StorageTek Lauds EMC-ADIC Deal

Exec says EMC helps StorageTek by endorsing tape. How's that for a backhanded compliment?

June 25, 2004

3 Min Read
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The head of Storage Technology Corp. (StorageTek)s (NYSE: STK) tape library division predicts EMC’s OEM deal with Advanced Digital Information Corp. (Nasdaq: ADIC) will stimulate tape sales for StorageTek (see EMC to Resell ADIC Tape).

Hang on: So StorageTek gains from its rival’s partnership with EMC? That’s what Jon Benson, StorageTek’s VP of automated tape solutions, claims. And no, he's not drunk on sour grapes. Benson says ADIC is a poor fit for EMC.

“EMC has enterprise customers, but they partner with a company known for low-end autoloaders?” Benson says. “That’s not exactly the perfect marriage.”

Of course, ADIC hopes the deal with EMC helps get it the enterprise presence it has lacked. But Benson says StorageTek will reap benefits from EMC’s admitting that tape is a part of its ILM (information lifecycle management) strategy.

“We see it as a positive for StorageTek that EMC finally embraces tape,” Benson says. ”Any enterprise customer that needs tape is going to look to us. You have two choices for enterprise tape libraries: IBM and us. If you’re an EMC customer, you’re probably not an IBM customer. So who do you go to for tape?”It’s a stretch to say EMC is embracing tape, though. You might say the marriage with ADIC was a shotgun wedding. Before announcing the deal with ADIC during EMC's Analyst Day on June 10, EMC executives stressed that they consider disk the primary target for most backups, with tape used only for archiving of rarely used data and offsite vaulting.

“Disk continues to take over backup and recovery and archiving,” EMC’s VP of corporate marketing Howard Elias said during the lead-in to the ADIC announcement, before conceding that customers asked for tape, which "will still have a role” in enterprise SANs. Later, CEO Joe Tucci said EMC would not consider acquiring ADIC, because tape is not a growth market.

So why ADIC instead of StorageTek? Sources whisper there’s too much bad blood between StorageTek and EMC, which have competed -- and gone to the mat -- over products and services in recent years (see StorageTek: The Next Disk Titan? and Who's Tops in SAN Services?). Benson won’t get into that publicly.

“I know more than I’m saying, but I can’t comment,” he says.

He will say the role of tape is growing, not shrinking.“StorageTek has had 15 straight quarters of year-over-year earnings growth and seven straight quarters of year-over-year revenue growth,” Benson says. “IBM’s tape revenues grew 25 percent year over year. To say tape is dying out -- the facts in the market would lead you to a different conclusion.”

Although StorageTek offers disk-based backup, Benson says tape is the better choice for storing the rapidly growing amount of data that needs to be kept for compliance reasons. StorageTek also emphasizes tape’s role in ILM, a term it once tried to trademark (see StorageTek Looks to Bag Buzzword).

“Who would keep any data you don't use spinning on disk longer than a couple of weeks?” Benson says. “It takes up space and electricity.”

StorageTek’s customers seem to agree. Executives acknowledged during their last earnings call in April that disk revenue growth for this year could be around 15 percent, compared to 17 percent in 2003 (see StorageTek: No IT Spending Uptick).

— Dave Raffo, Senior Editor, Byte and Switch0

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