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Sun Microsystems Is in Talks
To Resell Hitachi Computers
By JERRY GUIDERA
Staff Reporter of THE WALL STREET JOURNAL
Sun Microsystems Inc., angling to shore up its arsenal of storage products to battle industry leader EMC Corp., is in advanced talks to resell high-end information-storing computers made by Hitachi Data Systems Inc., according to people close to the matter.
For Sun, the move would be a concession of sorts that its year-and-a-half-old effort to sell its own "big box" storage systems to compete with EMC's dominant Symmetrix line of devices has fallen short of expectations. Sun, which is the leading maker of so-called server computers, has been seeking to expand its portfolio in the faster-growing data-storage market.
Sun Micro Warns 4th-Quarter Net May Trail Expectations by 67% (May 30)
HDS, a unit of Japan's Hitachi Ltd., last year dropped its server-computer business to focus only on storage systems. It has managed to gain significant market share by underpricing rivals.
Mark Canepa, head of Sun's storage division, called the talks "rumors," but added, "Anything that creates partnerships between storage and server companies enhances the overall solution [for customers] and makes it tougher for storage-only companies" to do business. Jodi Reinman, an HDS spokeswoman, declined to comment on the negotiations.
James Berlino, an analyst with Merrill Lynch, said a deal with HDS would be "a very good solution in the short term for Sun" after "failing to execute" on its other storage efforts. Added Thomas Mancino, an analyst with Pacific Growth Equities in San Francisco, "We believe that such a relationship will be announced shortly."
Sun and HDS have held talks about potential cooperation for months. The talks picked up speed in May, according to the people close to the situation. The deal may still encounter hitches, these people added. Sun must first decide what to do with its existing T3 line of high-end storage products. It is also unclear if the deal will involve a so-called OEM pact, where HDS's boxes are sold under the Sun brand, or an arrangement under which Sun will resell HDS-branded products.
Besides ratcheting up competition for storage leader EMC, Hopkinton, Mass., a deal might upset an existing arrangement between HDS and Hewlett-Packard Co., under which H-P also resells HDS high-end storage devices. Sun and H-P are archrivals. An H-P spokeswoman, Suzette Stephens, played down any impact to her firm's existing pact with HDS, calling the relationship with HDS "excellent."
EMC President Joe Tucci said any Sun-HDS alliance "will be increased competition, but in another sense they're finally coming around more to our point of view on things," because it shows that Sun "needs" to sell storage. |
