IBM buys Mylex, beefs up storage line

Big Blue agrees to pay $240 million for the company, which develops technology for storage systems.

Brooke Crothers Former CNET contributor

Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.

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Brooke Crothers

Jan. 2, 2002 4:43 p.m. PT

2 min read

IBM will purchase Mylex as part of its continuing effort to reinvigorate its storage business, the company said Tuesday.

Big Blue has agreed to pay $240 million for the Fremont, California-based company. A developer of technology for storage systems, Mylex products are used in desktop computer and networked environments.

IBM will pay $12 per share for each outstanding share of Mylex common stock. Based on the number of outstanding shares, the transaction is valued at approximately $240 million.

"Upon completion of the acquisition, which is subject to regulatory and other approvals, Mylex will become a wholly owned subsidiary of IBM," the company said in a statement.

IBM has historically been a strong player in disk drives but hasn't been as successful in the high-end corporate "enterprise" storage market, according to Steve Milunovich, an analyst at Merrill Lynch. Purchases of companies such as Mylex allow it to compete better with EMC. The acquisition is intended to bolster the ability of IBM's Technology Group to deliver "one-stop shopping" to customers of its storage products, the company said.

The move follows Monday's introduction of a new high-end storage system that mimics many of the features of sophisticated corporate servers. IBM is moving to recapture ground lost to rival EMC, now the storage market leader.

The acquisition also burnishes the capabilities of IBM's increasingly vital Technology Group. The division oversees IBM's colossal component sales businesses, which includes a smorgasbord of chip technologies, networking and communications hardware, and displays in addition to storage--in short, all major components used in computers today.

Mylex will allow IBM to help customers make the move to e-business and the massive amounts of data that go along with this. The company designs and manufactures RAID (redundant array of independent disks) hardware for storage products. RAID can provide higher performance and enhanced data security by effectively grouping several disks into a single system.

E-commerce and Web-site hosting generate greatly increased storage demands as companies deploy SANS (storage area networks) to handle data demands. SANs are separate networks of storage devices that manage and store data without tying up the computing resources of servers.

Monday's debutant, the IBM Enterprise Storage Server, offers up to 11 terabytes of storage and fits well into Big Blue's e-commerce strategy. Internet businesses are some of the biggest consumers of mass storage.

Earlier this year, Big Blue has announced multibillion-dollar agreements with Dell Computer and--ironically--EMC. Under terms of the latter pact, Hopkinton, Massachusetts-based EMC will continue to buy advanced IBM disk drives to be incorporated into its Symmetrix Enterprise Storage systems. In the future, the agreement is likely to include other IBM technologies, such as microprocessors and advanced custom chips. The alliance also provides for broad patent cross-licensing for storage and other technologies.