2006 Top 10: On the Hot Seat

Time to anticipate who will be feeling the most heat in the new year UPDATED 3/12/07 4:20 PM

December 28, 2006

6 Min Read
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No, there's nothing wrong with your thermostat. If you feel a burst of heat, it's because it's time for our annual storage hot seat list.

Half of the hot seaters from last year escaped this year's list, although not all for good reasons. McData is going away in a month or so when Brocade closes its acquisition. Intransa and MaXXan have become so insignificant that they're below the radar - in other words, they've cooled off too much for any hot seat. Congratulations to Brocade and Symantec for fixing most of the problems that had them on the 2005 list.

So who's going to be wishing their butts were made of asbestos in the coming year? Here are our picks:

No. 10: Adaptec

Adaptec appears in much better shape than it did a year ago. Under new CEO Sundi Sundaresh, Adaptec decided to stay in the NAS business with its Snap product line and added management and data protection software in 2006. But the jury is still out as to whether Adaptec can beat LSI on the SAS front and compete effectively against Windows-based NAS with its Snap products.

  • See Adaptec Intros CDP, New NAS

    No. 9: EMC

    EMC needs to integrate the slew of technologies it bought over the past three years and regain investor confidence in 2007. CEO Joe Tucci's reputation took a hit last summer after two soft quarters, and a $2.1 billion acquisition of RSA Security that raised questions about the price tag. The storage giant has more in its arsenal than any of its rivals but large jigsaw puzzles often take a long time to piece together. Don't bet against EMC completing that puzzle in 2007, but a lot of people are waiting to see the results with their own eyes before they believe them.

  • See Did EMC Overpay?

    No. 8: CA

    CA makes its debut on our hot seat list, but not because it had a particularly troubled year. The network software firm has had serious problems for a long time. But with its acquisition of XOsoft, iLumin, and MDY Group International over the past 14 months, CA has convinced us it's serious about storage. It now has CDP, replication, email archiving, records management, and compliance products -- putting a lot of storage functionality in the hands of a company with a poor track record. Perhaps now that former chairman Sanjay Kumar has been convicted and sentenced for accounting shenanigans, the company can get some real traction in the coming year.

  • See Suppliers Snap Up Services

    No. 7: Packeteer

    Packeteer was stung by disappointing revenue from WAFS products it got from its $78 million acquisition of Tacit. Meanwhile, rival Riverbed continues to rack up customers and remains the darling of investors after a successful IPO. Expect significant executive changes at Packeteer in 2007. You can also expect new faces in the old Tacit team now that former Tacit president Chuck Foley has moved on, and Packeteer marketing VP David Puglia was sent packing, according to a vendor executive who asked not to be named.

    Puglia disagreed with the implication he'd been let go by his former employer. "I resigned on good terms with Packeteer in December of 2006. I started at Tablus in January of 2007. Packeteer's Q4 revenue results exceeded expectations under my marketing programs," he wrote in a March 2007 email to Byte and Switch.

  • See Packeteer Picks Tacit

    No. 6: Iron Mountain

    Iron Mountain keeps making news for the wrong reasons. In 2005, it was embarrassing lost tapes. This year, fires to its London and Ottawa facilities cost it $7 million of operating income so far and resulted in more lost customer records. Also, the State Fair of Texas sued an Iron Mountain subsidiary claiming its employees stole and resold coupons that should have been destroyed. With Iron Mountain overhauling and expanding its digital archive and associated services to regain customer trust, 2007 could be a pivotal year for the archiving firm.

  • See Iron Mountain in Hot Water Again

    No. 5: Mendocino Software

    Mendocino is trying to avoid the fate of its fellow CDP pioneer, Revivio, which effectively went out of business until Symantec scooped up its assets. Unlike Revivio, Mendocino picked a partner strategy and tried to make it on the strength of OEM deals with EMC and Hewlett-Packard. It lost its EMC deal this year, and will try for new alliances after revamping its software.

  • See EMC Coughs Up for Kashya

    No. 4: BakBone

    A bunch of storage companies have had to restate their earnings for a variety of reasons over the past few years, but BakBone has set the standard for futility. BakBone has gone 31 months since it revealed it must restate earnings, got delisted by the Toronto Stock Exchange last May, and actually found new accounting irregularities in June. Things have gotten so bad that CEO Jim Johnson has quit putting out periodic updates promising a quick resolution to the problem. Meanwhile, BakBone's product team has made frequent updates and tried to stay technologically relevant. But it's hard to see BakBone become more than a niche player in a market that includes giants Symantec, EMC, and IBM, and newly public CommVault.

  • See BakBone Takes Aim

    No. 3: Sun Microsystems

    It's been 15 months since Sun closed its $4.1 billion acquisition of StorageTek, and it has yet to deliver a cohesive storage strategy or convinced people they're serious about storage. Following a year of executive turmoil that saw changes at the top of the company as well as throughout the storage division, David Yen is charged with figuring things out in 2007. He's got his work cut out for him trying to tap in to whatever innovative spirit remains since the STK acquisition and reviving the vendor's core business of server. How about planting a flag in the virtualization space?

  • See Sun Takes Action Amidst Concerns

    No. 2: Overland Storage
    How would you like to be the next CEO of Overland? The tape library vendor lost $25.4 million over the past 15 months since HP pulled the plug on an OEM deal that accounted for most of Overland's revenue. It since lost a smaller OEM deal to Dell because of production problems, then bought and wrote off a $9 million acquisition of software firm Zetta Systems. The board dumped CEO Chris Calisi in November, and brought back former CEO Scott McClendon until a permanent replacement is found.

  • See Overland Loses Another Partner

    No. 1: Hewlett-Packard

    As troubling as HP's snooping scandal was this year, that alone did not land it in the hottest seat in the storage board room. Unlike rival Dell, which has its own legal problems but continues to grow its storage business impressively, HP is at a crossroads with its storage product line. After an impressive run up from mid-2005, HP's storage sales cooled last quarter. That gives credence to its competitors' contention that HP's earlier sales spike consisted only of its upgrading existing customers. Now HP has to shake off a scandalous year and prove it can take share from the competition.

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2006
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