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Technology Stocks : Son of SAN - Storage Networking Technologies -- Ignore unavailable to you. Want to Upgrade?

To: James Calladine who wrote (3995)	9/10/2001 3:16:45 AM
From: Gus	Read Replies (1) \| Respond to of 4808

They've said similar things about the IBM-StorageTek deal in 1997, the HWP-Hitachi deal in 1999, the IBM-Compaq deal in 2000 and even the most recent Sun-Hitachi deal. Of those deals, I consider the IBM-StorageTek deal in 1997 and the IBM-Compaq deal in 2000 as the most powerful combinations even though both ended up falling short of slowing down EMC. The 1997 IBM-StorageTek deal allowed the top two mainframe tape storage vendors (STK-60%; IBM-30% share) to coalesce around StorageTek's technically-acclaimed Iceberg technology and Tivoli's industry-leading storage management software. The alliance collapsed when IBM decided to rush to market its toothless Shark in late 1999. Not coincidentally, 1999 was the year that EMC nosed ahead of Tivoli in the storage management software market The 2000 IBM-Compaq deal allowed the mainframe monopoly and the top Server/PC vendor to coalesce around complementary products at the mid-range (StorageWorks) and at the high-end (Shark). IBM initially decided to support Compaq's Versator (block level virtualization) with IBM's Storage Tank (file level virtualization), but decided that its Tivoli unit could do practically the same thing themselves so why bother especially since Compaq was coming to the conclusion that developing its own file-level virtualization technology was a fairly straight-forward endeavor. Of course, this was all before Compaq's VersaStor started to run into severe technical problems according to at least two industry analysts. Initially scheduled for 1H2001 more than 12 months ago, VersaStor has since been moved to 1H2002. While technically still in force, the alliance is for all practical purposes an upside down duck behind a glass window less than one year after its grand introduction. The Compaq-HWP deal involves thorny choices about management layers, unproven and unstable technology foundations and multiple distribution channels. It doesn't even come close to the potential synergies of the 2-year IBM-StorageTek deal in 1997 or the IBM-Compaq deal in 2000. The timing of the 9/10 EMC product announcement is interesting because it clearly anticipates the high-end Unix product rollouts by Sun and IBM at the end of the month. It also anticipates the general availability of FICON storage devices on 9/28/2001 and allows EMC to take advantage of any end of year procurement bulge created by corporations spreading out their storage purchases over two budget years. Most companies use the calendar year as their fiscal years. Already, CA has indicated that mainframe demand may be particularly strong in the 4th calendar quarter and this is in line with the guidance of potential upside provided by McData and Inrange which cater to this market. For all practical purposes, the storage offerings of HWP and Compaq are going to be plagued by questions about the merger and that practically leaves them wide open for the kind of aggressive dealmaking that has been going on in technology.