LSI Logic's Storage Systems division is to become a separate company. Currently, it is a wholly-owned subsidiary, LSI Storage Systems Inc. "Our plan is to create an independent storage systems company that unlocks the value and potential of our storage systems business," said Wilfred Corrigan, LSI Logic chairman and chief executive officer. LSI Logic is now, in effect, a company with two businesses: semi-conductors and storage. By splitting it each one will be able to grow faster, hope LSI Logic. The storage division accounted for 23 per cent of LSI Logic's revenues in the third quarter of this year.

LSI SSI makes and markets high-end modular drive arrays and management software. Revenues have recently returned to 2000 levels after a dip. StorageTek is LSI's storage distribution partner in many parts of the globe, notably Europe. Other companies which resell LSI's disk arrays and software include NCR's Teradata division, SGI and IBM. With the HDS purchase of IBM's drive manufacturing operations this outlet may be threatened.

Recently HDS has made alliances with software suppliers IXOS and AppIQ. Rival drive array supplier EMC has bought Documentum and Legato. Both HDS and EMC see the need to add software functionality to their arrays so as to respond better to data lifecycle needs. IDC has also forecast that in five years time 80 per cent of the storage market's revenues will be software based, up from its current 20 per cent. It's a point that HDS has taken on board.

LSI Logic SSI's separation and independence will, "intensify (its) market focus and strategic direction," Corrigan claimed. That doesn't say much at all about what its future direction might be. Software partnerships, bearing in mind the HDS and EMC moves, may well be on the agenda though.

An initial public offering is being considered for the first half of next year. The current management team will remain in place.