Sun Buying StorageTek for $4.1B

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)."

Comments

Oooh

[c0ldfusi0n]

So that's why the two StorageTek people in the room next to my office are soo happy.

Share Prices

[HaydnH]

Wish I'd baught some StorageTek shares before this happened... a nice 17% increase could've baught me a few gadgets...

It's about time Sun got some good storage though, I wonder if they have redundant power supplies with 2 power cables these days, it was rather annoying when you had redundant power supplies but an intern tripping over a power cable could (and did!) bring down a box.

Re:Share Prices

[brickballs]

from the article: "The deal, if completed, will pay StorageTek (Research) shareholders $37 a share, or an 18.5 percent premium on Wednesday's close."

Re:Share Prices

[Transfan76]

What are you smoking? Sun has been rebranding STK stuff for 10 years. I can't think of an array Sun currently sells, or for that matter has sold in the last 5 years that hasn't had dual power supplies and not had two cords. Usually the problem is people not plugging in the second cord. Part of that comment is pure flaimbait.

Re:Share Prices

[cttforsale]

while anyone can see the wisdom of plugging a machine with two power supplies in to 2 separate circuits, I think the biggest reason for 2 PSs is the possible failure of one...

Re:Share Prices

[PhraudulentOne]

...it was rather annoying when you had redundant power supplies but an intern tripping over a power cable could (and did!) bring down a box.

Tip: Don't leave your power cords running along the floor.

Re:Share Prices

[Wdomburg]

Oddly, we haven't had a redundant power supply blow on us in years, but we've had them save our ass regardless because of loose cords, blown inverters, and sloppy electricians.

Re:Share Prices

[HaydnH]

I'm smoking Marlboro lights thanks, although bad for my health they're not very mind altering!

Anyway, I was thinking that the A1000 and D1000 had only 1 power cable, which would of course include the A3000 as it was just a rack of A/D1000's. However, they did have 2 power cables so I stand corrected. On the server side the E250 & E450's definately only had 1 power cable though.

Re:Share Prices

[HaydnH]

The E250's are newer than the E450's - I guess Sun had learnt their lesson by the time they released the 250...

Re:Share Prices

[_damnit_]

Actually the A5x00 fibre channel boxes had only one cord and three power supplies! Great design I say.

Reverse acquisition?

[sjbe]

This strikes me as something close to an exit strategy by way of diversification for Sun. Their core server business is seriously erroding and under attack from all sides. This gives them potentially two things. First, a way to provide integrated product lines. Servers and storage are complementary businesses and I could see Sun offering tightly bundled turnkey installations. Second, this gets Sun a profit center to keep them afloat as they transition their business model.

Though it might not be advertised as such, this might be akin to a reverse acquisition since StorageTek is profitable and Sun isn't. It's interesting, though not surprising, that Sun had to pay cash. Their stock isn't worth much these days and no one is going to lend them money with a BB+ credit rating.

Re:Reverse acquisition?

[Glock27]

This strikes me as something close to an exit strategy by way of diversification for Sun.

I don't think so.

Their core server business is seriously erroding and under attack from all sides.

Actually, its server business has grown the last couple of quarters. Plus, its Opteron line coupled with Solaris is a strong offering. Yahoo Finance shows Sun as profitable with a P/E of 19 right now...low for a tech company.

This gives them potentially two things. First, a way to provide integrated product lines. Servers and storage are complementary businesses and I could see Sun offering tightly bundled turnkey installations. Second, this gets Sun a profit center to keep them afloat as they transition their business model.

Transition its business model to what? Sun has always sold (and resold) storage solutions.

Though it might not be advertised as such, this might be akin to a reverse acquisition since StorageTek is profitable and Sun isn't.

Yahoo Finance shows Sun as profitable with a P/E of 19 right now...low for a tech company.

It's interesting, though not surprising, that Sun had to pay cash. Their stock isn't worth much these days and no one is going to lend them money with a BB+ credit rating.

Don't count Sun out yet...it employs many smart people.

Re:Reverse acquisition?

[superpulpsicle]

"Actually, its server business has grown the last couple of quarters."

When you go from some of the worst quarters in the company's history, and say they improved. It doesn't say very much. I agree with the original poster, they are close to an exit strategy.

Re:Reverse acquisition?

[Glock27]

I agree with the original poster, they are close to an exit strategy.

I seriously doubt it, I guess the next couple of years will tell the tale...

Re:Reverse acquisition?

[clem]

Don't count Sun out yet...it employs many smart people.

Yes, but they also have a number of rabidly political middle managers who do their best to ensure that the smart people are left rotting on the dock.

Why, yes, I am a former employee.

Re:Reverse acquisition?

[Jack Taylor]

I could see Sun offering tightly bundled turnkey installations.

The first time I read that as "tightly bundled turkey installations". Time to get some sleep...

Re:Reverse acquisition?

[elmegil]

And even some non-former employees see the same thing. I hope that all the pie in the sky being sold about this acquisition internally is right, but I'm not holding my breath either.

Re:Reverse acquisition?

[Bellyflop]

I think you're relying on bad data for your analysis. I'm not sure how Yahoo has come up with a P/E of 19 - Sun was not profitable last quarter (-.02), nor were they profitable in the ttm (-.04). The company is expected to return to profitability, but they aren't doing well now nor have they had a profitable 12m time period since 2001.

Re:Reverse acquisition?

[illumin8]

And even some non-former employees see the same thing. I hope that all the pie in the sky being sold about this acquisition internally is right, but I'm not holding my breath either.

What I remember from my few years at Sun was that the management team was really good at blowing smoke up your ass and making you think that Sun was going to turn around. Every quarter you'd have to sit through some meeting where management would literally almost brainwash you into thinking that Sun was the center of the universe and that soon we would take over the entire computer industry. The thing that was scary was that despite all of the negative earnings and missed sales goals, they were really good at it, and after a while of working there you start to have the same type of groupthink and sheltered worldview that management has.

The fact of the matter is that Sun, at one point in time, had great people in a position where they could accomplish a lot. Nowadays, middle management actively sabotages anything remotely possible of success simply because they cannot tolerate the thought that an engineering team might create a technology that could save the company.

What you have now in Sun is typical of a lot of companies: Management wants to drive innovation through marketing and dictating to engineers what to create. We all know as engineers and geeks that this never works. True innovation does not come from the top down, it comes from the bottom up. Think Bill Joy and BSD Unix. These were not started because some team of unemployable middle managers decided that the industry needed an open operating system that anyone could write software for. These were started because a brilliant engineer had a vision and was given the right amount of time and freedom to create that vision in reality.

The sooner Sun tanks and all of the engineers regroup into garages and really start inventing again, the better, for all of us.

Re:Reverse acquisition?

[Bryan-10021]

An exit strategy like IBM in the 90's? Companies go through good times and bad times and Sun will turn themselves around just as IBM did.

For those too young to remember the 90's, it was a time when IBM was getting beat up by RISC UNIX boxes from HP and Sun and mainframes were on the way out.

If Sun wanted to get out of the server market then how do you explain spending $500 million on Solaris 10? Why invest in an all new line using it's own developed Sun hardware based on AMD Opteron chips? Or the new SPARC Throughput Computing chips (http://www.sun.com/processors/throughput/)?

Re:Reverse acquisition?

[njcoder]

"From what i've read, Sun's Opteron line is just rebranded Newisys servers."

That's true of the current models (v20z and v40z) which sun is selling quite well. I remember reading that Sun is AMD's biggest Opteron customer.

Sun is also working on a new line of Opteron servers codenamed Galaxy. These are completely in house designs. Andy Bechtolsheim, who was employee number one at Sun has returned to Sun through the aquisition of Kealia. There's been some talk about the Galaxy line of servers but not much information. Andy seems to be a very smart guy and the type of person you want to be bringing new innovations to the company. When he was at Stanford he built his own workstation so that he wouldn't wait for shared computer time on campus servers. He also worked on the first sun workstations. Like most other Opteron and x86 server vendors, Sun has been positioning their opteron servers as edge of network platforms but their Galaxy class line is rumoured to be for more important workloads that their workgroup ultrasparc servers are marketted at.

The w1100z and w2100z worstations from what I understand, were designed in house. There's a good review of the designs here

Re:Reverse acquisition?

[ZuggZugg]

"Don't count Sun out yet...it employs many smart people."

But is led by a couple of nutjobs (McNealy and Schwartz)...witness the hell that Carly did to HP, McNealy and Schwartz may not be as bad as Carly, but they certainly aren't doing that great with all the talent and technology assets they have at their disposal. Yes they have smart people doing cool stuff, but their ability to execute sucks ass, the SPARC has been a dog for at least 5 years now and they still don't fully admit it for obvious reasons and their delays at releasing viable product is saddening. Most CEOs would be bounced for a failure that was the SPARC 5...imagine how much money was lost right there alone! Not just a complete CPU scrapped but an entire line of systems designed for it...ouch.

Sun's track record with mergers, biggest failure in my mind is Cobalt guys and Netscape software...they have a good chance of destroying what little STK has.

STK is an OK storage company, I would argue they only really excel in TAPE and mainframe based storage solutions. Do they have any real software assets?

And while Sun has partnered with STK for Tape solutions for many years now and was a reseller how does owning them make their technology portfolio better? I also wonder what this deal will do to their relationships with other storage vendors, notable Hitachi for the high end Lightning series storage.

This doesn't change my opinion about Sun's future, I still see them eroding into irrelevance unless they change leadership.

The only things keeping Sun alive is the smart people who do good work to release solid products at Sun and the die hard customers still willing to pay a premium for technology that can be had elsewhere better, faster, cheaper.

Re:Reverse acquisition?

[aclarke]

...management would literally almost brainwash you into thinking that Sun was the center of the universe...

Well, Sun is at least the centre of the solar system...

(I'm sorry. Really. I couldn't resist)

Re:Reverse acquisition?

[fupeg]

Nowadays, middle management actively sabotages anything remotely possible of success simply because they cannot tolerate the thought that an engineering team might create a technology that could save the company.

That's interesting. The reasons behind Sun's failures are no secret. They made a ton of money in the late 90's selling Big Servers. They expanded like crazy and spent a lot of R&D money on making Even Bigger Servers and on developing software for Big Servers. They were in the worst possible position when the bubble burst. They did not handle the shift to smaller, faster x86 based servers. They did not handle the shift to open source enterprise software, even though much of it was written in their very own Java language.

It was a lot like the American car makers of the early 70's who were not able to deal with the public wanting smaller, more fuel efficient cars instead of just bigger and faster ones. Of course bigger, less fuel efficient cars did make a big comeback eventually, in the way of SUVs. Similarly, maybe Big Servers are making a comeback in the way of multi-core chips?

Anyways, externally that seems to be why Sun has fallen on hard times. They were too heavily invested in technology that was fueled by the dot com and telecom bubbles, and were unable to adapt to disruptive technologies (fast x86 servers, open source software such as Linux.) I had always guessed that this was just another case of smart people making clever technology that nobody wanted. It would be interesting to know how company politics played a role in this. Were engineers advising smaller, cheaper servers in 2000 and nobody listened? Did engineers want to switch to open source software in 2001?

Re:Reverse acquisition?

[HiThere]

One clear reason that Sun has fallen on hard times is their rabid case of MPD. Not at all the kind of company that I would want to rely on, or have as a business partner.

If Sun makes a public announcement of something, the best prediction of it's next announcement is the direct opposite of what it has just said. And it seems to experience NO cognitive dissonance, so this condition is unlikely to correct itself.

Re:Reverse acquisition?

[illumin8]

They did not handle the shift to smaller, faster x86 based servers. They did not handle the shift to open source enterprise software, even though much of it was written in their very own Java language.

I think this is an accurate assessment. When Linux and Open Source started to become a real market force, there were a lot of geeks and engineers within Sun that were very pro-Linux. We could see that Linux was the future. Then, there were management types that only saw Linux in the same close-minded view that Microsoft does, as a competitor that should be crushed. The problem is that although there are pockets within Sun that are very pro open source, they get drowned out by the groupthink that permeates from the top down. The groupthink that says "Linux bad, closed source good..."

It has gotten to the point where if you're a Sun employee, it could be dangerous to your career to be too much pro-Linux. For example, I had workers on my team snicker at me and say comments like "kid's OS" whenever I'd discuss something about Linux.

Think of it like this: If you're a Microsoft employee, when you're sitting around with your co-workers at lunch, are you going to tell them you spent the weekend at home setting up an Asterisk server running Linux? Not if you value your job you're not.

This culture permeates the company, and stifles innovation.

This is how I would fix Sun:

- If you manage a team of less than 10 people, you're out, period. There are many middle-managers that only have 4-5 direct reports and pull in 6 digit income. They came on-board during the dot-com boom and play political games to ensure they never get laid off. They would be the first to go. I'm sorry, I don't care how good you are, if your only job is to sit around and tell 4 or 5 people "work harder", you're not needed.
- Fire Scott Mcnealy. Really, I don't see how he's lasted this long.
- Get new executive level management that has a clue.

I think the first solution alone would probably cut 1000 head count and bring Sun to profitability immediately.

Anyway, what do I know, I'm just a former SSE that worked for a Sun partner.

I do like system administration on Sun though. I also like Linux. There's no reason those two platforms can't co-exist. The right tool for the job is what I always say...

Re:Reverse acquisition?

[1lus10n]

Also a former employee here. I dont think mcnealy is the problem. Its the people between mcnealy and the talent. People like schwartz (who has to be the biggest fucking ass ever).

A lot of people think Sun will get bought out, the name and talent alone are worth the going rate these days. Buy sun, fire all of management and essentially absorb the engineering and service departments.

Re:Reverse acquisition?

[Wdomburg]

Why invest in an all new line using it's own developed Sun hardware based on AMD Opteron chips? Or the new SPARC Throughput Computing chips (http://www.sun.com/processors/throughput/)?

Why scrap years of development work on the UltraSparc V and Gemeni chips?

The whole "throughput computing chip" is just Sun going along with industry trends. Multi-core chips were in the works at Sun, Intel, IBM, and AMD long before Sun started pushing "throughput computing".

I won't make any bold predictions about Sun, but it'll be interesting to see where things go over the years. Focus on original Opteron designs and the resurrection of Solaris x86 make for interesting speculation with regard to transitions though.

Re:Reverse acquisition?

[Seumas]

I think the first solution alone would probably cut 1000 head count and bring Sun to profitability immediately.

The first - what - 16,000 RIFs didn't seem to return them to profit, but you're sure just 1,000 more will do it, huh?

Anyway, as the press releases have said, the answer seems to be simply not expanding any further in America, but moving the expansions overseas.

Re:Reverse acquisition?

[zuzulo]

One of the things folks dont realize about Sun is that they *still* own the majority of russian supercomputer experts, and this asset will continue to pay serious dividends regardless of what CPUs they choose to use.

Re:Reverse acquisition?

[guacamole]

Actually, it sounds to me more like simply an attempt to break into the lucrative storage market. It has been estimated that companies are already spending as much money on storage hardware/support/software as on their servers. So, even though they pay big bucks to Sun, they still spend on equal amount on storage. Amazingly, even though Sun has been trying to become a major storage player for the last decade, they couldn't, even after buying up a whole lot of minor storage companies and developing a bunch of storage products on its own. More recently, they tried to take on EMC with their Sun T3 storage array and this strategy seems to have failed. Next they teamed up with Hitachi to sell rebadged Hitachi disk systems as "Sun StorEdge". It seems like this aquisition is just another step in Sun's troubled quest for more storage customers.

Re:Reverse acquisition?

[Glock27]

But is led by a couple of nutjobs (McNealy and Schwartz)...witness the hell that Carly did to HP, McNealy and Schwartz may not be as bad as Carly, but they certainly aren't doing that great with all the talent and technology assets they have at their disposal.

At least McNealy helped found the company and has been there since the beginning, unlike Carly who came in with basically no clue.

Yes they have smart people doing cool stuff, but their ability to execute sucks ass, the SPARC has been a dog for at least 5 years now and they still don't fully admit it for obvious reasons and their delays at releasing viable product is saddening.

I think it tacitly admits it with it's Opteron strategy. Sun has had the courage to embrace Opteron as a first-class server CPU, unlike any of the other 1st tier manufacturers except HP. On the software side, Solaris and Java are strong offerings (Dtrace is impressive) though it's not clear how much software directly contributes to the bottom line.

Not just a complete CPU scrapped but an entire line of systems designed for it...ouch.

Sometimes that's the smart thing to do...look at Intel struggling along with Itanium. It does show decisive management, which is something.

My point with my original post wasn't that Sun would soon return to being a powerhouse of computing. It might happen, but I wouldn't predict that at this point. However, I also don't think it'll "die", or significantly switch direction away from servers, Unix, and Java.

Re:Reverse acquisition?

[Wiz]

Actually, its server business has grown the last couple of quarters.

Ummm, you must read something different to me then.... Sun's server market dropped from 10.3% to 9.5% last quarter.

4th spot overall.

Re:Reverse acquisition?

[illumin8]

The first - what - 16,000 RIFs didn't seem to return them to profit, but you're sure just 1,000 more will do it, huh?

If you cut the people with the highest salaries that are dead-weight and basically worthless (tell me how a manager of 4 people provides a value to a company), yeah, it would make a difference.

We're talking people with $200k-300k salaries. That's not chump change.

Re:Reverse acquisition?

[elmegil]

Of course the people who are most dead weight at this point (after several RIFs) are the ones who have the best entrenched fiefdoms. While I can wish that the next RIF will be the one that axes the idiots, I'm tired of holding my breath for it.

Re:Reverse acquisition?

[illumin8]

Of course the people who are most dead weight at this point (after several RIFs) are the ones who have the best entrenched fiefdoms. While I can wish that the next RIF will be the one that axes the idiots, I'm tired of holding my breath for it.

This is very true... History has proven those that get ahead are those that are best at taking advantage of others. It's not likely they'll be removed now. Far more likely that they would have other more competent people RIFed instead to protect their fiefdom from smart people that might question why they have the positions they do.

Re:Reverse acquisition?

[_damnit_]

Sadly enough, so am I. The brutal irony of large companies is that eventually it becomes too hard to fire people. The RIFs only catch a small percentage of the deadweight and take far too many of the good people. Many, many good people have gone away while managers of the most failed groups and division suck up to McNealy and Co, get their promotions, crosstraining and 6 figure salaries.

Then again everyone says the same shit happens at their company.

Wait....

[TiMac]

Sun still has money?

Only half joking....lots of organizations I know of are pulling their support for Solaris and are buying cheaper machines from other vendors to run Linux on. I'm sure Sun has a substantial customer base left, but I wonder how long it will last as Linux continues to rise.

Re:Wait....

[stlhawkeye]

Only half joking....lots of organizations I know of are pulling their support for Solaris and are buying cheaper machines from other vendors to run Linux on. I'm sure Sun has a substantial customer base left, but I wonder how long it will last as Linux continues to rise.

Every place I've worked has either abandoned or is in the process of abandoning Solaris. Java is probably Sun's future.

Re:Wait....

[AKAImBatman]

Sun really needs to get Open Solaris out the door. If they play their cards right, they can push Solaris back into the market. Once they have a foothold with the "free" (as in Beer, Libre, and whatever other BS you want to call it) version, they can then turn around and become the premier vendor for Solaris systems. Whether it be x86, AMD64, or 64 way UltraSparc boxes, Sun will provide it and make companies feel all warm and fuzzy.

At the same time, Sun can leverage a large degree of open source software built around their platform, while upcoming developers and IT workers can have the pleasure of running Solaris on any machine they want. With any luck, it will be a win/win situation for everyone. :-)

Re:Wait....

[njcoder]

Apparently, we should be eeingn opensolaris in the next month or so???

Re:Wait....

[Plutor]

Where I work, we're paying sub-$4k for single-unit dual-Opteron Sun servers, on top of which we're running Linux. On a simple performance-to-cost ratio, these are the best Linux servers out there. From an administration point of view, they are a pleasure to work with, and it's a downright transcendental experience when they fail. I love my SunFire v20zs.

Re:Wait....

[ignorant_coward]

Yeah, I've done that, too. Old PCI card with Solaris 8 drivers...bam works in Solaris 10. They don't support it officially, of course, but it is a lifesaver on occasion.

Linux fanboys don't know what they are missing! This is what makes Slashdot so painful to read, sometimes. OpenSolaris will make it doubly so.

Re:Wait....

[Intron]

We decommisioned HP/UX before Solaris, but otherwise just so. We now have AIX, Linux and Windows [in order of mission-critical to least critical]

Re:Wait....

[dupup]

Agreed, the v20z rocks. Except for the deafening fan noise if you're not fortunate enough to have a concrete bunker in which to hide them. Does anybody know how to slow the fans down a little? I have heard rumors that it can be done until such time as they are actually needed.

Re:Wait....

[AKAImBatman]

No, I understand that. What OpenSolaris will do is that it will:

a) Allow redistribution
b) Generate Buzz
c) Generate a larger community around Solaris (the current one is pretty small I'm afraid)

None of this is served by the current Solaris. However, Solaris 10 has become the most downloaded version ever, so Sun is doing something right. :-)

Now if someone would just fix the damn install program to configure the DNS and Gateway correctly...

Re:Wait....

[AKAImBatman]

could you even download other versions of Solaris? ;-)

On again, off again. You could download Solaris 7 if you were a student. Then you could download Solaris 8 if you had less than 8 CPUs. Then you had to pay to download Solaris 9. Then that waffled back and forth a bit. So the definitive answer is: Sort of. ;-)

I'm surprised...

[PenguinBoyDave]

I knew it would happen eventually, but I thought it would be more like EMC as they have a full suite of disk and software already. Sun OEM's their storage software, and their storage hardware has been OEM'd from Quantum and LSI Logic for some time.

I hope this will help bring them back...SUN is a good company with a great past.

Re:I'm surprised...

[PenguinBoyDave]

Agreed. StorageTek makes some of the best storage hardware in the world. I'm a long-time STK believer. That is exactly why I hope this will put SUN in the light they need to be in, because I am also a SUN fan.

Re:I'm surprised...

[Jim_Maryland]

I've only dealt with one StorageTek solution and I have mixed opinions on the solution. The online storage portion was very good but the tape storage didn't perform as well as we had been lead to believe. For the datacenter I was in, the complete backups (basically a level 0 once a week) were expected to complete within a couple hour window, but in reality took the entire weekend (late Friday to early Monday morning).

The cost was also a major disappointment. I don't know the exact figures to break out the storage versus backup portions but the joke in the datacenter was that they could pay the salary and buy the hardware to manually backup (load tapes, kick off backup, and manage tape rotation) all the systems at a fraction of the cost (apparently we could have paid someone a decent salary for about 10 to 15 years). Granted, the solution did allow easy retrieval of lost data and placing a value on that is hard to figure out.

Re:I'm surprised...

[bluGill]

Actually StorageTek wouldn't be surprised if you could pay someone to do the work manually. However the company has made several sales when the manager walked in on the night shift and discovered the kids were using hockey sticks to pass tapes across the room. That explained why so many tapes were breaking overnight. No surprise that a fully automatic solution was brought in and those kids fired.

Combine abuse of hardware, with potential for stealing sensitive data, and the difficulty of finding people willing to work a boring job overnight, and automatic solutions make sense despite the higher cost.

Re:I'm surprised...

[spell]

I spend alot of money on storage and servers; this play makes no sense to me really. As mentioned, Stek's hardware has been OEM for a while and especially the disk from Engenio (LSI) has a number of suppliers including IBM and SGI; so it just looks like a me too play from Sun and I can't see it really helping Sun at all.

Sun need to decide what they are, are they a hardware company or are they a software company; until they decide this, the slow downwards spiral will continue.

Re:I'm surprised...

[njcoder]

Some of the complaints regarding Sun's storage solutions are that they are so mixed up. Probably from rebranding solutions from various vendors throughout their lines. Maybe StorageTek can bring some more coordination making customers that have to use multiple lines of Sun storage have an easier time sorting through and administering them?

Re:I'm surprised...

[spell]

Hmmmm...you do realise that the Flexline storage is simply rebadged Engenio disk and that you can buy it from IBM, SGI and even Sun. Okay, so they all use their own management software but from a raw hardware level, they are the same product. The interesting thing will be to see how Sun deal with what is essentially a device which is design to hook into multiple vendors; we still have a STK Powderhorn which is attached to our IBM mainframe; we never have any issues with support and we never get into finger pointing between IBM and STK...I just wonder what will happen when we throw Sun into the loop.

Re:I'm surprised...

[NateTech]

Sun doesn't need to choose between hardware and software, IBM certainly doesn't.

Sun simply needs to drop any division or group that's not profitable.

I'd guess that somewhere in that sea of red, there's probably a single group doing something inane that's probably creating 50% of the overall red ink. And that it's a pet project of someone very high up.

Time for that portion of Sun to die, quickly.

Re:I'm surprised...

[ahdeoz]

sparc? Looks like they're doing just that.

Accounting

[IAmTheDave]

I don't know much about finances in large businesses, but is 8.6% profit on sales considered good? Or is it just that in the case of Sun, any profit is good?

Re:Accounting

[Thanatopsis]

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

Re:Accounting

[Bellyflop]

That would be spectacular. Now if Sun were relying on their hardware business for their profit...they actually rely on their services division for most of their profit. Despite being about 1/3 of their revenue, services makes up about 60% of their profits.

Re:Accounting

[ComputerSlicer23]

Unless I miss my guess, 8.6% profit on commodity hardware is spectacular. My guess is that SAN are what StorageTek makes, and StorageTek isn't precisely commodity.

Commodity hardware is really brutal. You can drop that "hardware" out of that sentence and still be accurate. Being in a commodity business is brutal. All you really have to compete on is price. With SAN's, there's lots of other stuff to compete on. SAN's aren't as competitive as say the PC market. So I'm far less impressed by that then you appear to be. If they were making 8.6% in the PC market while competing against Gateway, Compaq and Dell, yep that's really impressive.

Kirby

Misread

[ParticleMan911]

Was I the only one to at first misread this as "Sun buying StarTrek for $4.1B"? This acquisition would be much more of a conversation topic.

Re:Misread

[ignorant_coward]

McNealy as Kirk
Papadopoulos as Spock
Bechtolsheim as Scotty
Yen as Sulu
Schwartz as Chekov
Uhura?

Well connected

[youknowmewell]

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.

Dumb dumb dumb

[wheatking]

Lets buy a tape storage specialist (founded in 1969) as our answer to business and technical challenges facing us today? I wonder which bright Sun exec thought up that one vs. making a smart(er) move on one of the Linux/cluster storage outfits around (Panasas et al) that will give Sun some legs for the next decade, not just geriatric technology with boardroom relationship based Sales that go away with the boomers retiring in the next ten years.

Re:Dumb dumb dumb

[Datamonstar]

You will never get rid of tape. At least not for a while. There is no other medium that allows you to have the data secure, backed up and accessable to both clients and IT. At least not for sensitive data that you don't want distributed across peer-to-peer.

Re:Dumb dumb dumb

[tweek]

yeah but the problem with tape is SOX. It's currently driving us nuts. We're not a public company so SOX doesn't apply to us but we're trying our damndest to be SOX compliant.

If anything tape may actually simply level out in the end. Alot of people are moving to a model like so:

disk->virtual tape disk->tape

TSM actually has the ability built in with file dev classes. You start using virtual tape drives and the tape library itself becomes alot less of an issue. You don't need a 3584 or a 3494 full of drives. I can't count how many people post to the ADSM mailing list about how they're implementing virtual tape libraries and how excellent it's been for them.

Re:Dumb dumb dumb

[lgw]

Virtual tape disk is a stopgap, all the backup software companies are pushing hard to get Disk->Disk->Tape support out the door.

Tape will never go away (you can't beat it for archival purposes) but disk has become cheap enough that there's no real cost advantage to tape for on-site storage. Once backup vendors start making full use of random-access for information retrieval, no one will look back.

Both MS and Veritas have disk-based backup products in public Beta, I'm sure others will follow. Just don't forget (like MS seems to) that eventually you have to move that data to tape and off to Iron Mountain for seven years to make the auditors happy.

Re:Dumb dumb dumb

[SpaceLifeForm]

Possibly you have forgotten that SUN has went to the Darkside?

This may have much more to do with control of patents that anything else.

Re:Dumb dumb dumb

[Dammital]

"Lets buy a tape storage specialist..."

... who, BTW, also manufactures and markets disk array subsystems. When IBM's own array products floundered, they ended up remarketing STK's disk subsystem as the "IBM RAMAC Virtual Array", which arguably kept EMC from eating IBM's lunch.

"... geriatric technology..."

You ought to learn something about the "geriatric technology" before you take shots. Those nines of uptime come as a result of redundant design, high quality components and media, and a paranoid culture shared by both the vendors and practitioners.

"... boardroom relationship based Sales that go away with the boomers retiring in the next ten years."

If more PFCSKs would actually talk to the boomers then they might find that we solved a lot of their problems years ago. Businesses came to depend on automation during our watch, and we were required to make the automation reliable and continuously available. This meant expensive hardware, complex software, mountains of documentation and more bureaucracy than you can shake a stick at -- change management, capacity planning, maintenance procedures, quality control, all that stuff that you hate to do, that gets in the way of the stuff that you want to be doing, but which keeps your business running.

(Sidebar: bureaucracy isn't a dirty word. It keeps enterprises going even during periods when you have sickouts or turnover or hurricanes or management changes or... whatever. It's hard to change procedures in a running bureaucracy, but it's also hard to kill a well-running one.)

We boomers, along with our "geriatric technology" and our inflexible bureaucracies, operate an astonishing amount of business that most people simply take for granted. It's like picking up your telephone -- everyone just expects to hear a dial tone, and never stop to consider the combination of science, technology, sweat and (yes) bureaucracy that makes that dial tone available to you 24/7. It's disheartening, really. Figuratively speaking, we provided dial tone for years, and the PFCSKs come along with downloadable ring tones and now management oohs and aahs. Okay, so I guess we should have marketed ourselves better.

(And yes, I wish more boomers would listen to the PFCSKs, too.)

Re:Dumb dumb dumb

[HiThere]

Read the CDDL license again. Or possibly Sun's press release. They aren't releasing those patents, they are promising not to sue you under certain circumstances. And those circumstances preclude using GPL or BSD licenses. (They're actually a lot more restrictive than that, but once I determined that they were irrelevant I intentionally refused to read further. Knowing too much about patents can be dangerous...and I don't know just where the line is.)

Re:Dumb dumb dumb

[Paul Jakma]

Read the CDDL license again. Or possibly Sun's press release. They aren't releasing those patents, they are promising not to sue you under certain circumstances. And those circumstances preclude using GPL or BSD licenses.

That last sentence is misleading. Obviously you must use the CDDL for the code implementing the patent (cause that is what the patent grant extends to), which must somehow be derived from the original CDDL code which the grantor released, however nothing stops you from using GPL or BSD code with CDDL code. (well, the GPL might stop you, if you aren't the copyright holder. If you are, you can give yourself an exception).

Re:Dumb dumb dumb

[HiThere]

And therefore it's just plain wrong to talk about the releasing the patents. Those patents aren't even close to dedicated to the public. They aren't available for FOSS software. They are available ONLY if you are running the program on Solaris under the CDDL license. (Are there any other possibilities? I'm no expert here, but that was what my quick read left me believing.)

Personally, I don't think that the CDDL should have been accepted as a FOSS license. OTOH, it does, technically, meet the defined conditions.

Re:Dumb dumb dumb

[njcoder]

"They aren't available for FOSS software. They are available ONLY if you are running the program on Solaris under the CDDL license. "

No, they're available for CDDL projects, which are FOSS projects whether you or the people at IBM want to acknowledge that.

Re:Dumb dumb dumb

[Paul Jakma]

And therefore it's just plain wrong to talk about the releasing the patents. Those patents aren't even close to dedicated to the public.

Nor is GPL software. The fact of the matter is that if you want to use a CDDLed patent, just take the code, compile it and link to it. (Whether you make your own code available is up to you, as long as you make modifications to the CDDL code available).

Sounds public enough to me.

Most definitely more public than either the IBM patent grants (which were a no-sue for the linux kernel only iirc, on patents covering such useful things as screws and gelpacks) or Nokia's (again covering only the linux kernel iirc, and only specific versions).

Re:Dumb dumb dumb

[NateTech]

Most folks aren't noticing that Sun's HQ and StorageTek's HQ's are right across the road from each other, literally.

Sun is in the Interlocken business park in Denver and just west of there on US-36, StorageTek sits.

It is a marriage of convenience.

Being that they're that close physically, they might actually be able to get something done and shuffle human knowledge around a little better than the "typical" merger of two companies nowhere near each other.

Time will tell.

Re:Dumb dumb dumb

[NateTech]

HQ, big building with lots of suits, huge datacenter, whatever...

It's just that they're situated right next to each other out here, and both the Sun facility and the StorageTek facility are within a couple of miles of each other - line of sight.

Both companies have an excellent reputation for hiring thousands at a time out here and laying them all off again a few years later. Neither is a shining example of corporate/community stewardship. They're made for each other.

Mediocre company buys mediocre company. Yawn.

Titanic

[Hits_B]

Simply polishing brass on the Titanic. I bailed out of Sun stock awhile ago and haven't looked back. IMHO this just weighs them down further and will speed their journey to the bottom. Bon Voyage!

Re:Titanic

[biz0r]

I am sorry...but did you not eat your wheaties this morning? From what I read, Sun is still presently LOSING money, while storagetek actually showed a decent profit.

If anything, this is lifting them up...in more ways than just monetarily as well.

Re:Titanic

[ahdeoz]

Good strategy. Buy high and sell low.

I bought a hard drive too, and for less than $4B

[nokilli]

You don't see anyone submitting stories about it.

Cool deal

[EvilStein]

Yeah, pointless post. I'm not seeing a whole lot of bad things about a deal like this. Sun makes servers, StorageTek makes honcho tape libraries. The easier they work together, the better. Less games of "blame the other vendor" when your library starts munching up DLT tapes at 3am. :)

Strange pairing

[confusion]

Storagetek has had some pretty good products, but I can't see how this acquisition is going to help either company in the long term.

I used to be a big Sun supporter but they seem to be stuck in neutral lately.

A merger with EMC or Quantum would have made a lot more sense than this.

Jerry
http://www.syslog.org/

Re:Strange pairing

[Spectra72]

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.

Re:Strange pairing

[kmankmankman2001]

As a STK (and SUN) customer I'm not real happy about this deal. Sun has a great rep of taking decent companies and making them disappear. We still use Solaris but buy Fujitsu servers to run it, because from both a price/performance and a realiability standpoint Fujitsu leaves Sun in the dust. This will be a real tricky deal to work out with all the cross-vendor sales channels at work. Sun sells HDS DASD at the high-end (rebranded). Will STK reps now be marketing HDS DASD along with the lower-end LSI as well as their tape libraries. Will Sun fund STK well enough to stay on pace with both mainframe and open systems technology advances (every time IBM tweaks a channel spec it takes STK forever to catch up - see chapter 1 (ESCON) and then chapter 2 (FICON)). I simply don't see the clear-cut synergy that will be formed by this acquisition and I suspect neither will investors.

product synergy

[Anonymous Coward]

While Storage Tek gives Sun some profitable product. The main benefit to Sun is a foot in the door with ST customers. So long as they don't pursue approach of requiring ST customers to buy other Sun hardware if they want ST product, it should be a good long term play for increasing sales in all lines. If things don't pan out, it's a good exit stratregy as it will result in short term boost to sales by squeezing 'stuck' customers until they squeal, allowinf Sun execs to dump stock.

Re:product synergy

[njcoder]

If Sun is smart they'll do what IBM does and accidentally leave extra stuff in the delivery:

Truck Driver: Hey wait, you didn't unload all your stff.
ST Customer: Only thing left in the truck are a few galaxy servers and JES software packages. All we ordered were ST storage arrays.
Truck Driver: You're m last delivery and all I know is I gotta bring back the truck empty and clean so I can either dump the stuff or you can take it. Your choice.

Before websphere became popular they were trying to give it away to people that would buy servers.

Better Sun than EMC

[bugpit]

Apparently there had been rumors that EMC was a possible buyer of STK, which would have been a lot more painful for STK. With Sun there is little overlap, so the two organizations should have a good chance of integrating cleanly, both in terms of people and technology.

- Gregg

Re:Better Sun than EMC

[GPLDAN]

Not to mention the fact they are right near each other on I-36 between Boulder and Denver. Probably two miles apart, tops.

Re:Better Sun than EMC

[NateTech]

US-36, actually. I-36 is somewhere else.

Around here it's still called the "Boulder Turnpike"... and once long long ago, it was a toll-road.

Profit margins

[sjbe]

I don't know much about finances in large businesses, but is 8.6% profit on sales considered good? Or is it just that in the case of Sun, any profit is good?

Depends on the business. For a manufacturing business a net profit of 8% might be outstanding. For a software business 8% net profit is pretty bad usually. In this case, 8.6% is pretty comparable to IBM's profit margin of 8.73% and IBM is a pretty darn good company.

StorageTek, profitable?

[quelrat]

Will this redeem StorageTek?

Ten years ago, I worked at a small company (starts with a 'Q') in a building across the parking lot from them. Every six months, it seemed, they either layed off or re-hired half their workforce.

It was the perpetual invalid of Colorado's Front Range.

And now they're profitable?

Re:StorageTek, profitable?

[jusdisgi]

Gee guys, what's the big deal? Pointing out that layoffs are a time-honored cost-cutting measure for corporations, and that this positively affects the bottom line is now flamebait? Well, stick your heads in the sand if you must....

Customer support

[killermookie]

Where I work we run two StorageTek tape libraries (9740 and an L700). StorageTek has a phenomenal customer support record with us. For the littlest issues with either tape library, they will have a tech on-site that very day.

Combine this with Sun's excellant on-site customer support and it's a match made in heaven.

Another name for it

[__aamcgs2220]

Down here in the deep south, we call this kind of thing "putting lipstick on a pig." Sun owning a storage company is about as useful as mammary glands on a billy goat. (trying to be somewhat PC) Good luck with this one, Scott.

Re:Another name for it

[__aamcgs2220]

It does, and that's mostly because Sun's future seems as bright as a black cat in a coal bin at midnight.

Re:Another name for it

[MyLongNickName]

You Southerners sure have some strange hobbies.

Here's a new one

[jargoone]

Sun posted a loss last year (albeit a much smaller one than the year before).

I got it now:

1) Lose money
2) Lose less money next year
3) Profit???

Doesn't sound right...

Re:Here's a new one

[anarxia]

If they continue to lose less money each year the loses will become negative so they will be profitable. I hope they don't use unsigned integers :)

20 year break-even

[Rich0]

StorageTek is a profitable company with $191 million in profit

So, that means they'll break even in only 20 years!

A good buy at the wrong price isn't a good buy - unless they think they can grow the company REALLY fast!

Re:20 year break-even

[njcoder]

StorageTek I think also has about $2 billion in cash and short term investments. They could use the cash the get with StorageTek to buy Novel :)

Re:20 year break-even

[jgardner100]

Hmm, looking at finance.yahoo.com seems to show that Sun lost $388m last year, so even presuming no improvement on Sun financials this year, this purchase would half their loss to under $200m. Doesn't seem to me that a company with some $10 billion in revenue would take 20 years to close that gap (one other purchase and the're there :->)

Re:20 year break-even

[shakah]

So, that means they'll break even in only 20 years!

Not sure you're looking at it correctly.

Assuming Sun paid a fair price (and putting aside transaction costs), what's to stop them from running the company for 2 years, making $400 million in profit, and selling the company at that time to someone else for $4 billion? In other words, shouldn't you view StorageTek as an asset investment instead of as a cost?

Re:I for one welcome our new .com bubble

[njcoder]

This isn't that bad a move. Sun has a ton of cash and needs to start making some investments with it. Sun's storage solutions have been all over the map and hopefully the aquisition of StorageTek will solve that problem. With StorageTek and Tarantella they've really made some good moves in providing a full solution to future enterprise computing needs.

Ever since sarbanse oxly, storage has been a gold mie business. People need to store insane amounts of information now.

What sun really should figure out how to do though is do to storage what it's doing to servers with opteron processors. Otherwise that storage company Larry Ellison is funding is going to eat everybody's lunch.

P/E overrated

[sjbe]

Yahoo Finance shows Sun as profitable with a P/E of 19 right now...low for a tech company.

So? They aren't very profitable so we shouldn't expect a high P/E. They might be in the black but they only made $18 million in net income last quarter; basically breakeven on $2.8 billion in revenue. And they lost $147 million the previous quarter. P/E ratios can be useful but they are HIGHLY overrated as a means to compare companies. Plus their stock price is in the crapper at $3.76. Perhaps it's a bargin at that price but the market is pretty smart and companies as heavily traded as SUNW don't fall close to penny stock valuations because they are doing well.

Transition its business model to what? Sun has always sold (and resold) storage solutions.

There is a difference between reselling something and focusing on it. IBM used to make most of their money selling hardware. They've always sold services but now they focused on it. Sun has always sold storage but now it will be a MUCH bigger part of their business. Hence their business strategy will have to change.

Re:Broadband for a big storage company :)

[Roskolnikov]

Not exactly sure what area your talking about but as someone presently sitting inside the StorageTek campus I can assure you that near the campus there are little if any problems regarding access to broadband; two wireless providers (WiFi and Sprint Broadband, Qworst DSL and ISDN and Comcast) I have a 6 down 1 up link and it works just fine.

As to the purchase, this a great fit for both STK and SUN.

Nugget o' information

[kouhoutek]

Those outside the Denver area might not be aware StorageTek's main facility is across the highway from a half empty Sun campus.

Picking up a less tape-centric storage company might have made more sense on paper, but StorageTek offers some serious consolidation opportunities without relocating staff.

I don't know if this makes up for some of the other shortcomings in the deal, but it is something to consider.

Re:Nugget o' information

[Frennzy]

There is something else to consider.

ST owns a metric buttload of prime real estate right on one of the busiest tech corriders in CO. The property is far larger than they need, and *also* sits right smack dab in the middle of proposed extensions to the Northwest Parkway, which would finally connect the northern tip of the greater Metro area (at I25) directly to I70 on the western side.

This property is worth beaucoup dollars *right now*. Expansion opportunities also abound. Sell that Sun campus...re-org the ST campus to accomodate everyone, and sell the rest of the existing ST land to developers or the tollway interests.

Profit!

Re:Nugget o' information

[Frennzy]

notice how I didn't mention office space?
Developers, in this context, means housing. Tollway interests, in this context, means the corporation that is looking to acquire the land to extend the NW parkway. It's a very desirable location for residences...I live very close and my house has appreciated 30% in the last two years alone.

Smart

[110010001000]

So they paid a 3,400% premium over current yearly profits on a low margin business. Makes a lot of sense to me!

Re:Smart

[MyLongNickName]

Remember that they also get the liquid assets valued at $1.2 Billion. Figure in the intangibles, and this isn't as ridiculous as it first seems.

I got them

[bluGill]

I used to work for StorageTek. I got a lot of stock in the late 90's for a a employee discount. I think I paid as little as $8/share for them. (StorageTek had to be the only high tech company that lost money 99, and had their stock drop for it)

I don't get too many wins, but this looks like one of the better ones.

Re:I got them

[bluGill]

Are you sure you want it? I drive a Geo Metro, which is missing on one cylinder, the windows do not work, and the synchromesh is out. Not that it matters, I'm driving those 44 MPG until it falls apart, or at least can't out accelerate the average Porsche (this is a reflection on the type of people who drive a Porsche, not the car itself) up to 70 mph.

In any case, I don't have that much stock. Though it is a nice amount of cash, I can't retire on it. In fact there are cars that I cannot afford to pay cash for even If I sell everything.

In any case, IF I spend the money on a car it won't be to replace my old car. I might buy a 64.5 mustang or 1929 John Deere, but I wouldn't drive either to work. More likely I'll invest it in something else so I can retire on it.

Re:I got them

[ahdeoz]

Shares in sun at a 17% discount with no commisssion might be a good investment. Or it might not. But you might be happy holding onto it for 3-5 years if it's not a cash buyout.

I mentioned this to my boss...

[tweek]

and the first thing he said is "Do we have any StorageTek equipment?"

We don't but if we did, we might consider phasing it out now. He had lunch with McNeely at some CIO luncheon a few weeks back and came back thinking the man was a total idiot. He spent all the time railing against Linux and his competitors instead of talking up things that might make us consider Sun equipment.

Sun == Digital Equipment Corp

[Odonian]

I used to work for Digital, designing Alpha workstations. When they couldn't break a profit in that market, we fell back and concentrated on the higher-margin server market only. When that didn't work, we fell back again to making alpha-based storage servers.

The rest of course is history, wasn't long before the Compaq buyout, retirement of the Digital brand, and end of production of the Alpha chip altogether; ie total company death.

Sounds a lot like that.

Re:Sun == Digital Equipment Corp

[ignorant_coward]

With Niagara, Niagara II, and Rock, the future of SPARC is just fine.

A good deal

[0xABADC0DA]

ST has $1.1 billion cash, so Sun is really spending more like $3 billion. At $191 million profit that's over 6% return on their investment. Plus you have to expect sales to increase due to companies storing more data due to the recent demise of that accounting firm due to aggressively destroying documents.

Then you factor in the forthcoming zfs, which should make Solaris far better than any other operating system for handling mass data storage and they could do very well by this deal.

Re:A good deal

[flaming-opus]

You know I've done a lot of reading on ZFS, and I can't say it's likely to make that much of a difference. It's a journalled, 64-bit (yes they claim 128, but that's junk, as the underlying scsi layer doesn't support it), scalable filesystem. It has a few bells and whistles with indexing and access controls, but nothing that isn't already in a lot of other products. Basically it's catching up with where most other 3rd generation filesystems have been for years. It's probably not a bad filesystem, but I don't think it's going to bring about any major storage revolution.

Solaris (with Veritas filesystem and volume manager) has always been a good platform for archival storage. It's a good, stable platform for a database, file-serving, and the I/O capability of the machines is quite good. Where they really need to add value is on the software side of things. It's not enough to have servers, disks, and tape drives. Anyone can do that, buy it from dell even. What else are they going to offer? What will it cost? How well does it work? I don't think it's a bad combination, but it's two ho-hum companies combining into a larger ho-hum.

Re:A good deal

[Paul Jakma]

It's a journalled, 64-bit (yes they claim 128, but that's junk, as the underlying scsi layer doesn't support it)

You dont quite understand then. ZFS is designed to manage storage, in addition to being a filesystem. A ZFS can have multiple disks in it. SCSI might not have addresses bigger than 64bit, but if you have a filesystem designed to operate over many many disks then 128bit address size internal in the fs is quite a good idea.

So you're wrong, or at least, you missed a crucial point of ZFS when you derided the 128bit aspects of it. ;)

Uhm, Help Me Out Here

[Master of Transhuman]

Sun has THREE billion in cash.
Sun spends FOUR billion in cash to buy a company.

Sun is posting a loss on their revenue.
Sun is buying a company with a $190 million profit.

Does this look like desperation to you or is it just me?

Re:Uhm, Help Me Out Here

[oldmanmtn]

It's just you. And whoever posted the story. According to their latest 10Q filing, they have $6.7B in current assets (i.e., cash, securities, accounts receivable, etc.).

dumbasses

[Anonymous Coward]

AMD would have been a much better buy a few years ago, SUN could have turned into an IBM.

What were you thinking Scott and John?

Wish they bought Bea System Inc. instead.

[lost_techie]

For that kind of money, they could have bought Bea System Inc. Their valuation is $3.42 billion today.

Java is supposed to be Sun's big thing. And buying the #2 App Server company will go a long way in helping Sun in the java market. And help Sun improve its software business which I believe is higher margin than hardware.

Re:Seriously don't get this

[w42w42]

haha - I'm not surprised - look what they did to cobalt. They bought them out, and don't even sell any cobalt machines anymore. I think I see a pattern here.

Hysterical - a visit to http://www.cobalt.com/ brings you to a Sun page, with a big splash stating their buying storage tek. How appropriate.

Why not spend that money this way?

[Hellboy0101]

$4.1B can actually buy you one thing that Sun needs the most right now, and that's time. Dell successfully implemented a strategy to lean back on it's cash reserves for no other reason than to lower it's prices, and stick it to it's competition. Sun could implement the same strategy for it's hardware. Switch to Linux and provide high quality software (Linux), bundled with high end hardware to create price points up and down it's line that could put the HP's and IBM's of the world in a bind. All the while maintain some of it's cash reserves, and play up it's services buisness much the same as IBM has.

Re:Hooray.

[Geddy]

So, I guess you're for the Redhat on Dell to EMC backend storage solution?

I'm just trying to figure out your exact position on this story.

Re:I for one welcome our new .com bubble

[denissmith]

Really huge mergers like this usually fail to deliver, and sometimes fail out-right. Storage needs are increasing, as you rightly point out, but storage is also being turned into a commodity, which means in the next 3 - 5 years margins are going to shrink. This is not the environment SUN, in particular, has success with. You are right about the useless roadmap for storage that SUN has had. I guess they are looking to buy the expertise they lack, but again, this seldom pays off.

Re:Hooray.

[Wakko Warner]

AIX 5.3 on Power 5 on Hitachi, actually, with an IBM LTO tape library.

So much easier to manage; it isn't even close.

- A.P.

How it's going to work

[�berhund]

Here's how I think this is going to play out.

Sun and StorageTek are right across the highway from each other. A few years ago, a popular new shopping mall sprang up right next to them. Now, Sun has a ton of empty office space.

StorageTek has a huge complex taking up a huger plot of land, a lot of it empty. That land is directly adjacent to a hugely popular mall, so is very valuable. They've been wanting to bulldoze their current residence so they can get more money out of it as shops and residential.

So, I think they'll move everyone from StorageTek into the empty space at Sun, and go ahead and bulldoze and redevelop the old StorageTek space. Their net gain from the real estate issues alone probably make this a good deal.

As a bonus, they'll save huge amounts in recruiting fees, since they'll no longer be stealing each others employees from across the street!

Re:How it's going to work

[Zode]

Nope. STK has fab shops, too expensive to bulldoze and relocate. However there's nothing stopping a Sun relocation to the STK campus.

Re:How it's going to work

[�berhund]

Others are saying that the City of Louisville (where StorageTek is located) won't let them rezone the land for residential and retail anyway.

Re:How it's going to work

[�berhund]

I'm told the fabs (Building 6?) were scrapped a few years ago already.

Re:How it's going to work

[�berhund]

My wife says my parent comment scooped Boulder's Daily Camera (the local newspaper for Sun and StorageTek in those parts).

Silly free registration required:
http://www.dailycamera.com/bdc/local_business/arti cle/0,1713,BDC_2461_3827456,00.html

Some choice quotes:

'Brian Freed, an analyst who covers StorageTek for Morgan, Keegan & Co. Inc., in Memphis, Tenn., said it wouldn't surprise him if Sun moved the StorageTek employees to its campus.'

'StorageTek's Louisville site is "probably something they'll sell," he said.'

IF STK could sell storage

[bluGill]

STK does not know how to sell storage. STK knows how to sell tape. Disk storage is something they sell, but with most of sales it is an accident. The company has had problems for years because customers call their salesmen when they want more tape, and customers call often enough that the salesmen can make a good living selling just tape to customers that call them. When you are selling million dollar tape systems there are not many new customers, so there is no worry about selling to a new customer.

Selling disk is not something they can do. Which is one of the reasons STK's disk never sells well. (Great product overall, though there are downsides that are easy for compititon to take advantage of when the salesmen doesn't care about the sale anyway)

When I worked there, STK had the rights to sell every Sun computer, but they never did. (including the Ultra Enterprize 10k, which Sun didn't let many sell)

STK's tech support is pretty good though. AT least the ones I've worked with.

Re:Hooray.

[Wakko Warner]

And please, give me some of whatever you're smoking if you think AIX is a better choice for an OS. AIX has about as great of future as does hpux.

Tell me what Solaris does better than AIX.

- A.P.

Re:This is better for STK

[unother]

But by far the most valuable thing that Sun just aquired was several hundred acres of super-prime real estate on Hwy 36-the Denver/Boulder turnpike. This area is incredibly hot for development. STK was smart to get the land when it was worthless.

Why do I have this sneaking suspicion that this may have been one of the key factors for choosing this particular organization?

Any idea how much that would be worth at market rates? Does this mean the deal will practically pay for itself?

Storage for services?

[cpu_fusion]

Maybe Sun intends to provide you and I with free "online storage", perhaps with some synergy with their Java productline to provide services? I could see a strategy here to compliment or compete with where Google is going.

There's probably a lot more to this than just looking to sell storage solutions with each server. Perhaps in 10 years the idea of hosting all your data (and programs) on your own computer will seem antiquated... you know that whole "net computing" concept they were talking about 7 years ago.

Re:Seriously don't get this

[pcsmith811]

As other people have pointed out EMC would have been a *much* better buy.

Of course EMC would have been a much better buy. But first they'd have to be "for sale" and second, it'd cost about 10x more.

disclaimer: I could be wrong about the 10x part, just going off Yahoo finance! (http://finance.yahoo.com/q/ks?s=EMC vs http://finance.yahoo.com/q/ks?s=STK)

But stk have manufacturing

[grahamsz]

I'd have thought it'd have been easier to sell off Sun's broomfield campus and move their remaining employees over to stk.

I think both companies campuses are wel below capacity right now.

However stk's campus is more isolated and could probably be better turned into a housing development, whereas sun's is in a business park.