Sun's announcement last week that it would buy StorageTek for $4.1 billion has left at least one analyst scratching his head.
"Buying a company that is primarily tape technology today doesn't look like an exciting play for a forward-thinking company like Sun," said Forrester analyst Frank Gillett, agreeing with Techworld's own analysis. "It appears like they have some strategic stuff in mind in the long run, but I don't think that this acquisition is being justified on yet-to-be-announced technology. In the short run [the logic] is an open question."
Under the agreement, Sun will pay $4.1 billion for StorageTek - $37 a share in cash.
Gillett said he could only surmise that the deal was not about the technology but the acquisition of a storage specialised workforce and customer base. "And I can't make that one really hum," he said. "At the end of the day it almost seems like a really simple-minded deal - let's make Sun bigger."
But James Whitemore, Sun's marketing VP for network storage, said the acquisition is very specific and completes a big part of Sun's end-to-end storage strategy puzzle. "It will be a one-stop shop," he explained.
"Tape is a part of a tiered storage architecture. If you look at any tiered architecture you need high speed, relatively high cost, data center class disk, you need lower cost performance disk, you need tape," he said. "You need a complete portfolio and with this acquisition, we have it. What we are adding here is a thousand focused, storage-sales specialists, 2,000-plus focused, storage-service professionals," he said.
There are no plans to change StorageTek's product and development road map, Whitemore said, especially given the complementary nature of the two companies' technologies. There is little technology overlap, he said.
As to why StorageTek agreed to the deal, Gillett is a little less confused. "They thought that even though they had great technology, as a $2 billion specialist with a tape foundation, they just couldnt go uphill against the storage guys no matter how cool their ideas were," he said. The 'storage guys' include the likes of IBM, EMC and Hitachi, he said. By aligning itself to Sun, StorageTek will increase it cachet, Gillett said.
Sun targeted its storage product line as a cause for weak financial results reported in April. It reported a net loss of $61 million for the quarter. Company execs said one problem was that the rate at which customers purchase Sun's storage products along with servers had dropped over the last three quarters. Sun competitors such as IBM have been selling storage devices with servers, but Sun has lagged in that market.