Sun angles for bigger share of storage market

The market for storage devices has become a driving obsession among major hardware manufacturers, including Sun, IBM, Compaq and Dell.

The growth of e-commerce has vastly expanded the need for data storage. Rather than incorporating drives and other storage devices inside of servers, companies instead are building devices specialized for the task. Often now, more profit is made from storage equipment than from the server when a new system is sold, analysts say.

The StorEdge N8000, with 200 to 800 gigabytes of capacity and a starting price of $54,000, will be joined by the higher-capacity N8200 and N8400 by the end of September, said Denise Shiffman, vice president of marketing for Sun's network storage group. The devices are designed to easily attach to a network, so companies can quickly add room for tasks such as sharing files, storing email or housing Web pages.

Sun's new storage appliances fall squarely into Network Appliance's market for high-speed "network attached storage" (NAS) devices that offer fast performance and are easy to operate. Sun argues its products are faster and bigger than NetApp's, Shiffman said.

The new storage emphasis has attracted some firms, such as Dell and Fujitsu, to sign deals that allow them to sell Network Appliance hardware under their own names. In a higher-end market, Hewlett-Packard also wanted thicker profit margins, kicking EMC out of its own sales effort and deciding to sell a Hitachi storage system under its own name.

Sun has its own storage push under way. It has acquired three storage companies--Encore, MaxStrat and RedCape. And the company plans to introduce a new higher-end storage system, the T300, code-named "Purple," on June 14.

The company's storage efforts have thus far won mixed reviews from analysts, however. Sun hasn't been successful selling products connected to non-Sun computers, and the company quietly discontinued the flopped A7000 storage product that was the centerpiece of the $185 million acquisition of Encore in 1997.

"Sun has been reasonably successful selling storage into its installed base. It's been notably unsuccessful going outside of it," said Illuminata analyst Jonathan Webster.

Shiffman acknowledges that most Sun storage currently ends up alongside Sun servers, but the company hopes to penetrate new customer accounts with the new storage devices introduced this week.

"This allows us to grow our market potential fairly dramatically," she said. The device can handle communications through both the widespread NFS standard and through the comparable CIFS standard from Microsoft, she said.

Sun no doubt hopes the new products will do a better job expanding the Sun customer base than the A7000. That device could connect not only to Sun and other Unix servers but also to IBM mainframes and Windows NT servers. The A7000 was discontinued last fall, said product marketing manager Mike Nalls. "It is no more," he said, citing a lack of demand for products that were large and monolithic instead of smaller with room to grow.

Webster was less charitable about the demise of the A7000. "It's just a huge embarrassment. It's something they just don't want to talk about," he said.

But the upcoming T300 could be a better way to sell to new accounts, he said. StorageTek will resell the device under its own name to a broader customer base, which will enable Windows and other customers to buy it without Sun having to retool its sales and support personnel, Webster said.