Seagate said this week that through a partnership with Cobalt Networks, it will begin selling a server appliance designed to easily plug into a network to expand storage capacity, a strategy Quantum and Maxtor embarked on last year.
These companies are scrambling to find a way to escape the fiercely competitive and nearly profitless environment that afflicts hard drive makers. Meanwhile, companies such as Network Appliance and EMC make a healthy business selling hardware built from those same disks.
That harsh environment prompted Seagate last week to take drastic restructuring measures that will turn it back into a privately held company.
Now that server appliances have won over numerous companies, including all the major computer makers, the difficulty will be in getting customers' attention in the midst of a cluttered and noisy marketplace. Seagate is targeting its product at Internet service providers and application service providers, companies that provide software functions over the Internet. Both types of firms have high demand for hardware.
The Seagate strategy differs from that selected by Maxtor and Quantum. While those companies acquired start-ups to get their hands on more products, Seagate decided to resell devices manufactured by Cobalt.
Cobalt, which builds server appliances using the Linux operating system, is in the midst of an expansion of its effort to sell products through other companies as well as under its own brand name, the company said in an Securities and Exchange Commission filing. Cobalt also sells server appliances through Japanese telecommunication giant NTT DoCoMo, which sells Cobalt machines for wireless email systems, and through France Telecom, which sells Cobalt machines to French public schools for Internet access.
In the agreement between Cobalt and Seagate, Seagate will be able to tap into Cobalt's customer base, and Seagate will develop software that will be available on Cobalt's servers.
Meanwhile, at the higher end of the market, server appliance maker Procom announced a new NetForce 1500 storage server targeted at a much higher end of the market. The new Procom servers will cost between $22,000 and $50,000, the company said.
Hewlett-Packard uses Procom hardware in a line of its storage server appliances.