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Sun Buying StorageTek for $4.1B

Posted by Zonk on from the that's-a-lot-of-storage dept.

MarkEst1973 writes "Sun Microsystems Inc. is buying Storage Technology Corp. in a $4.1 billion cash deal, the companies announced Thursday. The acquisition answers lingering questions about what Sun would do with about $3.1 billion of balance sheet cash. StorageTek is a profitable company with $191 million in profit in '04 on $2.2bn in sales while Sun posted a loss last year (albeit a much smaller one than the year before)."

3 of 215 comments (clear)

  1. Well connected by youknowmewell · · Score: 4, Informative

    StorageTek is well connected with many other storage providers and some of their products are becoming of interest to the mainframe guys where I work. Future products to encrypt data going to tap using hardware will definitely increase their profitibility, if those products ever come out (suppose to come out 2006 last I heard). This is certainly a big buy for Sun.

  2. Re:Accounting by Thanatopsis · · Score: 3, Informative

    8.6% profit on HARDWARE is spectacular. Hardware is a very low margin business.

    --

    Thalasar
  3. Re:Strange pairing by Spectra72 · · Score: 3, Informative
    It gives Sun a ready made pool of sales people who understand how to sell storage. Sun's server-centric sales force has never really gotten that. Even though the Network Storage Division at Sun generates a lot of revenue with a relatively small employee base (less than 1000 people), it could be doing better if it had a better storage focused sales force. Sun's attach rate for it's own storage on its own Solaris Servers lags the industry standard. That's easy money if done even a few percentage points better. Sun has always worked closely with STK. STK is right down the street from Sun's Colorado campus. STK will help drive storage sales.

    This also gives Sun a pool of tech support people who know how to support things in a heterogenous server environment, mainly Windows, but others as well. With Sun selling servers that are Microsoft Certified (the opeteron based ones for example), look for Sun storage to be attached to more and more Windows servers. Check out the Microsoft blogger with pics of Sun storage in Redmond if you doubt that.

    EMC is obviously the big hitter in the storage arena, at the enterprise level at least. But of course, trying to aquire them would have been more expensive and also would have conflicted with current resale agreements with Hitachi. Doable? Possibly. But STK & Sun probably have a closer historical relationship that has had less bumps in the road. Sun has never really competed with STK, its always resold their tape libraries.