September 2, 2010 -- The fat lady seems to have sung. Dell exited the 3PAR acquisition stage with the following statement by Dave Johnson, Dell's senior vice president, corporate strategy: "We took a measured approach throughout the process and have decided to end these discussions."
After what appears to be a lot of under-the-covers negotiations, HP ended the drama with a $33-per-share, $2.4-billion acquisition offer (see "Dell Ends 3PAR Talks After HP's $2.4 Billion Bid" on Enterprise Storage Forum).
After what we've seen over the past couple weeks, I'm hesitant to call this a done deal, but that appears to be the case.
So HP gets 3PAR's crown jewels of virtualization, cloud computing capabilities, storage/data tiering and thin provisioning (not to mention ASIC technology). The question now is: How will HP fold 3PAR's systems into its existing disk array lineup? 3PAR overlaps big time with HP's venerable EVA line, and to a lesser degree with the high-end systems that HP OEMs from Hitachi Data Systems. Something has to give, although it will probably be awhile until HP provides details.
For Dell, the question is: Now what? Many observers have speculated that Dell will go after another disk array vendor (Compellent, Isilon, Xiotech?), but none of those companies are a replacement for what Dell had in mind with the 3PAR bid. Maybe Dell will turn to networking (Brocade?). Or software (CommVault?).
Dell put its cards on the table, and finally folded. For now. Which table will it sit down to next?
In a side show next to the three-ring HP-Dell-3PAR circus, litigious Crossroads Systems yesterday filed a patent infringement lawsuit against 3PAR and, according to an article on PC World, D-Link, Rorke Data, Chelsio Communications, DataCore Software, iStor Networks and American Megatrends. According to that article (see "3Par Faces Lawsuit as Bidding War Continues"), the suit involves a patent for a storage router that provides virtual local storage on remote storage devices.
Thursday, August 26, 2010
Tuesday, August 24, 2010
HP, Dell, 3PAR: Bidding war or done deal?
August 24, 2010 – We should probably just let this drama play out and then comment on it, but who can resist? As the storage world waits for Dell’s response to HP’s $1.6 billion counter-offer for 3PAR, I thought I’d take a stab at some of the questions that are being bandied about.
Will Dell counter? At first, I thought this was a done deal for HP. In an acquisition context, a 33% raise leads to an opponent folding. Then again, maybe this “I’ll see your $1.15 billion and raise you $450 million” is just these guys anteing up. This pot could get close to, or exceed, $2 billion.
Yes, I think Dell will counter, but I don’t think it would be wise. And the reason for that leads me to the next question.
Is 3PAR better for HP or Dell? I think it’s better for HP, but this is highly arguable.
HP has a solid high-end lineup with the HDS OEM deal, but I doubt that HP’s Dave Donatelli (formerly with EMC) is a reseller type of guy. 3PAR gives HP its own technology, and possibly a better weapon against EMC. The question would then be: What would HP do with the HDS line? And if HP follows Oracle’s suit on that, What becomes of HDS? (HP execs said that they would continue with the HDS partnership, business as usual.)
HP knows how to sell really high-end gear, which can’t be said about Dell. Plus, if Dell winds up acquiring 3PAR it would have to then follow up with a string of risky, blockbuster acquisitions to really own the IT stack. And even Dell’s war chest would be seriously depleted after a long series of billion dollar acquisitions.
If this deal pushes upward of $2 billion, there would be a lot of pressure on Dell to prove that it can play in the IT stratosphere, which is questionable. Dell obviously had a lot of success with the EqualLogic acquisition, but instead of going right to the very high end with 3PAR (and thus going head-to-head with EMC), it seems like a stepping-stone approach might have made better sense (e.g., acquiring BlueArc or Compellent or Isilon or Xiotech, etc.)
Will other suitors jump in? Doubtful. The only possibilities are IBM, EMC, NetApp or Oracle, and of those only Oracle is rich enough and nuts enough (see “Who will Oracle acquire next?” ). If Oracle wants another storage product line, my money is on (and Larry’s money is in) Pillar Data.
If IBM or EMC made a move for 3PAR it would (a) be admitting that their existing high-end arrays aren’t up to snuff and (b) create too much confusion among customers and overlap in product lines. For $1.6 billion+, there are much better acquisitions for IBM or EMC to make.
NetApp could probably afford 3PAR, but does NetApp really want to get into another big-time bidding war? Been there, done that.
I think we’re in for a bidding war, but there will only be two players at the table.
Related blog post:
HP’s bid for 3PAR not its first
Recommended blog: Stephen Foskett’s “Everyone Loves 3Par: Here’s Why”
Will Dell counter? At first, I thought this was a done deal for HP. In an acquisition context, a 33% raise leads to an opponent folding. Then again, maybe this “I’ll see your $1.15 billion and raise you $450 million” is just these guys anteing up. This pot could get close to, or exceed, $2 billion.
Yes, I think Dell will counter, but I don’t think it would be wise. And the reason for that leads me to the next question.
Is 3PAR better for HP or Dell? I think it’s better for HP, but this is highly arguable.
HP has a solid high-end lineup with the HDS OEM deal, but I doubt that HP’s Dave Donatelli (formerly with EMC) is a reseller type of guy. 3PAR gives HP its own technology, and possibly a better weapon against EMC. The question would then be: What would HP do with the HDS line? And if HP follows Oracle’s suit on that, What becomes of HDS? (HP execs said that they would continue with the HDS partnership, business as usual.)
HP knows how to sell really high-end gear, which can’t be said about Dell. Plus, if Dell winds up acquiring 3PAR it would have to then follow up with a string of risky, blockbuster acquisitions to really own the IT stack. And even Dell’s war chest would be seriously depleted after a long series of billion dollar acquisitions.
If this deal pushes upward of $2 billion, there would be a lot of pressure on Dell to prove that it can play in the IT stratosphere, which is questionable. Dell obviously had a lot of success with the EqualLogic acquisition, but instead of going right to the very high end with 3PAR (and thus going head-to-head with EMC), it seems like a stepping-stone approach might have made better sense (e.g., acquiring BlueArc or Compellent or Isilon or Xiotech, etc.)
Will other suitors jump in? Doubtful. The only possibilities are IBM, EMC, NetApp or Oracle, and of those only Oracle is rich enough and nuts enough (see “Who will Oracle acquire next?” ). If Oracle wants another storage product line, my money is on (and Larry’s money is in) Pillar Data.
If IBM or EMC made a move for 3PAR it would (a) be admitting that their existing high-end arrays aren’t up to snuff and (b) create too much confusion among customers and overlap in product lines. For $1.6 billion+, there are much better acquisitions for IBM or EMC to make.
NetApp could probably afford 3PAR, but does NetApp really want to get into another big-time bidding war? Been there, done that.
I think we’re in for a bidding war, but there will only be two players at the table.
Related blog post:
HP’s bid for 3PAR not its first
Recommended blog: Stephen Foskett’s “Everyone Loves 3Par: Here’s Why”
Friday, August 20, 2010
Who will Oracle acquire next?
August 20, 2010 – In my recent blog post on the Top 10 storage acquisitions of 2010, I solicited opinions from our readers on who they think will be acquired next. I’ll report on those crazy conjectures in a future post, but for now:
I heard from Stephen Jannise, an ERP market analyst with Distribution Software Advice. He recently blogged about what Oracle may be up to next (see “Oracle Mergers and Acquisitions: Who’s Next?”)
Stephen provides some very interesting analysis of potential acquisition candidates for Oracle, and has a survey on his post where you can vote. I encourage you to do it, if just for fun. Software Advice will have results from the survey within a few days, and I’ll update this post when I get the results.
Did you realize that since 2004, when it acquired PeopleSoft, Oracle has bought more than 40 companies, five of which were multi-billion dollar deals? Stephen includes a cool chart in his blog showing all of Oracle’s acquisitions and the relative sizes of the deals.
Most of Oracle’s previous acquisitions fall into the buckets of “applications,” “industry solutions,” “middleware” and “databases,” but two were in the “servers and storage” bucket: Sun and Virtual Iron.
However, in Stephen’s analysis and the reader comments on his blog, storage vendors are prominent as possible acquisitions for Oracle.
Based on analysis of Oracle’s M&A strategy and acquisition criteria, he puts the possible acquisitions into four categories:
Fairly Straightforward Ideas:
Teradata
Informatica
TIBCO
Messy, But Potentially Profitable:
CA
Sungard
Infor
Bold Moves into the Network Layer:
Research in Motion
Juniper Networks
F5 Networks
Brocade
Pricey Buys in Hot Markets:
VMware
EMC
Salesforce.com
Allscripts
Let Software Advice hear from the storage community: Check out the analysis and cast your vote at “Oracle Mergers and Acquisitions: Who’s Next?"
In the Comments section of The Software Advice Blog, the following storage or storage-centric vendors are mentioned as possible takeover candidates: Symantec, EMC, NetApp, LSI, Panasas
Dave’s comments (on only the storage vendors as potential acquisitions):
EMC, NetApp: Fuggedaboutit. These votes suggest that at least a few of Software Advice’s readers enjoy recreational drug use.
LSI: And that at least one reader has gone beyond recreational use. The question is not whether Oracle will buy LSI but, rather, whether Oracle will continue the LSI reseller deal that it inherited from Sun.
Panasas: Nope.
Brocade: Definitely a potential acquisition candidate, but not by Oracle.
In my opinion, the most likely (storage-oriented) candidates for Oracle would be CA and/or Symantec.
I heard from Stephen Jannise, an ERP market analyst with Distribution Software Advice. He recently blogged about what Oracle may be up to next (see “Oracle Mergers and Acquisitions: Who’s Next?”)
Stephen provides some very interesting analysis of potential acquisition candidates for Oracle, and has a survey on his post where you can vote. I encourage you to do it, if just for fun. Software Advice will have results from the survey within a few days, and I’ll update this post when I get the results.
Did you realize that since 2004, when it acquired PeopleSoft, Oracle has bought more than 40 companies, five of which were multi-billion dollar deals? Stephen includes a cool chart in his blog showing all of Oracle’s acquisitions and the relative sizes of the deals.
Most of Oracle’s previous acquisitions fall into the buckets of “applications,” “industry solutions,” “middleware” and “databases,” but two were in the “servers and storage” bucket: Sun and Virtual Iron.
However, in Stephen’s analysis and the reader comments on his blog, storage vendors are prominent as possible acquisitions for Oracle.
Based on analysis of Oracle’s M&A strategy and acquisition criteria, he puts the possible acquisitions into four categories:
Fairly Straightforward Ideas:
Teradata
Informatica
TIBCO
Messy, But Potentially Profitable:
CA
Sungard
Infor
Bold Moves into the Network Layer:
Research in Motion
Juniper Networks
F5 Networks
Brocade
Pricey Buys in Hot Markets:
VMware
EMC
Salesforce.com
Allscripts
Let Software Advice hear from the storage community: Check out the analysis and cast your vote at “Oracle Mergers and Acquisitions: Who’s Next?"
In the Comments section of The Software Advice Blog, the following storage or storage-centric vendors are mentioned as possible takeover candidates: Symantec, EMC, NetApp, LSI, Panasas
Dave’s comments (on only the storage vendors as potential acquisitions):
EMC, NetApp: Fuggedaboutit. These votes suggest that at least a few of Software Advice’s readers enjoy recreational drug use.
LSI: And that at least one reader has gone beyond recreational use. The question is not whether Oracle will buy LSI but, rather, whether Oracle will continue the LSI reseller deal that it inherited from Sun.
Panasas: Nope.
Brocade: Definitely a potential acquisition candidate, but not by Oracle.
In my opinion, the most likely (storage-oriented) candidates for Oracle would be CA and/or Symantec.
Wednesday, August 18, 2010
NetApp hits a home run in Q1
August 18, 2010 – NetApp reported its fiscal first quarter 2011 results today, narrowly exceeding financial analysts’ expectations. But who cares about expectations? Let’s look at the (impressive) raw numbers.
For the quarter, NetApp (NASDAQ: NTAP) raked in revenue of $1.14 billion, which is a 36% increase over the same quarter a year ago ($838 million), although a 3% drop vs. the previous quarter.
GAAP net income was $142 million, vs. $52 million a year ago, while non-GAAP income was $183 million, vs. $76 million a year ago.
“With total revenue growth for the quarter of 36% and product revenue growth of 51% year over year, NetApp has begun our fiscal year with great momentum,” understated president and CEO Tom Georgens.
Company officials followed that up with predictions of $1.16 billion to $1.21 billion in revenue for the next quarter.
Highlights
The biggest growth in revenue came from hardware (which NetApp refers to as “product” revenue): At $720.8 million for the quarter, that’s a 51% increase over the same period a year ago (although down 5% sequentially). Total systems shipped increased 78% over the previous year’s quarter, with nice numbers across all segments, including entry-level (+107%), midrange (+37%) and enterprise (+102%).
The only negative I noticed was a 38% quarter-to-quarter decline in shipments of NetApp’s V-series systems, although shipments of that product line increased 42% year-over-year.
On the software revenue front (which NetApp refers to as “software entitlement & maintenance revenue”), the company pulled in $174.7 million – an increase of only 6% year-over-year and 0.5% sequentially. Hey, what do you expect when a market leader in a particular technology – data deduplication – gives it away for free? But software is the area that I would expect NetApp to improve on going forward.
Services revenue came in at $242.3 million, up 25% year-over-year and 1% sequentially.
(You may be noticing that NetApp’s quarter-to-quarter performance was not nearly as astounding as its year-over-year performance, but that’s in part because it’s previous quarter was, in fact, astounding: see “NetApp wows Wall Street, doubles quarterly profits.”
More fun facts
NTAP's gross margin in its first quarter was 64.5% (on a non-GAAP basis), while operating margin was 18.8%.
And what would any write-up on NetApp be without some fun facts on data deduplication? The company claims to have achieved “more than an exabyte of storage with deduped storage-system deployments” (which doesn’t really make sense to me) and to have “deployed more than 87,000 deduped storage systems” (again, does that mean systems with dedupe functionality baked in, or, systems that are actually using the dedupe functionality?)
But here’s the really interesting number in my opinion: NTAP's balance sheet shows $2.61 billion in cash. In light of recent acquisitions (Dell-3PAR, Dell-Ocarina, IBM-Storwize, etc.), you just have to wonder who NetApp is going to buy.
As I’ve speculated before (without an iota of knowledge in the matter), Permabit might be a palatable morsel, but maybe I’m just drunk on the dedupe juice.
Look for some acquisition speculation in my next post.
Related blog posts:
EMC breaks Q2 revenue record
Earnings recap: ELX, QLGC, CVLT, SYMC, PAR, CML, STEC, HDS
Top 10 storage acquisitions of 2010
For the quarter, NetApp (NASDAQ: NTAP) raked in revenue of $1.14 billion, which is a 36% increase over the same quarter a year ago ($838 million), although a 3% drop vs. the previous quarter.
GAAP net income was $142 million, vs. $52 million a year ago, while non-GAAP income was $183 million, vs. $76 million a year ago.
“With total revenue growth for the quarter of 36% and product revenue growth of 51% year over year, NetApp has begun our fiscal year with great momentum,” understated president and CEO Tom Georgens.
Company officials followed that up with predictions of $1.16 billion to $1.21 billion in revenue for the next quarter.
Highlights
The biggest growth in revenue came from hardware (which NetApp refers to as “product” revenue): At $720.8 million for the quarter, that’s a 51% increase over the same period a year ago (although down 5% sequentially). Total systems shipped increased 78% over the previous year’s quarter, with nice numbers across all segments, including entry-level (+107%), midrange (+37%) and enterprise (+102%).
The only negative I noticed was a 38% quarter-to-quarter decline in shipments of NetApp’s V-series systems, although shipments of that product line increased 42% year-over-year.
On the software revenue front (which NetApp refers to as “software entitlement & maintenance revenue”), the company pulled in $174.7 million – an increase of only 6% year-over-year and 0.5% sequentially. Hey, what do you expect when a market leader in a particular technology – data deduplication – gives it away for free? But software is the area that I would expect NetApp to improve on going forward.
Services revenue came in at $242.3 million, up 25% year-over-year and 1% sequentially.
(You may be noticing that NetApp’s quarter-to-quarter performance was not nearly as astounding as its year-over-year performance, but that’s in part because it’s previous quarter was, in fact, astounding: see “NetApp wows Wall Street, doubles quarterly profits.”
More fun facts
NTAP's gross margin in its first quarter was 64.5% (on a non-GAAP basis), while operating margin was 18.8%.
And what would any write-up on NetApp be without some fun facts on data deduplication? The company claims to have achieved “more than an exabyte of storage with deduped storage-system deployments” (which doesn’t really make sense to me) and to have “deployed more than 87,000 deduped storage systems” (again, does that mean systems with dedupe functionality baked in, or, systems that are actually using the dedupe functionality?)
But here’s the really interesting number in my opinion: NTAP's balance sheet shows $2.61 billion in cash. In light of recent acquisitions (Dell-3PAR, Dell-Ocarina, IBM-Storwize, etc.), you just have to wonder who NetApp is going to buy.
As I’ve speculated before (without an iota of knowledge in the matter), Permabit might be a palatable morsel, but maybe I’m just drunk on the dedupe juice.
Look for some acquisition speculation in my next post.
Related blog posts:
EMC breaks Q2 revenue record
Earnings recap: ELX, QLGC, CVLT, SYMC, PAR, CML, STEC, HDS
Top 10 storage acquisitions of 2010
Wednesday, August 11, 2010
Top 10 storage acquisitions of 2010
UPDATED August 16, 2010 – I originally posted this Top 10 acquisitions piece last week, with EMC's acquisition of Greenplum in the #1 spot. Today's announcement that Dell plans to acquire 3PAR for a whopping $1.15 billion clearly catapults that deal into the #1 position. As such, here's my revised list of the Top 10 storage acquisitions of 2010, in ascending order:
#10: EXAR – NETERION
This one probably wouldn’t have made the Top 10 list except for the fact that it’s Exar’s second storage-related acquisition in the last year, indicating that this relatively unknown vendor is up to something in the storage market.
The acquisition of Hifn last year put Exar in the storage optimization market with data deduplication, compression and encryption technology. Which put them into discussions that include Storwize (acquired by IBM, see below), Ocarina Networks (acquired by Dell, see below) and Permabit.
The acquisition of Neterion this year (reportedly for $10 million to $11 million) puts Exar in the 10GbE/FCoE adapter space, and might get them a place in conversations typically focused on vendors such as Emulex, QLogic, Brocade, Broadcom and Intel.
“We see a lot of synergy between Neterion’s virtual I/O technology and Hifn’s data compression, security [encryption] and data deduplication technologies,” said John Williams, vice president of Exar’s datacom and storage business.”
Interesting, but does an engineering-focused company have the marketing might to compete with the big boys? Well, Neterion OEMs include EMC, HP, IBM, Fujitsu and Hitachi, so the company at least knows how to play with the big boys.
See “Exar to acquire Neterion”
#9: SOLARWINDS – TEK-TOOLS
As with Exar, this one made the Top 10 list in large part due to the surprise factor: Few in the storage world had ever heard of SolarWinds, which specializes in network and applications management software.
Tek-Tools has for a long time specialized in storage resource management (SRM) tools, and SolarWinds plans to integrate Tek-Tools’ Profiler SRM suite into its Orion portfolio by the end of this year. Sounds like a good fit, but since when did any acquisition-driven integration project get completed on schedule?
SolarWinds paid $42 million for Tek-Tools. And if that seems steep, consider the fact that Tek-Tools partners and resellers include 3PAR, AdviStor, Agami, Bell Micro, Brocade, CA, Cambridge Computer, CDW, Dell, EMC, GlassHouse, the Harding Group, HP, IBM, Kisdata, LSI, the Microsoft Developer Network, MySQL AB, NetApp, Novell, PC Mall, Quantum, Red Hat, Siemens Business, Sun, Syncsort, Techmate, VMware and Xiotech.
See “SolarWinds acquires Tek-Tools for SRM”
#8: PMC-SIERRA – ADAPTEC
Throughout the 1990s, Adaptec was synonymous with SCSI, and had a lock on the SCSI controller/adapter market. The company reached its heyday when it racked up revenues of about $800 million in fiscal 2000. But Adaptec didn’t see the winds of change blowing. PMC-Sierra acquired Adaptec for $34 million.
In addition to Adaptec’s technology and products, PMC acquired Adaptec’s extensive channel, where it is still strong in RAID adapters.
The interesting thing about this acquisition is that it puts PMC-Sierra in even more intense competition with arch enemy LSI. Now PMC will compete in the channel with LSI at the board level, whereas previously the battle was fought on the semiconductor front.
See “PMC-Sierra to buy Adaptec’s channel storage business”
#7: NETAPP – BYCAST
The terms of this deal were not disclosed. According to our original article on the acquisition: “NetApp is advancing its efforts in the cloud storage market with the acquisition of Bycast, a developer of object-based storage virtualization software that turns multiple storage devices across geographically dispersed locations into a single pool for storing fixed content data.”
See “NetApp to acquire Bycast for cloud storage software.”
NetApp plans to leverage Bycast technology to go after markets such as digital media, Web 2.0, healthcare, and cloud services providers.
Bycast’s flagship product is its StorageGRID virtualization software. It will be interesting to see what happens to some of Bycast’s existing OEM deals, which include partnerships with IBM and HP.
#6: EMULEX – SERVERENGINES
Prior to acquiring ServerEngines, Emulex was in a dicey position: The company licensed critical technology, including 10GbE ASICs, from ServerEngines and that technology was key to Emulex’s (at the time) risky gamble of betting the farm on 10GbE – a market owned largely by Broadcom and Intel.
The position was dicey because a competitor could scoop up ServerEngines, thus pulling the rug from underneath Emulex’s (at the time) loose footing. Emulex paid a high price for ServerEngines, but there wasn’t any choice.
According to our original article on the acquisition: “Emulex will acquire ServerEngines for $78 million in cash and eight million shares of Emulex stock. Based on Emulex’s closing price of $10.11 last week, those eight million shares would translate into an additional $81 million, bringing the total to almost $160 million.”
But wait, there’s more: “In addition, Emulex will issue four million shares of stock if ServerEngines meets certain business objectives by the end of 2011. Emulex also agreed to assume ServerEngines’ debt, which is currently $25 million. As such, the deal could eventually exceed $200 million.”
See “Emulex to acquire ServerEngines.”
The bet, and the acquisition, seem to have paid off. Emulex has racked up a number of OEM design wins for its 10GbE/FCoE/iSCSI converged network adapters (CNAs), most notably with HP. This puts Emulex at the table with Intel and Broadcom (which it beat out for the HP business) and may strengthen its position vs. QLogic and Brocade. In addition to HP, Emulex has design wins with vendors such as Dell, EMC, HDS, HP, IBM and NetApp.
ServerEngines was founded in 2004 by former Broadcom engineers that were previously with ServerWorks, which was acquired by Broadcom in 2001. In early 2009, Broadcom launched an unsuccessful hostile takeover of Emulex.
#5: DELL – OCARINA
Rumored to be in the $150 million ballpark, Dell’s acquisition of Ocarina came as a surprise to almost everybody. And this one (along with #4, see below) confirmed that storage optimization (data deduplication and/or compression) of primary storage is The Next Big Thing.
According to my original blog post on this acquisition (see “Dell to acquire Ocarina for data deduplication”): “Until the announcement of its embeddable, OEM version of its software, Ocarina was known primarily as a vendor of data reduction technology for primary storage. But the embeddable version is applicable across the storage spectrum, from primary storage to backup and archive.”
That led some analysts to predict that Dell is pursuing a one-size-fits-all approach to data deduplication where Ocarina’s technology will be used across the storage spectrum. If true, that would be bad news for Dell dedupe partners Symantec, CommVault and maybe even EMC Data Domain. But I don’t think that’s Dell’s game plan, at least not for the foreseeable future.
I think Dell will initially leverage Ocarina’s technology in specific image-intensive, fixed-content applications, and only on primary storage. That space is where, so far, Ocarina has made its mark, with large wins at companies such as Kodak. Dell will continue to use Symantec, CommVault and Data Domain where those companies’ technologies make more sense, or where customers demand it.
Besides, the Ocarina technology could be used in conjunction with deduplication technology from vendors such as Symantec and CommVault.
And in a related Top 10 acquisition . . .
#4: IBM – STORWIZE
This one had been rumored for weeks before IBM made it official, so it ranks low on the surprise factor but high on the industry influence scale. Even more than the Dell-Ocarina deal, and even more than NetApp’s evangelizing, IBM’s acquisition of data compression specialist Storwize put data reduction for primary storage in the #1 spot among Hot Storage Technologies.
Rumors put this deal in the range of $140 million.
IBM didn’t lay out specific plans, and it already has some good data reduction technology, but it looks like Big Blue will apply the Storwize technology to its high-end XIV system, Scale-Out Network Attached Storage (SONAS) platform, System Storage Easy Tier, and maybe even its ProtecTIER deduplication products.
Storwize’s data reduction technology differs from some of its competitors in that it is in-line, real-time compression, as opposed to data deduplication.
It’s certainly not an understatement to say that being acquired by IBM was the smartest thing Storwize did since changing its name from Storwiz.
Read the full story on InfoStor partner site Enterprise Storage Forum: “IBM to Buy Storwize for Real-Time Data Compression.” And check out Kevin Komiega’s blog post: “IBM to Acquire Storwize.”
#3: VISION SOLUTIONS – DOUBLE-TAKE
This one ranked high on the surprise factor (because Vision Solutions isn’t exactly well-known in the storage community) and it also ranked high on dollars, being valued at $242 million. Those two factors earned it the #2 ranking, although IBM-Storwize and Dell-Ocarina may be more interesting and certainly got a lot more ink.
The $242 million amounted to about $10.55 per Double-Take share. Double-Take went public in 2006 at about $11 a share.
Prior to the Vision Solutions announcement, it was well known that Double-Take was on the block, but the smart money was on vendors such as Dell and HP as potential acquirers.
Vision Solutions specializes in data protection software for IBM systems, while Double-Take’s strengths are in backup, replication, disaster recovery and high availability software, primarily for Microsoft platforms.
See “Vision Solutions to acquire Double-Take”
#2: EMC – GREENPLUM
I never did find out exactly what EMC paid for Greenplum, a data warehousing and analytics specialist, but my (questionable) sources tell me that the acquisition payment would easily put the deal near the top of this list. And besides, what would a Top 10 Storage Acquisitions list be without an EMC entry?
Greenplum claims more than 100 customers, including NASDAQ OMX, NYSE Euronext, Skype, Equifax and T-Mobile.
In addition to its massively parallel processing (MPP) Greenplum Database, the company has Greenplum Chorus, a cloud platform for collaboration and data sharing. Greenplum will become the foundation of a new division within EMC’s Information Infrastructure business.
So it’s a nice fit with EMC’s private cloud initiatives, but it also roughens up the competition between EMC, Oracle, IBM and Sun. Do you have a feeling that there’s at least one more big – very big – acquisition on the way?
See “EMC acquires data warehousing vendor Greenplum.”
#1: DELL -- 3PAR
At approximately $1.15 billion, Dell's planned acquisition of 3PAR is in the same ballpark as EMC's acquisition of Data Domain last year, both of which qualify as game changers.
Dell has commenced a tender offer to acquire all outstanding shares of 3PAR stock for $18 a share, or about an 86% permium over 3PAR's closing price on Friday.
That hefty price tag suggests that there were other bidders for 3PAR. And if anyone doubted that Dell wants to be a real (as opposed to reseller) player in the storage space, the 3PAR acquisition should assuage those doubts.
This announcement will probably once again call into question Dell's reseller partnership with EMC, but I don't see why. The Dell-EMC marriage will run its course one way or the other, but the outcome won't have anything to do with the 3PAR deal.
However, when you look at all of Dell's storage acquisitions (3PAR, Ocarina, EqualLogic, Exanet, Scalent and probably more to come), Dell and EMC could be on an accelerated path to splitsville. (Reportedly, Dell says that there is only about a 20% overlap between the 3PAR and Dell/EMC product lines.)
Historically, the summer months have been ripe for storage acquisitions so, given the prevailing climate, fasten your seatbelts. I may have to update this Top 10 list within the next two weeks.
#10: EXAR – NETERION
This one probably wouldn’t have made the Top 10 list except for the fact that it’s Exar’s second storage-related acquisition in the last year, indicating that this relatively unknown vendor is up to something in the storage market.
The acquisition of Hifn last year put Exar in the storage optimization market with data deduplication, compression and encryption technology. Which put them into discussions that include Storwize (acquired by IBM, see below), Ocarina Networks (acquired by Dell, see below) and Permabit.
The acquisition of Neterion this year (reportedly for $10 million to $11 million) puts Exar in the 10GbE/FCoE adapter space, and might get them a place in conversations typically focused on vendors such as Emulex, QLogic, Brocade, Broadcom and Intel.
“We see a lot of synergy between Neterion’s virtual I/O technology and Hifn’s data compression, security [encryption] and data deduplication technologies,” said John Williams, vice president of Exar’s datacom and storage business.”
Interesting, but does an engineering-focused company have the marketing might to compete with the big boys? Well, Neterion OEMs include EMC, HP, IBM, Fujitsu and Hitachi, so the company at least knows how to play with the big boys.
See “Exar to acquire Neterion”
#9: SOLARWINDS – TEK-TOOLS
As with Exar, this one made the Top 10 list in large part due to the surprise factor: Few in the storage world had ever heard of SolarWinds, which specializes in network and applications management software.
Tek-Tools has for a long time specialized in storage resource management (SRM) tools, and SolarWinds plans to integrate Tek-Tools’ Profiler SRM suite into its Orion portfolio by the end of this year. Sounds like a good fit, but since when did any acquisition-driven integration project get completed on schedule?
SolarWinds paid $42 million for Tek-Tools. And if that seems steep, consider the fact that Tek-Tools partners and resellers include 3PAR, AdviStor, Agami, Bell Micro, Brocade, CA, Cambridge Computer, CDW, Dell, EMC, GlassHouse, the Harding Group, HP, IBM, Kisdata, LSI, the Microsoft Developer Network, MySQL AB, NetApp, Novell, PC Mall, Quantum, Red Hat, Siemens Business, Sun, Syncsort, Techmate, VMware and Xiotech.
See “SolarWinds acquires Tek-Tools for SRM”
#8: PMC-SIERRA – ADAPTEC
Throughout the 1990s, Adaptec was synonymous with SCSI, and had a lock on the SCSI controller/adapter market. The company reached its heyday when it racked up revenues of about $800 million in fiscal 2000. But Adaptec didn’t see the winds of change blowing. PMC-Sierra acquired Adaptec for $34 million.
In addition to Adaptec’s technology and products, PMC acquired Adaptec’s extensive channel, where it is still strong in RAID adapters.
The interesting thing about this acquisition is that it puts PMC-Sierra in even more intense competition with arch enemy LSI. Now PMC will compete in the channel with LSI at the board level, whereas previously the battle was fought on the semiconductor front.
See “PMC-Sierra to buy Adaptec’s channel storage business”
#7: NETAPP – BYCAST
The terms of this deal were not disclosed. According to our original article on the acquisition: “NetApp is advancing its efforts in the cloud storage market with the acquisition of Bycast, a developer of object-based storage virtualization software that turns multiple storage devices across geographically dispersed locations into a single pool for storing fixed content data.”
See “NetApp to acquire Bycast for cloud storage software.”
NetApp plans to leverage Bycast technology to go after markets such as digital media, Web 2.0, healthcare, and cloud services providers.
Bycast’s flagship product is its StorageGRID virtualization software. It will be interesting to see what happens to some of Bycast’s existing OEM deals, which include partnerships with IBM and HP.
#6: EMULEX – SERVERENGINES
Prior to acquiring ServerEngines, Emulex was in a dicey position: The company licensed critical technology, including 10GbE ASICs, from ServerEngines and that technology was key to Emulex’s (at the time) risky gamble of betting the farm on 10GbE – a market owned largely by Broadcom and Intel.
The position was dicey because a competitor could scoop up ServerEngines, thus pulling the rug from underneath Emulex’s (at the time) loose footing. Emulex paid a high price for ServerEngines, but there wasn’t any choice.
According to our original article on the acquisition: “Emulex will acquire ServerEngines for $78 million in cash and eight million shares of Emulex stock. Based on Emulex’s closing price of $10.11 last week, those eight million shares would translate into an additional $81 million, bringing the total to almost $160 million.”
But wait, there’s more: “In addition, Emulex will issue four million shares of stock if ServerEngines meets certain business objectives by the end of 2011. Emulex also agreed to assume ServerEngines’ debt, which is currently $25 million. As such, the deal could eventually exceed $200 million.”
See “Emulex to acquire ServerEngines.”
The bet, and the acquisition, seem to have paid off. Emulex has racked up a number of OEM design wins for its 10GbE/FCoE/iSCSI converged network adapters (CNAs), most notably with HP. This puts Emulex at the table with Intel and Broadcom (which it beat out for the HP business) and may strengthen its position vs. QLogic and Brocade. In addition to HP, Emulex has design wins with vendors such as Dell, EMC, HDS, HP, IBM and NetApp.
ServerEngines was founded in 2004 by former Broadcom engineers that were previously with ServerWorks, which was acquired by Broadcom in 2001. In early 2009, Broadcom launched an unsuccessful hostile takeover of Emulex.
#5: DELL – OCARINA
Rumored to be in the $150 million ballpark, Dell’s acquisition of Ocarina came as a surprise to almost everybody. And this one (along with #4, see below) confirmed that storage optimization (data deduplication and/or compression) of primary storage is The Next Big Thing.
According to my original blog post on this acquisition (see “Dell to acquire Ocarina for data deduplication”): “Until the announcement of its embeddable, OEM version of its software, Ocarina was known primarily as a vendor of data reduction technology for primary storage. But the embeddable version is applicable across the storage spectrum, from primary storage to backup and archive.”
That led some analysts to predict that Dell is pursuing a one-size-fits-all approach to data deduplication where Ocarina’s technology will be used across the storage spectrum. If true, that would be bad news for Dell dedupe partners Symantec, CommVault and maybe even EMC Data Domain. But I don’t think that’s Dell’s game plan, at least not for the foreseeable future.
I think Dell will initially leverage Ocarina’s technology in specific image-intensive, fixed-content applications, and only on primary storage. That space is where, so far, Ocarina has made its mark, with large wins at companies such as Kodak. Dell will continue to use Symantec, CommVault and Data Domain where those companies’ technologies make more sense, or where customers demand it.
Besides, the Ocarina technology could be used in conjunction with deduplication technology from vendors such as Symantec and CommVault.
And in a related Top 10 acquisition . . .
#4: IBM – STORWIZE
This one had been rumored for weeks before IBM made it official, so it ranks low on the surprise factor but high on the industry influence scale. Even more than the Dell-Ocarina deal, and even more than NetApp’s evangelizing, IBM’s acquisition of data compression specialist Storwize put data reduction for primary storage in the #1 spot among Hot Storage Technologies.
Rumors put this deal in the range of $140 million.
IBM didn’t lay out specific plans, and it already has some good data reduction technology, but it looks like Big Blue will apply the Storwize technology to its high-end XIV system, Scale-Out Network Attached Storage (SONAS) platform, System Storage Easy Tier, and maybe even its ProtecTIER deduplication products.
Storwize’s data reduction technology differs from some of its competitors in that it is in-line, real-time compression, as opposed to data deduplication.
It’s certainly not an understatement to say that being acquired by IBM was the smartest thing Storwize did since changing its name from Storwiz.
Read the full story on InfoStor partner site Enterprise Storage Forum: “IBM to Buy Storwize for Real-Time Data Compression.” And check out Kevin Komiega’s blog post: “IBM to Acquire Storwize.”
#3: VISION SOLUTIONS – DOUBLE-TAKE
This one ranked high on the surprise factor (because Vision Solutions isn’t exactly well-known in the storage community) and it also ranked high on dollars, being valued at $242 million. Those two factors earned it the #2 ranking, although IBM-Storwize and Dell-Ocarina may be more interesting and certainly got a lot more ink.
The $242 million amounted to about $10.55 per Double-Take share. Double-Take went public in 2006 at about $11 a share.
Prior to the Vision Solutions announcement, it was well known that Double-Take was on the block, but the smart money was on vendors such as Dell and HP as potential acquirers.
Vision Solutions specializes in data protection software for IBM systems, while Double-Take’s strengths are in backup, replication, disaster recovery and high availability software, primarily for Microsoft platforms.
See “Vision Solutions to acquire Double-Take”
#2: EMC – GREENPLUM
I never did find out exactly what EMC paid for Greenplum, a data warehousing and analytics specialist, but my (questionable) sources tell me that the acquisition payment would easily put the deal near the top of this list. And besides, what would a Top 10 Storage Acquisitions list be without an EMC entry?
Greenplum claims more than 100 customers, including NASDAQ OMX, NYSE Euronext, Skype, Equifax and T-Mobile.
In addition to its massively parallel processing (MPP) Greenplum Database, the company has Greenplum Chorus, a cloud platform for collaboration and data sharing. Greenplum will become the foundation of a new division within EMC’s Information Infrastructure business.
So it’s a nice fit with EMC’s private cloud initiatives, but it also roughens up the competition between EMC, Oracle, IBM and Sun. Do you have a feeling that there’s at least one more big – very big – acquisition on the way?
See “EMC acquires data warehousing vendor Greenplum.”
#1: DELL -- 3PAR
At approximately $1.15 billion, Dell's planned acquisition of 3PAR is in the same ballpark as EMC's acquisition of Data Domain last year, both of which qualify as game changers.
Dell has commenced a tender offer to acquire all outstanding shares of 3PAR stock for $18 a share, or about an 86% permium over 3PAR's closing price on Friday.
That hefty price tag suggests that there were other bidders for 3PAR. And if anyone doubted that Dell wants to be a real (as opposed to reseller) player in the storage space, the 3PAR acquisition should assuage those doubts.
This announcement will probably once again call into question Dell's reseller partnership with EMC, but I don't see why. The Dell-EMC marriage will run its course one way or the other, but the outcome won't have anything to do with the 3PAR deal.
However, when you look at all of Dell's storage acquisitions (3PAR, Ocarina, EqualLogic, Exanet, Scalent and probably more to come), Dell and EMC could be on an accelerated path to splitsville. (Reportedly, Dell says that there is only about a 20% overlap between the 3PAR and Dell/EMC product lines.)
Historically, the summer months have been ripe for storage acquisitions so, given the prevailing climate, fasten your seatbelts. I may have to update this Top 10 list within the next two weeks.
Saturday, August 7, 2010
Earnings recap: ELX, QLGC, CVLT, SYMC, PAR, CML, STEC, HDS
August 6, 2010 – Over the past couple weeks, a number of storage vendors reported quarterly earnings (or lack thereof). Overall, the storage industry seems to be on a slow rebound, driven in part by technology refreshes at the server, PC, OS and network levels.
The financial picture started out brightly with a stellar report from Isilon (see “Isilon stock soars on Q2 earnings report”), but after that results were a mixed bag. Here’s a quick recap:
EMULEX (NYSE: ELX)
The numbers: Emulex reported its fourth quarter results yesterday, with net revenues of $103.1 million, an increase of 30% over the same quarter last year and a 1% increase over the previous quarter. Q4 GAAP net loss was $2.5 million, compared to $4.5 million in Q4 of fiscal 2009.
Highlights: President and CEO Jim McCluney highlighted the company’s 10GbE/FCoE technology and design wins, most notably with HP for Emulex’s OneConnect UCNA technology. Emulex also has design wins with Cisco, Dell, EMC, Fujitsu and HDS.
Comments: Emulex bet the farm on 10GbE, and with the HP LOM win the company appears to be poised for impressive growth, although the timing of that ramp is unclear. The company will also benefit from the upcoming server upgrade cycle, which should accelerate in the fourth quarter. Emulex’s acquisition of ServerEngines (expensive but necessary) is expected to be finalized at the end of this month.
QLOGIC (NASDAQ: QLGC)
The numbers: For the three months ended June 27, QLogic earned $25.4 million, up 70% percent from $15 million in the same period a year earlier. Revenue rose 16% to $142.6 million, vs. $122.8 million a year ago. Analysts were expecting $144.1 million in revenue.
Highlights: Wall Street can be cruel to companies that have a lock on their primary markets, such as QLogic and Emulex in the Fibre Channel HBA space, because of consistently high expectations: Although QLogic’s numbers were quite good, its stock price took a hit on the day of its quarterly earnings announcement, dropping 14% at one point.
Interesting tidbit: The company had $10 million in revenue “from products serving host applications for the fast-growing converged network [FCoE] market.”
Comments: Although QLogic’s future success does in fact depend on its performance in the FCoE/CEE/DCB space, it’s too early to factor FCoE performance into QLogic’s stock performance. Next year will be The Year of FCoE reckoning, as the QLogic-Emulex-Brocade-Broadcom-Intel battle reaches war status.
COMMVAULT (NASDAQ: CVLT)
The numbers: Revenues for CommVault’s first fiscal quarter were $66.3 million, an increase of 10% over Q1 2010 and a decrease of 10% vs. the previous quarter. Net income was $3.5 million, up $1.1 million vs. the same period a year ago.
Highlights: Dell accounted for about 26% of CommVault’s revenue, up 21% year-over-year.
Comments: Some observers predicted that Dell’s recent acquisition of Ocarina Networks (see “Dell to acquire Ocarina for data deduplication”) spelled trouble for CommVault. That assumed that Dell was headed toward a one-size-fits-all approach to data deduplication. I don’t think so. Dell will probably continue with its existing dedupe-related reseller deals (CommVault, Symantec, EMC Data Domain) while leveraging the Ocarina technology in specific markets (e.g., primary storage optimization in image-intensive environments).
One good reason to stick with CommVault’s stock is the upcoming release of Simpana 9, which I understand will include some significant improvements in the areas of deduplication and virtualization.
SYMANTEC (NASDAQ: SYMC)
The numbers: Symantec reported revenue of $1.433 billion in its first fiscal quarter, essentially unchanged from $1.432 billion in last year’s Q1. But the earnings picture was brighter. The company reported net income of $161 million, compared to $74 million in Q1 2009.
Highlights: Revenue for Symantec’s largest business segment – storage and server management – fell 5% year-over-year to $524 million.
Comments: Symantec’s storage revenues should pick up in the next few quarters due to a ramp in sales of its Backup Express 10 and NetBackup 7 software (both of which were introduced early this year) and a new version of Enterprise Vault this quarter.
3PAR (NYSE: PAR)
The numbers: 3PAR’s quarterly revenues were $54.3 million, an increase of 22% vs. $44.5 million in the same period a year ago. GAAP net loss was $1.8 million, virtually identical to the company’s loss in the year earlier quarter.
Highlights: 3PAR president and CEO David Scott emphasized the company’s strengths in “multi-tenant clustering, thin technologies, and autonomic management,” all of which play well in the cloud.
Comments: Not as impressive as Isilon’s quarterly report, but companies such as 3PAR, Isilon and Compellent (see below) are proving that upstarts can put a dent in the armor of the market share leaders by leveraging truly differentiated technology, at least for awhile.
COMPELLENT (NYSE: CML)
The numbers: In its second fiscal quarter ended June 30, Compellent posted record revenue of $36.5 million, a 27% increase over the same quarter in 2009 and a 15% increase over the first quarter of 2010. GAAP net loss was $172,000, and non-GAAP net income was $1.5 million.
Highlights: Compellent claims an installed base of 2,124 customers, an increase of 182 customers vs. the previous quarter. Cash and investments totaled $132 million.
Comments: Compellent’s data movement/tiering/management technology, dubbed Fluid Data, appears to be a primary catalyst behind Compellent’s growth. Pipar Jeffray analysts noted that key risks for Compellent include “reliance on channel partners, limited international exposure, well-capitalized competitors and a challenging macro-economic backdrop.”
STEC (NASDAQ: STEC)
The numbers: Solid-state disk (SSD) specialist STEC posted revenue of $61.3 million in the second quarter. That’s a decrease of 29.1% from the second quarter of 2009, but an increase of 58% from the first quarter of 2010.
Highlights: STEC bounced back from a disappointing first quarter, posting non-GAAP gross profit margin of 42.7% vs. 34.2% in the first quarter, having resolved inventory carryover issues with its largest customer (EMC). For the next quarter, company officials are predicting revenue in the $78 million to $80 million range, indicating a continued resurgence.
Comments: STEC stock has been on a roller-coaster ride, with its 52-week price ranging from $9.47 to $42.50 a share. The company has an early lead in the enterprise SSD market, with design wins at most of the leading disk array vendors. And STEC is still the single source for SSDs at most of its customers. STEC recently introduced MLC SSDs, augmenting its SLC-based SSD product line with lower-cost alternatives. (See “MLC vs. SLC flash for enterprise SSD” on infostor.com.) And the next generation of STEC’s Zeus and Mach SSDs are due later this year, reportedly with 2X the capacity.
HITACHI DATA SYSTEMS (HDS)
Hitachi Ltd. recently reported its Q1FY10 financial results. The company’s HDS operation is not publicly traded, but here’s a recap of HDS’ results. NOTE: The following is excerpted from a report by Aaron C. Rakers, managing director at Stifel Nicolaus.
The numbers: “Consolidated revenues (revenues from HDS + revenues of storage systems sales in Japan) for the first quarter fiscal year 2010 were $804 million, up 13% year on year. This was HDS’ third consecutive record quarter. The first quarter, which ended June 30, was the best Q1 in HDS history, beating the company’s previous best first quarter by $100 million.”
Highlights: Year-over-year revenues grew across all geographies: Americas (+27%), EMEA (+4%), APAC (+19%, excluding Japan domestic sales).
Comments (from Aaron Rakers): “HDS’ Q1FY10 results continue to show increased diversity between hardware, software and services, with solid growth across all areas. Fueled by strong AMS systems sales and increased USP V/VM platform adoption, the company’s hardware revenue was up double digits from Q1FY09. Likewise, software and services revenues grew double digits year-over-year and now account for nearly half of HDS’ total revenue, which is a higher percentage compared to the previous year. The increase in software and services revenue was attributed to increased traction in virtualization software such as Hitachi Dynamic Provisioning. HDS’ file and content portfolio, which includes the Hitachi High-performance NAS Platform and Hitachi Content Platform products, also showed strong year-on-year growth; in fact, the file and content portfolio recorded a 200% increase in FY2009 compared to FY2008.”
Related articles:
EMC breaks Q2 revenue record (blog post, July 21)
NetApp wows Wall Street, doubles quarterly profits (news story, May 26)
The financial picture started out brightly with a stellar report from Isilon (see “Isilon stock soars on Q2 earnings report”), but after that results were a mixed bag. Here’s a quick recap:
EMULEX (NYSE: ELX)
The numbers: Emulex reported its fourth quarter results yesterday, with net revenues of $103.1 million, an increase of 30% over the same quarter last year and a 1% increase over the previous quarter. Q4 GAAP net loss was $2.5 million, compared to $4.5 million in Q4 of fiscal 2009.
Highlights: President and CEO Jim McCluney highlighted the company’s 10GbE/FCoE technology and design wins, most notably with HP for Emulex’s OneConnect UCNA technology. Emulex also has design wins with Cisco, Dell, EMC, Fujitsu and HDS.
Comments: Emulex bet the farm on 10GbE, and with the HP LOM win the company appears to be poised for impressive growth, although the timing of that ramp is unclear. The company will also benefit from the upcoming server upgrade cycle, which should accelerate in the fourth quarter. Emulex’s acquisition of ServerEngines (expensive but necessary) is expected to be finalized at the end of this month.
QLOGIC (NASDAQ: QLGC)
The numbers: For the three months ended June 27, QLogic earned $25.4 million, up 70% percent from $15 million in the same period a year earlier. Revenue rose 16% to $142.6 million, vs. $122.8 million a year ago. Analysts were expecting $144.1 million in revenue.
Highlights: Wall Street can be cruel to companies that have a lock on their primary markets, such as QLogic and Emulex in the Fibre Channel HBA space, because of consistently high expectations: Although QLogic’s numbers were quite good, its stock price took a hit on the day of its quarterly earnings announcement, dropping 14% at one point.
Interesting tidbit: The company had $10 million in revenue “from products serving host applications for the fast-growing converged network [FCoE] market.”
Comments: Although QLogic’s future success does in fact depend on its performance in the FCoE/CEE/DCB space, it’s too early to factor FCoE performance into QLogic’s stock performance. Next year will be The Year of FCoE reckoning, as the QLogic-Emulex-Brocade-Broadcom-Intel battle reaches war status.
COMMVAULT (NASDAQ: CVLT)
The numbers: Revenues for CommVault’s first fiscal quarter were $66.3 million, an increase of 10% over Q1 2010 and a decrease of 10% vs. the previous quarter. Net income was $3.5 million, up $1.1 million vs. the same period a year ago.
Highlights: Dell accounted for about 26% of CommVault’s revenue, up 21% year-over-year.
Comments: Some observers predicted that Dell’s recent acquisition of Ocarina Networks (see “Dell to acquire Ocarina for data deduplication”) spelled trouble for CommVault. That assumed that Dell was headed toward a one-size-fits-all approach to data deduplication. I don’t think so. Dell will probably continue with its existing dedupe-related reseller deals (CommVault, Symantec, EMC Data Domain) while leveraging the Ocarina technology in specific markets (e.g., primary storage optimization in image-intensive environments).
One good reason to stick with CommVault’s stock is the upcoming release of Simpana 9, which I understand will include some significant improvements in the areas of deduplication and virtualization.
SYMANTEC (NASDAQ: SYMC)
The numbers: Symantec reported revenue of $1.433 billion in its first fiscal quarter, essentially unchanged from $1.432 billion in last year’s Q1. But the earnings picture was brighter. The company reported net income of $161 million, compared to $74 million in Q1 2009.
Highlights: Revenue for Symantec’s largest business segment – storage and server management – fell 5% year-over-year to $524 million.
Comments: Symantec’s storage revenues should pick up in the next few quarters due to a ramp in sales of its Backup Express 10 and NetBackup 7 software (both of which were introduced early this year) and a new version of Enterprise Vault this quarter.
3PAR (NYSE: PAR)
The numbers: 3PAR’s quarterly revenues were $54.3 million, an increase of 22% vs. $44.5 million in the same period a year ago. GAAP net loss was $1.8 million, virtually identical to the company’s loss in the year earlier quarter.
Highlights: 3PAR president and CEO David Scott emphasized the company’s strengths in “multi-tenant clustering, thin technologies, and autonomic management,” all of which play well in the cloud.
Comments: Not as impressive as Isilon’s quarterly report, but companies such as 3PAR, Isilon and Compellent (see below) are proving that upstarts can put a dent in the armor of the market share leaders by leveraging truly differentiated technology, at least for awhile.
COMPELLENT (NYSE: CML)
The numbers: In its second fiscal quarter ended June 30, Compellent posted record revenue of $36.5 million, a 27% increase over the same quarter in 2009 and a 15% increase over the first quarter of 2010. GAAP net loss was $172,000, and non-GAAP net income was $1.5 million.
Highlights: Compellent claims an installed base of 2,124 customers, an increase of 182 customers vs. the previous quarter. Cash and investments totaled $132 million.
Comments: Compellent’s data movement/tiering/management technology, dubbed Fluid Data, appears to be a primary catalyst behind Compellent’s growth. Pipar Jeffray analysts noted that key risks for Compellent include “reliance on channel partners, limited international exposure, well-capitalized competitors and a challenging macro-economic backdrop.”
STEC (NASDAQ: STEC)
The numbers: Solid-state disk (SSD) specialist STEC posted revenue of $61.3 million in the second quarter. That’s a decrease of 29.1% from the second quarter of 2009, but an increase of 58% from the first quarter of 2010.
Highlights: STEC bounced back from a disappointing first quarter, posting non-GAAP gross profit margin of 42.7% vs. 34.2% in the first quarter, having resolved inventory carryover issues with its largest customer (EMC). For the next quarter, company officials are predicting revenue in the $78 million to $80 million range, indicating a continued resurgence.
Comments: STEC stock has been on a roller-coaster ride, with its 52-week price ranging from $9.47 to $42.50 a share. The company has an early lead in the enterprise SSD market, with design wins at most of the leading disk array vendors. And STEC is still the single source for SSDs at most of its customers. STEC recently introduced MLC SSDs, augmenting its SLC-based SSD product line with lower-cost alternatives. (See “MLC vs. SLC flash for enterprise SSD” on infostor.com.) And the next generation of STEC’s Zeus and Mach SSDs are due later this year, reportedly with 2X the capacity.
HITACHI DATA SYSTEMS (HDS)
Hitachi Ltd. recently reported its Q1FY10 financial results. The company’s HDS operation is not publicly traded, but here’s a recap of HDS’ results. NOTE: The following is excerpted from a report by Aaron C. Rakers, managing director at Stifel Nicolaus.
The numbers: “Consolidated revenues (revenues from HDS + revenues of storage systems sales in Japan) for the first quarter fiscal year 2010 were $804 million, up 13% year on year. This was HDS’ third consecutive record quarter. The first quarter, which ended June 30, was the best Q1 in HDS history, beating the company’s previous best first quarter by $100 million.”
Highlights: Year-over-year revenues grew across all geographies: Americas (+27%), EMEA (+4%), APAC (+19%, excluding Japan domestic sales).
Comments (from Aaron Rakers): “HDS’ Q1FY10 results continue to show increased diversity between hardware, software and services, with solid growth across all areas. Fueled by strong AMS systems sales and increased USP V/VM platform adoption, the company’s hardware revenue was up double digits from Q1FY09. Likewise, software and services revenues grew double digits year-over-year and now account for nearly half of HDS’ total revenue, which is a higher percentage compared to the previous year. The increase in software and services revenue was attributed to increased traction in virtualization software such as Hitachi Dynamic Provisioning. HDS’ file and content portfolio, which includes the Hitachi High-performance NAS Platform and Hitachi Content Platform products, also showed strong year-on-year growth; in fact, the file and content portfolio recorded a 200% increase in FY2009 compared to FY2008.”
Related articles:
EMC breaks Q2 revenue record (blog post, July 21)
NetApp wows Wall Street, doubles quarterly profits (news story, May 26)
Monday, August 2, 2010
What’s so cool about Intel’s Jasper Forest?
August 2, 2010 – Intel recently began production shipments of its C5500/C3500 series processors, formerly code-named Jasper Forest. The chips, which are based on the Nehalem architecture and are part of the Xeon line of CPUs, are optimized for embedded storage and communications systems.
David Tuhy, general manager in Intel’s Storage Group, says there are four key features that storage vendors and end users will benefit from: a built-in RAID accelerator, asynchronous DRAM self-refresh technology, PCIe non-transparent bridging, and increased bandwidth.
The C5500/C3500 includes an integrated accelerator (internally dubbed Crystal Beach) that offloads RAID-5 and RAID-6 processing and eliminates the need for a custom ASIC for RAID-5/6 operations. In addition to increasing performance, the RAID offload functionality saves energy and space on RAID controller cards.
A single-core Jasper Forest processor consumes a maximum of 23 watts, while a quad-core processor consumes a maximum of 85 watts, resulting in decreased power consumption and denser storage designs. (The C5500/C3500 requires about 23 watts less power than the previous-generation Xeon processors.)
The asynchronous DRAM self-refresh (ADR) feature is data retention technology that provides “the ability to keep DRAM in a refresh state in case you lose power,” Tuhy explains.
The C5500/C3500’s PCIe non-transparent bridging (NTB) technology enables high-availability, active-active failover. And the integrated PCIe support and NTB allows multiple systems to connect over a PCIe link, eliminating the need for an external PCIe switch or hub chip.
Finally, the Jasper Forest processors have about 2X more bandwidth per watt than previous generation Xeon 5400 series processors, which enables the chips to support hundreds of disk drives as well as solid-state disk (SSD) drives, according to Tuhy.
The Xeon C5500/C3500 is typically integrated with Intel’s 3420 chip (see diagram), which has 12 USB 2.0 ports, six SATA ports, and eight PCIe 2.0 lanes.
Promise Technology, a RAID controller and array vendor, hopes to be among the first to deliver RAID arrays using the Jasper Forest processors. Promise plans to ship limited quantities of C5500/C3500-based storage systems in the fourth quarter, with production shipments expected in the first quarter of next year.
In a press release announcing its plans to integrate the Jasper Forest processors into future storage systems, Promise’s vice president of engineering, Jin-Lon Hon, called the C5500/C3500 “one of the most significant advancements in the storage industry in the past decade.”
For Promise, one of the key benefits of the C5500/C3500 is increased performance. Ray Bahar, Promise’s vice president of sales and marketing, expects a 4X to 6X increase in performance versus the previous generation Xeon processors that Promise has been using.
“With the older architecture we’re getting around 4GBps bandwidth, but the next generation will provide around 16GBps,” says Bahar.
He also likes the fact that the Jasper Forest processors integrate a variety of storage functions on a single ASIC, which “saves a lot of space on the controller board and significantly decreases power and thermal requirements,” says Bahar.
In addition, he says that the ability to scale from a single-core chip to a quad-core processor enables RAID arrays based on the C5500/C3500 to scale from the SMB market to large enterprises.
Finally, “much higher throughput eliminates the need for multiple RAID heads to get the same performance, so the overall cost to end users will be much less,” Bahar adds.
In addition to Promise Technology, AIC/Xtore has also announced support for the Jasper Forest processors. The company demonstrated its Orion Unified Storage Server, based on the C5500/C3500, at the NAB show earlier this year.
Side note: Jasper Forest is a petrified forest in Arizona.
Related article:
Intel previews Jasper Forest processors
David Tuhy, general manager in Intel’s Storage Group, says there are four key features that storage vendors and end users will benefit from: a built-in RAID accelerator, asynchronous DRAM self-refresh technology, PCIe non-transparent bridging, and increased bandwidth.
The C5500/C3500 includes an integrated accelerator (internally dubbed Crystal Beach) that offloads RAID-5 and RAID-6 processing and eliminates the need for a custom ASIC for RAID-5/6 operations. In addition to increasing performance, the RAID offload functionality saves energy and space on RAID controller cards.
A single-core Jasper Forest processor consumes a maximum of 23 watts, while a quad-core processor consumes a maximum of 85 watts, resulting in decreased power consumption and denser storage designs. (The C5500/C3500 requires about 23 watts less power than the previous-generation Xeon processors.)
The asynchronous DRAM self-refresh (ADR) feature is data retention technology that provides “the ability to keep DRAM in a refresh state in case you lose power,” Tuhy explains.
The C5500/C3500’s PCIe non-transparent bridging (NTB) technology enables high-availability, active-active failover. And the integrated PCIe support and NTB allows multiple systems to connect over a PCIe link, eliminating the need for an external PCIe switch or hub chip.
Finally, the Jasper Forest processors have about 2X more bandwidth per watt than previous generation Xeon 5400 series processors, which enables the chips to support hundreds of disk drives as well as solid-state disk (SSD) drives, according to Tuhy.
The Xeon C5500/C3500 is typically integrated with Intel’s 3420 chip (see diagram), which has 12 USB 2.0 ports, six SATA ports, and eight PCIe 2.0 lanes.
Promise Technology, a RAID controller and array vendor, hopes to be among the first to deliver RAID arrays using the Jasper Forest processors. Promise plans to ship limited quantities of C5500/C3500-based storage systems in the fourth quarter, with production shipments expected in the first quarter of next year.
In a press release announcing its plans to integrate the Jasper Forest processors into future storage systems, Promise’s vice president of engineering, Jin-Lon Hon, called the C5500/C3500 “one of the most significant advancements in the storage industry in the past decade.”
For Promise, one of the key benefits of the C5500/C3500 is increased performance. Ray Bahar, Promise’s vice president of sales and marketing, expects a 4X to 6X increase in performance versus the previous generation Xeon processors that Promise has been using.
“With the older architecture we’re getting around 4GBps bandwidth, but the next generation will provide around 16GBps,” says Bahar.
He also likes the fact that the Jasper Forest processors integrate a variety of storage functions on a single ASIC, which “saves a lot of space on the controller board and significantly decreases power and thermal requirements,” says Bahar.
In addition, he says that the ability to scale from a single-core chip to a quad-core processor enables RAID arrays based on the C5500/C3500 to scale from the SMB market to large enterprises.
Finally, “much higher throughput eliminates the need for multiple RAID heads to get the same performance, so the overall cost to end users will be much less,” Bahar adds.
In addition to Promise Technology, AIC/Xtore has also announced support for the Jasper Forest processors. The company demonstrated its Orion Unified Storage Server, based on the C5500/C3500, at the NAB show earlier this year.
Side note: Jasper Forest is a petrified forest in Arizona.
Related article:
Intel previews Jasper Forest processors
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