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HP Upgrade Features OEM Crowd

If Hewlett-Packard Co.'s (NYSE: HPQ) storage tide rises from next weeks product rollout, it could lift a lot of boats with it.

The storage gear HP plans to launch officially next week encompasses OEM gear from Storage Technology Corp. (StorageTek) (NYSE: STK) and startups PolyServe Inc., Riverbed Technology Inc., and Sepaton Inc.

HP will OEM StorageTek’s midrange tape library, PolyServe’s clustered file system software, Riverbed’s WAN accelerator software, and Sepaton’s virtual tape library (VTL) engine (see HP in Deal With Riverbed, Sources Say).

The largest deal from a revenue standpoint is likely one that has been the works for a while -- HP's agreement to sell StorageTek’s SL500 midrange tape library as a companion to its new Enterprise Virtual Array (EVA) midrange SAN systems (see HP Plans EVA Facelift). As it has been telling customers since last fall, HP will rebrand the SL500 as the Enterprise Modular Library (EML) family (see StorageTek, HP Deal on Tape and StorageTek Slings SL500).

Despite the reduction in use of tape as backup media, the market is still solid: According to IDC, tape automation gleaned $1.8 billion in 2004. At least one financial analyst, Shebly Seyrafi of Merrill Lynch & Co. Inc., thinks the tape deal could bring StorageTek a sizeable chunk of those sales -- an additional $22 million in revenue this year and $66 million in 2006. That revenue will likely come at the expense of HP’s other OEM library partners – Quantum Corp. (NYSE: DSS) on the high end and Overland Storage Inc. (Nasdaq: OVRL) on the low end.

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