Steven Murphy, President and CEO, Fujitsu Softek

Fujitsu Software Technology Corp. (Softek) President and CEO Steven Murphy believes that if history is any indication, his company is in the perfect position to rise above the hordes clamoring for a piece of the storage software market.

How so, you ask? After all, storage giants EMC Corp. (NYSE: EMC), Hewlett-Packard Co. (NYSE: HPQ), IBM Corp. (NYSE: IBM), and others have set their sights on exactly the same goal and with the lion's share of the hardware market, they have a considerable headstart. Fujitsu Softek's chance of grabbing this prize, as a small company and a relative newcomer to the industry, should be prèsque impossible.

Actually, Murphy finds all the noise coming from the hardware companies "hysterical" (we'll explain why later). But first, who is this man who dares to laugh in EMC's face? [Ed. note: Or glare, to judge by his picture at the left.]

Prior to joining Fujitsu Softek in Sunnyvale, Calif., Murphy was president of the software division at Amdahl Corp. When Fujitsu Ltd. (KLS: FUJI.KL) acquired Amdahl for $850 million in 1997 and decided to spin off the software group in March 2001, Murphy was the obvious choice to run the new entity, which remains a wholly owned subsidiary of Fujitsu Ltd.

Before Amdahl, Murphy was president and COO of Minacom Solutions, which develops management software for service providers. He also was VP and general manager at Applied Digital Access (a telecommunications service fulfillment firm that merged with Dynatech, which became Acterna); and director of marketing for Anderson Consulting (now Accenture).In other words, he's been around a while and has witnessed the shaping of the storage industry over the past 20 years.

Still, why should we care about Fujitsu Softek? Isn't it really just the software arm of Fujitsu Ltd., spun off to look like an independent company but (wink wink, nudge nudge) supporting Fujitsu hardware first and foremost?

Say this to Murphy and watch the steam jet out of his ears. To find out his reasons why this isn't so, and for latest news on Fujitsu Softek, read our interview with him by clicking on the links below:

Byte and Switch: Why is Fujitsu Softek relevant today, when all the major storage companies are beginning to sell management software?Murphy: I woke up cranky this morning to read all this EMC garbage about open software... I find it hysterical that EMC is trying to be the honest broker in the marketplace when they are guilty of the largest over-provisioning in history. Did you know that at least 50 percent of everything they shipped in the last three years is underutilized?

Byte and Switch: That much, eh? Then a strategy to create software that better utilizes that hardware is a good plan, no?

Murphy: Absolutely, but don't try and dress it up as "open" software that supports all hardware platforms equally. Their software initiative is a Trojan horse strategy to sell more hardware, don't be mistaken. It might support other platforms, but they will quietly tell you that it works best in EMC environments. All the intelligence will be in EMC's microkernel, which they will say is for reliability reasons. They will play the FUD [fear, uncertainly, and doubt] card.

Byte and Switch: But EMC split the company into three divisions, and the open systems software group, independent of the hardware division, is tasked with nothing but the job of creating the best open systems storage management software on the market. [See EMC Goes Soft and EMC Trifurcates.]

Murphy: OK, check out this piece of history. The original bones of Fujitsu Softek were carved out of a hardware company. We were part of the Amdahl group. To make it work, we had to be completely separate, with our own stock and our own board. It's impossible to do it in a large, old hardware company where vanity-versus-sanity runs the business. EMC cares about how much gear it has on the floor... Rivers flow certain ways on different sides of the world, and that will never change. I know their pain.Byte and Switch: But isn't Fujitsu Softek really just providing software for Fujitsu Ltd.'s hardware platforms and selling open software under the guise of an independent company, to cash in on that market, as well?

Murphy: No. And the proof is in the pudding. Check out Gartner/Dataquest's latest data on which companies are best positioned to succeed in storage area management. For the first time, Softek appears on the "incumbent players" list alongside Veritas Software Corp. [Nasdaq: VRTS], BMC Software Inc. [NYSE: BMC], Computer Associates International [NYSE: CA], and IBM Tivoli. We are no longer in the emerging players group with InterSAN Inc., CreekPath Systems Inc., Prisa Networks Inc. [recently acquired by EMC; see EMC to Acquire Prisa, Finally], StorageNetworks Inc. [Nasdaq: STOR], Storability Inc., and the other startups.

Byte and Switch: Veritas is the 800-pound software gorilla here, right? How are you going to compete with this company?

Murphy: We are not going to lose any license revenue by reducing the number of servers in a given environment – this does not affect us. All stakeholders have a vested interest; if the promise of SANs comes through, there will be fewer Veritas licenses required. But we don't under estimate Veritas. It has a huge installed base and channel in place.

Byte and Switch: What are you doing on the channel side?Murphy: We've just launched a channel partner program, which should triple our sales force. We're almost 382 employees today, with 100 of those in sales. [See Softek Opens Channel.]

Byte and Switch: Growing then, but still a little company compared with the titans of storage.

Murphy: You'll see. History is on our side.

NEXT: 'History Will Repeat'

Murphy: Think back 15 years...[Editor drifts off to teenage years, remembers summers building camps in the back garden at home... raking the leaves in the autumn for extra pocket money...]

Murphy: ...to the mainframe era.

Byte and Switch: Oh, yes, the mainframe era. Of course.

Murphy: There were a bunch of hardware companies – Unisys [NYSE: UIS], Amdahl, IBM, HP, and others – all vying for a piece of the software market, as there were way too many people in the data center and the emphasis was on consolidation, automation, and provisioning to eliminate all the manual intervention required to keep these systems running.

Byte and Switch: Right. Then what happened?Murphy: The hardware vendors created software, but they built this support and service function in a proprietary fashion on their boxes, making interoperability more of a problem than it needed to be. Out of this situation grew 10 to 12 independent software companies [ISVs] that spurred the innovation to solve this problem and help enterprises consolidate and manage their mainframe environments.

Byte and Switch: Which were those companies?

Murphy: Boole and Babbage, BMC, CA, Candle, Goal Systems, Legent Corp, Mobius, OPS-MVS, UCC, Sterling, and many more. Most of them were acquired by BMC and CA, in actual fact.

Byte and Switch: And to what degree did the software from those software companies do what it was intended for?

Murphy: Well, mainframe utilization rates went up to around 85 percent. Compare that with the utilization rates of open systems storage today which is around 30 percent in the NT environment and 50 percent at best in the Unix space.Byte and Switch: An interesting lesson, thanks. In essence, you’re saying that Fujitsu Softek is in the bracket of storage ISVs attempting to solve the open systems storage interoperability problems of today, like the aforementioned companies did in the mainframe era.

Murphy: Right, but unlike the point product startups out there that are struggling for funds, Softek is backed by a $44 billion IT company [Fujitsu Ltd.] and we already have 600-plus revenue-generating customers.

NEXT: Softek's Roadmap

Byte and Switch: What does Fujitsu Softek sell today? And can you tell us what your annual revenue is?

Murphy: Sure. We expect to report about $51 million in revenue this year, which is up roughly $10 million on last year. Our storage product portfolio comprises the TDMF [Transparent Data Migration Facility] software suite, which is data replication software originally developed by Amdahl's software division. Some 40 percent of the world's largest corporations have deployed TDMF with a 92 percent renewal rate. Current installations of Softek TDMF mainframe and open systems editions represent more than $100 million in revenue.Byte and Switch: What does TDMF do exactly, and how well is the open systems product selling?

Murphy: It's designed to replicate live, disk-based data from devices on a primary system to disk devices on a secondary system, across any available network connection supporting TCP/IP. Data is duplicated preserving the original write-ordering in near-real time to assure integrity between the two systems in the event of hardware failure, natural disaster, or human error. The replicated data, frozen at a specific point in time, can be made available for reading to applications on the secondary at any point in time by means of a check-pointing mechanism. This allows replicated data to be used for taking backups, doing data analysis or seeding other applications such as Web servers.

About 35 percent of our revenue comes from the TDMF product today; 70 percent of this is on the DAS [direct-attached storage] side and 30 percent is SAN/open systems. But interestingly, with all the Linux announcements from IBM and Sun, my salespeople reckon there could be a renaissance in the mainframe market.

Byte and Switch: OK, data replication's good. But what about storage resource management [SRM], virtualization, policy-based provisioning, disaster recovery, and all that other hot stuff?

Murphy: This is what we've spent the last two years evangelizing about and are now starting to deliver. We've been integrating the various acquisitions we've made, including DataCore Software Corp.'s IP and Vixel Corp.'s [Nasdaq: VIXL] SAN management software, into our SAN management framework. [See Softek Acquires Vixel's Software and Softek Buys DataCore Code.]So far, this includes space management, archive and delete functionality, and automated backup for Windows for SAN and NAS environments. Automated provisioning and enterprise disaster recovery is coming later this year. [See Softek Intros 'Windowless' Backup and Softek Promises 25% Better Utilization.]

NEXT: Acquisition Plans and Beyond

Byte and Switch: Are you planning any more acquisitions?

Murphy: Prices are right. In the next 12 months you'll see at least two more acquisitions from us.

Byte and Switch: In the automated provisioning and DR space?Murphy: Can't say.

Byte and Switch: So what's next? Given all the interest in storage management software right now, if the economy didn't suck so badly, would you consider an IPO?

Murphy: Waking up every day to Maria Bartiromo, the financial reporter on CNBC, talking about the blood on the streets, does put me off somewhat. Come on, change the tone, Maria! But she's right. We are dealing with scorched buyers here. Softek has just hit the second half of its year, and I am looking at our business plan. We have no worries about quarterly filings, no issue with funding – Fujitsu has not said no to Softek once since we started this thing – we have no need to even focus on when we will look for public financing. Our focus is on providing the best storage management software for our customers.

Byte and Switch: Good one. Thanks, Steve.

— Jo Maitland, Senior Editor, Byte and Switch
www.byteandswitch.com