In a related development, StorageNetworks announced yesterday that it is suing Metromedia Fiber Network Inc. (MFN) (Nasdaq: MFNX)
for breach of contract, misrepresentation, and deceptive trade practices. StorageNetworks alleges Metromedia failed to provide the fiber optic capacity required by a lease agreement between the two companies. Analysts speculate StorageNetworks would like to shave expenses by terminating expensive long-term leases with MFN.
StorageNetworks now is attempting to refocus on two small but growing business segments that are less capital intensive and presumably more resistant to the economic downturn. Both are service oriented and rely on StorageNetworks proprietary software. The first, called STORmanage, helps businesses manage their own storage systems more effectively. The second, STORfusion, provides a similar service for carriers and service providers.
These services provide customers virtualization software that sees multiple storage devices as a single device. Typically, companies use only about 40 percent of their storage capacity, because when storage is attached to certain servers it cant be used by others, explains Gartner/Dataquest analyst, Adam Couture. StorageNetworks also provides software that lets businesses and carriers monitor and manage storage equipment and networking gear from a remote location.
STORmanage has signed on several high-profile customers, including Cisco Systems Inc. (Nasdaq: CSCO), Enron Broadband Services Inc.,
and Martha Stewart. The STORfusion unit has signed on Fujitsu Ltd. (KLS: FUJI.KL). Analysts say both will disclose other major customer wins in the near future.
StorageNetworks already has competitors providing similar services. They include Storability Inc.
and StorageWay Inc.
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