Engenio was the disk sub-system building block and disk-array-producing division of LSI Logic. It had its own branding and was destined for indepence via an IPO, guided by its then CEO Tom Georghens. Its sub-systems and arrays are supplied under OEM arrangements to vendors such as Sun and StorageTek. It supplies SAN mananagement software courtesy of an OEM arrangement with AppIQ, now being acquired by HP.
As a disk array vendor it is in a second tier, along with Dot Hill and Xyratex, all smaller than the three main array vendors EMC, HDS and IBM.
LSI Logic has changed its view of Engenio after its own change of CEO. New man, Abhi Talwalkar, sees more LSI Logic shareholder value coming from keeping Engenio in the LSI Logic fold and integrating LSI Logic's RAID chip and card products with it.
Abhi Talwalkar briefed us on where LSI Logic and Engenio are heading.
He is 100 days in the job and sees LSI as a vertically-integrated ASIC-based company when the market is moving towards horizontally linked companies: "The ASIC industry is moving from vertical to horizontal integration. Five years ago an ASIC company was a vertically-oriented company. A one-stop shop. No more. The market has dis-aggregated. ... A company can't be a leader in all the segments making up the (old) vertically-integrated structure."
"This structural shift absolutely requires a change in strategy."
He said that Intel and Samsung are the only vertically-integrated companies left. No none else generates the $8billion annual revenue needed to fund the fabs, etc.)
LSI is a traditional vertically-integrated ASIC company. It has to change.
He said: "We have significantly reinvigorated the LSI Organisation -- particularly with the leadership team.... LSI will adopt a fab-less manufacturing strategy. We'll sell our Gresham fab facility."
He thnks LSI Logic focussed too much on technology and too little on markets, saying: "We need to be market-led instead of being technology-led. We cannot just focus on technology - we have to pick markets where LSI has design expertise, systems knowledge. (It's) absolutely critical. ... We have to engage with our customers at the systems level ... and (have) engagements with market makers," such as HP, Dell, Brocade, Seagate and others.
He also wants to make the separate parts of LSI Logic work better together, instead of being in separate product silos: "We are driving to extract synergies across product lines. LSI has to some degree almost been a silo organisation (with a) number of product groups (There have been) no synergies. (We have) not come together."
He asserts though that LSI Logic is in a strong position: "There isn't a company today that parallels LSI Logic in storage (sub-systems. We have a ) leadership position in SCSI controllers, SAS controllers. (We have) leadership in building blocks for mid-range segment, (and are) poised for leadership in volume segment."
The future is going to about being systems-aware and generating synergies.
Talwalkar said: "From a storage standpoint we have an abundance of systems expertise." The storage product line includes: "SCSI controllers, RAID adapters and systems. We are leaders in all segments. We've brought them together. We want to extract synergies by bringing these three product lines together."
"We're going to pick the markets and stay in the markets for the long-term.... You have to be a technology leader. That was one of the reasons why we decided to go fab-less relative to process technology. The differentiating factors today are having the right IP, the expertise to integrate systems on a chip."
"LSI has always been a leader here, (it) excels at this activity. Having your own fab and producing your own wafers is not a differentiator today. "Even IBM, even TI use external foundries."
He is emphatic that LSI Logic is in a strong position in the storage business saying that: "Regarding enterprise storage the storage market is very supportive of LSI supplying building blocks." It collaborates with HP, Dell, EMC, Sun, Seagate, Fujitsu, Lenovo, Brocade, QLogic. McDATA is a customer for standard ASICs.That's a lot of good relationships.
The building blocks include HBAs, Expanders, RAID Cards, Engenio controllers, MegaRAID, Stack, MyStorage SW, SANtricity management software and integrated RAID.
Talwalkar avers that: "LSI is driving every segment of the storage market. We're everywhere. No one else in storage has our capabilities from silicon to systems building blocks."
"We're a leader today in mid-range storage (system building blocks) . I certainly want to extend that into volume. We're looking at entering the consumer market with our enterprise products. ... We have a strong RAID adaptor business."
He sees that: "(The) worlds of storage within the server and outside the server are coming together. We believe we're in a strong position for that convergence. IT managers want it, want a common system management interface for storage inside the servers and outside. It increases our differentiation substantially against the other storage building block suppliers."
Talwalkar is not enthusiastic about the disk array products. He said: "For StorageTek LSI ships controllers, enclosures, software - system building bocks. Drives too for StorageTek. (But) packaging drives in arrays is not a core competence of LSI. We'll let our customers do that. Drives are a very small amount of our business."
What about the Engenio brand? "We have every intention of maintaining the Engenio brand. It's fairly well known to our OEM customers."
As an example of working with market makers he cites Dell and HP: "LSI and HP collaborated with Seagate to help HP bring a line of servers to market in July with the first SAS controllers."
In the future Engenio will be the LSI Logic brand name for modular external RAID storage system building blocks, even complete systems. Other LSI Logic brands include:-
- MegaRAID for host-based RAID storage adapters sold to OEM customers and also distributed through indirect channels.
- LSI Logic for host bus adapters sold to OEM customers and also distributed through indirect channels. Also for SCSI, SAS, Fibre Channel and RAID-on-chip (ROC) I/O semiconductors and custom ASICs sold to OEM customers.
LSI Logic will design and build semi-conductor components for its customers using third-party foundries. These components will have systems expertise and software likely used, and LSI Logic will work with its customers to build what they want.
There will be no Engenio IPO. Engenio will be less visible to end-users as it submerges itself deep into its chosen parts of the storage value chain and becomes a, hopefully, synergistic part of LSI Logic's business.
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