Shining light on Sun's storage tale

Sun Microsystems has attacked the storage market with a vengeance, as company officials talk up acquisitions, investments and new products on the way. The vendor claims a Sun server and storage pairing gives customers one place to shop and "one throat to choke," positioning Sun well against the storage king EMC.

The company recently finalised its acquisition of storage software maker LSC Inc., and on Monday (May 7) launched a set of storage appliances -- the StorEdge N8400 and N8600 Network Attached Storage (NAS) products, designed to give users storage space while requiring minimal configuration. In addition, Sun's Chairman and Chief Executive Officer Scott McNealy said last week the company would continue making storage acquisitions throughout 2001.

While Sun may talk a good game, analysts claim the vendor needs to live up to its words to gain market share in a lucrative space.

"Sun tells a good story, but it only holds up in some cases," said Roger Cox, an analyst with Gartner Group Inc.

The StorEdge products were only Sun's second and third NAS offerings respectively, marking a slow move toward a high growth market. Beyond its limited NAS line, Sun has also been losing share in the market for storage products linked to its Solaris operating system, falling behind EMC in a market it should own, according to Cox.

"Sun only got about 32 percent of that market, when they should be getting 100 percent," Cox said.

In 1999, Sun held 35 percent of the Solaris-related storage market, while EMC owned 39.5 percent of the same segment. Sun then lost ground, down to 32 percent or about 1.2 billion in sales in 2000. Conversely, EMC pulled in 44 percent or 1.7 billion in sales.

While Sun acknowledges that it has moved late in parts of the storage market, many customers seem impressed with its prices -- which are generally lower than EMC on competing products -- and arguably lower costs for managing Sun storage products.

"By getting on a single platform across the board with servers and storage, it meant a single engineer could support both sets of hardware," said Brad Whitley, a network engineer at Devon Energy Corp. "With Sun storage you are able to manage it with a common interface you are used to when managing their servers."

Devon acquired numerous companies in recent years, forcing it to deal with different hardware carried over from the acquired companies. To simplify its infrastructure, Devon decided to stick with one vendor where possible in its technology buys and has championed this decision since.

While Sun's all-in-one approach may at times give it an edge over EMC, analysts and customers claim EMC is also adding management features as it expands mainframe style storage with networked technology.

"I think EMC recognises the challenge of moving from selling iron to selling bits," said Frank Auer, vice president of operations at Galileo International Inc. and longtime EMC customer. EMC's software functionality and scalability handily beats Sun, Auer said, leading him to believe the storage giant can deflect challenges.

For the time being, most analysts agree with Auer, saying that EMC will dominate storage for some time to come. The same analysts, however, also say that Sun's has obviously upped its focus on storage and that the whole-system approach can pay off in the long run.

Sun's charge into storage makes sense at a time when many vendors are trying to catch EMC as bandwidth advances and small, powerful storage boxes are driving the adoption of networked technologies.

"Storage is either moving or has already moved to the network," said Charles King, senior analyst with Zona Research Inc. in Redwood City, California. "This move to the network is something that all of the competition is praying EMC can't pull off in time."

IBM, Compaq and others have addressed both the NAS and SAN (storage area network) arena, making products able to send large chunks of data over IP (Internet Protocol). EMC has developed its network-centric CLARiiON and Celerra products, but the company has and will thrive for some time selling large, centralized storage systems. However, Sun and its fellow hardware rivals hope EMC will be distracted enough by its long-standing storage model to give them a shot at grabbing market share gains, King said. In addition, the server powerhouses facing slowed sales in a down U.S. economy saw the storage market be one of the last hit by the downturn and hear speculation that it will be one of the first to ramp again.

While EMC faces a storage assault from many competitors, the vendor claims it can hold on to the market is has and expand its product line at the same time.

"I am not that worried about the competition," said Mike Ruettgers, executive chairman at EMC in a recent interview. "We have the ability to invest in multiple levels of technology."

EMC will spend $1 billion on research and development this year with 70 percent of that going to the company's oft celebrated software. EMC's investment solely in storage sends a strong statement to customers and assures flexibility with the company's product arsenal, Ruettgers said.

"The server guys are very much focused on servers first," he said. "A good question to ask Scott (McNealy) is, 'where are your best people working?' "Sun maintains that storage will be a top priority for it this year and that storage receives as much attention as developing UltraSPARC processors, Solaris, servers and software. The company admits to falling behind in storage due to its server-centric past, but it is now ready to take a piece of one of technology's strongest, growing sectors.

Sun has long touted its ability to sell customers a complete line of technology centered around a singular vision: "The network is the computer." This network mantra helped the vendor consistently pull server market share away from IBM and could again pay off with storage. Sun claims that, in general, it sells cheaper products than EMC does, that it can offer a service level agreement well beyond its rivals and that it has an army of developers coming up with applications in all areas for the Sun platform. Developers who work with Java, iPlanet software, and Solaris, and ties their applications to Sun hardware will ultimately be key to making the Sun systems story a painful read for EMC, according to Greg Papadopoulos, chief technology officer at Sun.

"EMC is clearly a focused, successful company, but you don't hear a lot about the company's technology from its customers," Papadopoulos said in a recent interview. "What you hear is about how EMC takes care of (its customers)."

"We look at what disrupts the incumbent market," he said. "There is a whole new network-based storage view now emerging. For Sun, that is the perfect opportunity. In a way, (EMC has) to recompete for that space."

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