StorageTek Offers Arsenal

Storage Technology Corp. (StorageTek) (NYSE: STK), charging ahead with its services strategy while waiting to become part of Sun Microsystems Inc. (Nasdaq: SUNW), next week will launch a remote backup service through storage service provider Arsenal Digital Solutions Worldwide Inc.

StorageTek execs say it is business as usual until Suns $4.1 billion acquisition closes, so they’re moving on the services road map laid out in March (see StorageTek Swears by Services and Sun to Acquire StorageTek for $4.1B).

David Kershen, business manager of StorageTek’s remote managed services, says he expects the remote data protection market to grow to $3 billion by 2008. StorageTek picked Arsenal’s ViaRemote service as the best way to attack the market, which consists mostly of SMBs and remote offices of large companies.

Arsenal’s ViaRemote uses Avamar Inc. software to back up any server, PC, or laptop over an encrypted network to Arsenal’s disaster recovery center. The service allows up to eight daily, five weekly, and three monthly backups, and lets customers store 90 days of data.

Customers have the option of storing data longer or backing up to a second hosting center for an extra fee. Another option is Fast Restore, which uses a caching appliance on some or all of the remote sites. StorageTek will add a bare-metal restore option in the third quarter, Keshner says.StorageTek’s pricing for ViaRemote starts at $20 per Gbyte per month to protect 50 Gbytes or less on severs, and scales down based on volume to approximately $4 per Gbyte to protect 50 TBytes or more. The price for PCs and laptops range from approximately $11.67 to $13.33 per seat, depending on the number of seats protected.

Shouldn’t a tape library and disk vendor be able to provide its own backup services without relying on a third party? StorageTek tried that, with little success.

“We tried to address this by selling a lot of little libraries, tape drives, and software. Frankly, we don’t get a lot of footprint there,” Kershen says. “This is where smaller competitors have more traction than we do. If you have to buy hardware for 10 [remote] offices, it’s easier to go with a lower-end library.”

That favors vendors such as Advanced Digital Information Corp. (Nasdaq: ADIC), Quantum Corp. (NYSE: DSS), and Overland Storage Inc. (Nasdaq: OVRL), while StorageTek’s strength is in the enterprise (see Quantum Offers Monitoring Service). Rather than cede the booming market, StorageTek decided to find a partner.

Besides helping to compete with rival tape vendors, Kershen says ViaRemote puts StorageTek “on even footing” with larger service organizations like Electronic Data Systems Corp. (EDS) (NYSE: EDS) and IBM Global Services.StorageTek had other options besides Arsenal. AmeriVault Corp., EVault Inc., Incentra Solutions Inc., and LiveVault Corp. all offer competing services (see AmeriVault Weighs In on Tape Losses, EVault Advances Online Backup , and IBM Dives Into Online Backup). Kershen says Arsenal is the most successful of the bunch, and it certainly helped Arsenal that it already uses StorageTek tape libraries in its North Carolina hosting center.

“They’re the most financially viable of the providers who can do this,” Kershen says. “Plus, they’re a good StorageTek customer.”

Kershen says StorageTek even considered partnering with a wide-area file services (WAFS) vendor. While WAFS vendors have caught the eye of the likes of Brocade Communications Systems Inc. (Nasdaq: BRCD), Cisco Systems Inc. (Nasdaq: CSCO), Hewlett-Packard Co. (NYSE: HPQ), and Microsoft Corp. (Nasdaq: MSFT) as a backup option for remote offices, Kershen says he wasn’t sure the technology is battle-tested yet (see Cisco Chomps FineGround, Brocade Invests in Tacit, HP in Deal With Riverbed, Sources Say, and Microsoft Gives Tacit Approval).

“We explored WAFS, but didn’t get far with it,” he says. “We wanted to bring this out a couple of quarters ago, so we’re focusing on what we can bring to market now and what we know works. We don’t want to be last one into this market.”

— Dave Raffo, Senior Editor, Byte and Switch0