I would love to see DELL do a nice size strategic acquisition too.!! There are some very high potential firms that are pioneers in the data storage field. DELL is investing in one called Storagenetworks. I expect that we may see DELL more aggressively ramp up their efforts in the very lucrative storage marketplace.
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JRI: Ceck out the fine print in this new Red Herring article...
<<Storagenetworks stows big money for big plans
By Matthew A. DeBellis
Redherring.com
January 28, 2000
It's a good thing 18-month-old Storagenetworks fell into $103 million in a third round of venture financing this week, bringing its total VC bounty to $205 million. The company plans to spend $700 million to build its "global data storage network" over the next four years.
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The third-round investors were computer retailer Dell Computer (Nasdaq: DELL), telecommunications firm Global Crossing (Nasdaq: GBLX), and Exodus Communications (Nasdaq: EXDS), a provider of data centers.
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Storagenetworks is doing business in what's dubbed the "storage service provider" market, where third-party companies maintain, back up, and recover data as an off-site service on a subscription basis. A $21 billion business last year, the storage service provider market will reach $24 billion this year and $40 billion in 2003, according to market researcher IDC.
ITS DAY WILL COME
Despite the paltry numbers for the storage services market, analysts say the business of outsourcing data management will grow during the next few years as more companies become comfortable with outside experts maintaining their data. Some of the world's largest technology and telecommunications companies are entering the business.
Thursday AT&T (NYSE: T) teamed with Cisco Systems (Nasdaq: CSCO), Hewlett-Packard (NYSE: HWP), IBM (NYSE: IBM), Sun Microsystems (Nasdaq: SUNW), and EMC (NYSE: EMC), which makes data storage and retrieval technology, to develop network services primarily for application service providers (ASPs), which host software applications. Storagenetworks seems to have come out a winner in this big partnership, because AT&T's plan calls for Storagenetworks to provide storage services at some of AT&T's selected data centers. Last September Qwest Communications (Nasdaq: QWST) partnered with HP to offer similar services.
Besides plans by industry behemoths to encroach on Storagenetworks's territory, several startups are quietly preparing to launch competing services.
"Storagenetworks is out plowing a green field, and right now there isn't anybody else in the field," says John Webster, an analyst at Illuminata, a market research firm. "But that won't last for long. Some more serious competitors could appear in a heartbeat."
IN PERSPECTIVE
Two hundred million dollars is a lot of dough, but not nearly enough for the Waltham, Massachusetts-based company to build a $700 million global data storage network. Cofounder and CEO Peter Bell was cagey when it came to talk about a next round of funding or a public offering.
Storagenetworks is an attractive takeover target because it was first to market with a focused data management business, says Steve Duplessie, a senior analyst at market researcher Enterprise Storage Group. Telecommunications outfits such as Global Crossing and Qwest may be interested in Storagenetworks, as might computer hardware makers Compaq Computer (NYSE: CPQ), Dell, HP, IBM, and EMC, analysts say.
While analysts speculate, Storagenetworks continues to open more data centers. Next week it opens a London center, a part of its plan to increase the number of locations from 14 to 60 by year's end, Mr. Bell says. A Frankfurt, Germany, center will open by this March, followed by Tokyo and Singapore centers this fall.
So far, 85 customers pay an average of $40,000 per month for Storagenetworks's service, says Mr. Bell.
According to analysts, companies most interested in Storagenetworks's service are ASPs and Internet service providers (ISPs). It's harder to persuade Fortune 500 firms that their data is better handled by someone other than themselves, they say. >> |
