Rackable Systems Sheds Storage

Rackable confirms plans to get rid of its RapidScale business

August 15, 2008

3 Min Read
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HPC specialist Rackable Systems has announced plans to sell off part of its storage business, an indication that the economy is still deeply troubled.

Specifically, the vendor is looking to divest its RapidScale clustered file system appliances, according to Maurice Liebenstern, Rackables general counsel and senior vice president of development.

”We have been working with this asset for quite some time, and we have determined that it’s a better strategy for us to look for an alternative than undertake additional investment,” he says.

Rackable, which has experienced some tough recent quarters, first discussed its plans to get rid of RapidScale technology on its second-quarter earnings call earlier this month, when James Wheat, the company’s CFO, explained that the product line is “not likely to meet our future expectations."

Today, Liebenstern told Byte and Switch that the decision to divest RapidScale was based on a “cost benefit analysis” and “expertise,” hinting that the technology is consuming more R&D that Rackable can realistically devote to it.“It could be successful, it’s just not aligned with the main emphasis and focus we’re pursuing now,” he added. “I think it will be a tremendous asset for another party.”

The exec was less forthcoming on specific details of the sell-off, refusing to reveal RapidScale’s price-tag, or the identities of potential acquirers. “There has been interest, but we’re really kicking off the process [today].”

As for the company’s future storage strategy, Rackable is looking to partner with other vendors for clustering technology, according to Liebenstern.

”I think that the way that it will work is... we will have at least one major partnership with an existing vendor in this HPC storage space,” he says.

Rackable resells IBM blades as part of its recently launched "Containerized data center" and also has a number of storage partners listed on its Website. These include Adaptec, Emulex, Fujitsu, Hitachi, LSI Logic, and Seagate.At least one analyst was not surprised by Rackable’s decision to shed part of its storage business.

”The way that storage has continued to scale, both in performance and capacity, it’s becoming increasingly difficult for smaller specialists to come up with solutions where the payback is worth the investment,” says Charles King, president and principal analyst of Pund-IT. “There are so many different solutions and options out there that it’s becoming more and more difficult for smaller companies to play in this space.”

The current economic climate is making it even more difficult for vendors to break into the storage market, according to King.

”We’re in the middle of a softening economy -- if not a recession -- and these circumstances tend to favor larger vendors,” he says. “So many companies got burnt in the dot.com bust that I think it has made a lot of businesses very suspicious of very small companies.”Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.

  • Adaptec Inc. (Nasdaq: ADPT)

  • Emulex Corp. (NYSE: ELX)

  • Hitachi Ltd. (NYSE: HIT; Paris: PHA)

  • Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY)

  • LSI Corp. (NYSE: LSI)

  • Pund-IT Inc.

  • Rackable Systems Inc. (Nasdaq: RACK)

  • Seagate Technology Inc.0

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