Sun Microsystems Inc.'s $4.1 billion acquisition of Storage Technology Corp. is expected to close Sept. 1, leaving in its wake a much smaller independent tape-vendor market. Mark Canepa, executive vice president of the Network Storage Products Group at Sun Microsystems Inc., will be overseeing the combined Sun/StorageTek division, which will be located on StorageTek's Louisville, Colo., campus.
What is your overall strategy for incorporating StorageTek into Sun?
Mark Canepa: We have 15 teams that are part of the integration process. Each team is chartered with finding cost synergies in their area but also finding the revenue synergies related to their area. We realize it's a 7,000-person, $4 billion acquisition. We are looking at executing this based on maximizing the objectives we've set forth. For example, how do you capitalize on the potential revenue synergies out there? How do you find cost synergies that are available to you, and how do you extract them and get them down to the bottom line?
What kinds of layoffs do you expect to occur as a result of this acquisition?
Mark Canepa: We don't know that yet. Obviously, it would be very premature to discuss that now as we're trying to operate as two separate companies. You can imagine the disruption that could have in both companies' employee base. Once we close, we'll be able to look at it in more detail and be able to make some more explicit announcements.
How will purchasing StorageTek boost your storage strategy?
Mark Canepa: We don't believe we're product-constrained. We believe we're coverage-constrained. Our products and solutions and capabilities are in excess of the size of the sales force we've got out there to sell them on a day-to-day basis. The first thing StorageTek brings is 1,000-plus salespeople, which massively increases our coverage. The second thing it does is it augments those sales reps that at StorageTek were able to sell a certain product block, basically tape- and archival-based solutions. They immediately have access to all of Sun's storage portfolio, which is a lot broader than StorageTek's portfolio. The third area is that many customers StorageTek has are not Sun customers today. StorageTek has spent 35 years catering to a lot of mainframe customers. While continuing to cater to their mainframe storage needs, it also allows us to expose them to more than just mainframe servers. Over time, we believe that can yield additional revenue synergies.
Your sales force is made up of 300 people or so. How do convince them to sell another company's products?
Mark Canepa: After all, your strategy is to move Sun's storage sales force over to STK, and then have them work with them as a team. We're going to end up with one storage sales force. All of a sudden there's one price list. It's not a Sun sales rep vs. an STK sales rep. They're all going to be Sun sales reps. It's not a STK product vs. a Sun one. Its going to be Sun's storage product price list. They're very rapidly going to be under one set of rules and quota.
What's your go-to-market strategy for StorageTek's products?
Mark Canepa: We've been OEM'ing a number of STK products for a long time. For a lot of their library systems, the go-to-market strategy is going to remain relatively unchanged. For a number of other ones, they're going to be on the Sun price list for the first time after the acquisition. To a large extent, we're going to leverage a lot of the go-to-market strategy that STK has. Initially, we're going to be catering to the same customers STK will be selling to. A lot of the improvements in our go-to-market strategy is that we can begin to broadcast a much broader value proposition. We can talk about ILM in much broader terms than what STK would do all by itself.
StorageTek's go-to-market strategy was catering to customers from the time their data was in the archival stage to when deleted. We can [move] on to a go-to-market strategy that can be around from [the} day data [was] created to [the] day [it's] deleted.
In what way do you see your purchase of STK as a foreshadowing of more market consolidation?
Mark Canepa: We think the IT market is in a consolidation phase. Sun CEO Scott McNealy talked about it. He said in general that we want to be one of the consolidators of the IT market. We intend to be on the consolidating side of all this happening.
With Sun buying STK and EMC partnering with ADIC, that doesn't leave a lot of independent tape vendors out there.
Mark Canepa: You're right. Right now there's Quantum, ADIC, IBM and Sun. You still have Overland [Storage] out there. They've got their challenges. We're definitely going to get down to a handful of archival companies.
How do you address product overlap, particularly with your content-addressed storage line, including Honeycomb?
Mark Canepa: We've been working pretty hard on that. We're not in the position of revealing any data at this point. What I can tell you is you're going to find when you dig into this stuff [that] there's a lot less overlap than might first appear. While there may be a little overlaps here or there, in the scheme of things it's going to be pretty minor, and it will be a relatively straightforward process to get the right things positioned correctly.
You've been losing market share to IBM, EMC and HP. How do you regain it through this deal?
Mark Canepa: The way we gain market share, we believe, is not primarily due to a bigger product line. It's being able to get feet on the street. It's about being able to get a sales force out there that can go toe-to-toe with the storage sales forces of our competitors. The STK acquisition does get us that, and we fully intend to capitalize on it.