Sun Nabs StorageTek

However, while solution providers said the move will help Sun go cross-platform and compete head-to-head with storage offerings from IBM and Hewlett-Packard, it may not necessarily be the shot in the arm Sun needs to return to financial stability.

"It's a nice play to get into competitive accounts such as IBM and HP stronghold accounts," said Tom Kuni, president of SSI hubcity, Metuchen, N.J. "StorageTek absolutely is a de facto standard inside major data centers."

However, one solution provider said that it's "foolish" for Sun, Santa Clara, Calif., to spend more than half of its cash on a company that is seeing its core competency—tape storage and backup—lose market share to disk.

StorageTek CEO Tom Martin "pulled the wool over someone's eyes to get $4 billion for that shrinking company," said the VAR, who requested anonymity. "Using up $4 billion of $7 billion to buy [StorageTek] isn't the way I would have spent my money."

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StorageTek is one of the top four independent vendors in the tape-automation space, a market that for now is fairly flat. However, the Louisville, Colo.-based company is seeing its disk business grow, thanks in part to an OEM deal with Engenio, which also OEMs arrays for IBM, Sun and SGI.

This business is a good basis for providing ILM, which Sun executives said is the real gravy of the deal for both vendors. The emerging ILM space is a hot button for customers due to increasing government regulation of how data is stored and managed, including requirements for HIPAA and Sarbanes-Oxley compliance.

By combining StorageTek's offerings with Sun's identity management and broad secure systems portfolio, "We have the ability to handle the entire life cycle of data securely with a better chance at the appropriate levels of privacy and availability than anybody else out there in the marketplace," said Sun Chairman and CEO Scott McNealy.

One snag in this grand vision is that StorageTek does not have much in the way of ILM software at the moment. But Brenda Zawatski, vice president of ILM at StorageTek, hinted that the company soon will deliver a comprehensive ILM software portfolio.

Still, one solution provider said that betting so much on a product set that has not been proven in the market is a risky maneuver for Sun, which is already in troubled financial waters. The VAR, who requested anonymity, also noted that Sun has had difficulty managing its workforce numbers and likely will have to make major workforce reductions to absorb StorageTek's 7,000 employees.

On a positive note, VARs said the acquisition does give Sun its best opportunity to date to go cross-platform with its storage offerings. In the past several years, Sun has made several acquisitions and OEM deals in an effort to sell storage technology to new customers.

In particular, with its high-end tape arrays that play in the largest enterprises, StorageTek gives Sun the weapon with which to go head-to-head with IBM in the mainframe space, said Pat Edwards, vice president of sales at Alliance Technology Group, a StorageTek solution provider in Hanover, Md.

"Sun has its E10K servers and mainframe-class processors," he said. "But it's not getting into the high-end space, which is owned by IBM. This will open doors for them."

JOSEPH F. KOVAR contributed to this story.