Minnesota is sprouting a new high-tech industry
Eric Wieffering
Star Tribune
Published 08/27/01
Minnesota may have missed the ephemeral glamour and riches
that accompanied dot-com mania, but the state has quietly
developed a national profile in a technology likely to prove
more lasting and lucrative.
The technology -- called storage area networks -- are
high-speed networks of machines that contain nothing but a
disk or disks for storing data. These systems are becoming as
essential to business as the telephone.
E-mail, the Internet and other data-intensive technologies are
creating a mountain of information, and companies now are
spending 30 to 50 percent of their technology budget on storage
needs.
While there are competing storage technologies, International
Data Corp. estimates storage area networks will dominate, with
worldwide spending likely to top $40 billion in 2004.
Thanks in part to its mainframe computer legacy and some
important work done at the University of Minnesota, the state
is home to companies developing both the hardware for storage
area networks, or SANs, and the software to manage them.
While the number and size of the companies here don't yet
rival Boston or Silicon Valley, the region's importance is
growing.
'Minnesota is clearly one of the centers of excellence,' said
Matthew O'Keefe, a former University of Minnesota professor
and the founder of Sistina Software, a start-up firm developing
programs that manage data storage and retrieval. 'There's a
critical mass of employees here, enough to build a company
with,' he said.
Some of the nation's biggest technology companies have
swooped into the state to capitalize on that talent.
Storage Technology of Colorado was one of the first, acquiring
Network Systems Corp. in 1995 for $170 million and renaming
it StorageTek. The Brooklyn Park facility now has more than
250 employees, most of them engineers working on switches
and hubs that help route traffic from storage devices.
A year later, Mountain View, Calif.-based Veritas Software
bought a small software company started by former Control
Data, Cray Research and Unisys programmers. Roseville serves
as a research and development center for Veritas' backup
software, and the company previously has announced plans to
triple the unit's work force to 600 by 2003.
And in the past two years alone, four Minnesota companies
working on network storage products were acquired for a
combined $2 billion.
Cisco Systems bought NuSpeed, QLogic bought Ancor
Communications, Seagate acquired Xiotech and Sun
Microsystems bought LSC Inc. The firms have remained in the
state and continue to add workers.
The plundering from outside Minnesota's borders has not left
the state without any homegrown, independent companies.
Publicly traded players in the storage area network field include
Computer Network Technology, a maker of routers, switches
and software; Tricord Systems, a software maker; Ciprico,
which makes storage systems for film, video and digital
broadcast files; and systems integrator Data link.
Oakdale-based Imation Corp., whose storage media are used in
storage area networks, has formed a consulting division and
recently opened a vendor-neutral SAN test lab, one of only
two independent labs in the country.
The slowdown in capital spending by businesses has been felt at
most SAN companies, but industry observers say growth is
bound to resume.
'If a business is still growing, it can only delay investing in
storage for so long,' said Bill Peldzus, marketing manager for
Imation's storage consulting division. 'Data is their crown
jewels.'
Many of Minnesota's storage networking companies share a
common heritage. Often, founders or key employees once
worked for Cray, Control Data and some of the other
mainframe makers that once made Minnesota a nationally
known computing center.
While the personal computer did for Minnesota's mainframe
makers what the meteors did for the dinosaurs, some key
underlying technologies -- such as those used to store, protect,
fetch and dispatch data -- remained important for networked
personal computers.
Many of the engineers who founded or work for these
companies also are graduates of the University of Minnesota.
While the university has been knocked for missing out on the
personal computer revolution and the advent of Internet
technologies, it can boast of having done groundbreaking work
in data storage and retrieval, said Mark Ferelli,
editor-in-chief of Computer Technology Review, a respected
trade journal.
Even Ferelli will admit, however, 'that storage is not sexy,'
which might explain why, just a year ago, many of the state's
top business and civic leaders cited the relative paucity of
Internet start-ups as proof that Minnesota no longer was a
place where new technologies and companies were born.
'There was a lot more going on here than people knew about,'
said Bob Kill, CEO of Ciprico. 'And the difference between so
much of the Internet hype and us is that this is a real business.'
-- Eric Wieffering is at ewieffering@startribune.com .
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