A Market of Contradiction

Storage networking is a highly volatile space, where seemingly contradictory forces blur the financial picture.

The month of May has barely begun, for instance, yet we've been hit with the following news:

• The sale of replication startup Kashya to EMC for $153 million. (See EMC Pays $153M for Kashya.)
• The sale of WAFS vendor Tacit (which has an OEM deal with Brocade) to WAN optimization supplier Packeteer for $78 million cash. (See Packeteer Buys Tacit.)
• A Chapter 11 filing from SGI. (See SGI Opens Chapter 11.)
• The $770 million sale of tape rival ADIC to Quantum. (See Quantum Takes Tape Rival ADIC.)
• Funding of $13 million to data classification startup Njini. (See ITU-T Holds Meeting of Telecommunications for Disaster Relief and Mitigation Partnership Coordination Panel.)
• Funding of $16 million to processor startup Silverback -- with investment from Intel and NetApp. (See Silverback Hoists $16M.)
• Big talk but meager delivery from Sun, which has appointed a new CEO. (See Sun Ships Little, Talks Big.)

All that unfolded against a backdrop of reduced revenue reports from big players and reduced investment in startups. (See Storage Financials Take a Dip and Storage '06 Funding Down.) Which raises the question: What kind of market is this, where combinations and consolidation proceed so briskly despite a touch of sluggishness in user spending?

There's no easy answer. But storage networking is clearly a landscape where suppliers who can't chart the terrain fail to gain the considerable ground that's open for staking.