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Eyeing EMC, Sun talks up storage plans

The company says its strategy to tightly join storage systems, servers and software is a better deal for customers--and acknowledges it's playing catch-up in the market.

SAN FRANCISCO--Sun Microsystems tried Wednesday to elevate the status of its storage strategy, introducing new software and hardware that the company argues beats out the top dog in the storage market, EMC.

For several years, EMC has capitalized on building powerful standalone storage systems with data-protection features and other perks of their own. But Sun believes that tightly joining storage systems, servers and software is a better strategy--and that companies with server products will be able to meet that need better than EMC.

"We have said we felt standalone storage companies would have a very difficult time as companies like us, Compaq and IBM got better at storage," said Sun Chief Operating Officer Ed Zander as he opened a three-day analyst conference here. "All the traditional systems competitors are getting stronger at storage and gaining market share."

Well, almost all, anyway. For storage that's separate from servers, EMC sold $3.8 billion in storage systems in 2001--21 percent of the market--according to a projection by IDC. Sun, by contrast, had only $1.1 billion in sales, or 6 percent, lagging second-place Compaq Computer, third-place IBM and fourth-place Hewlett-Packard.

That's a slide from 2000, when Sun had led both IBM and HP.

Wednesday's new products include software that runs on a server and helps customers back up and restore data quickly; two new storage systems that accommodate as much as 11 terabytes of data; and file system software used to govern how data is written on storage systems. Collectively, the announcements improve Sun's high-end features.

Sun acknowledges it's playing catch-up in the storage market.

"It's hard. We had put a lot of our research and development in the mid-1990s around servers, around Solaris, around Java," Zander said. Five years ago, when Sun decided to take on EMC--its third big competitor after IBM and Microsoft--"It was a daunting challenge."

Sun has been trying to elevate its storage division for years, with numerous acquisitions and initiatives but not much progress. The acquisitions of Encore, HighGround Systems, LSC Software, Red Cape and MaxStrat cost Sun more than $1 billion, Zander said.

Gartner analyst Roger Cox says EMC may have a point when it says Sun Microsystems has a bit of a credibility problem with regard to its storage strategy.

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But Jonathan Schwartz, who oversaw the acquisition of HighGround Systems and LSC Software, each costing tens of millions of dollars, argues that the acquisitions already have paid off. Salespeople are able to make more compelling arguments about Sun technology, he said.

The company has already run through a list of product launches for the storage market, including the A7000 from Encore, which was considered a dud, and the T3 from MaxStrat, which was released in June 2000. Those products didn't compete effectively with EMC, though.

Sun eventually took the same route as Hewlett-Packard and began selling the high-end storage system from Hitachi subsidiary Hitachi Data Systems.

Sun has sold 200 HDS systems, said James Staten, director of competitive intelligence and strategy at Sun, and "we believe there's so much interest that we're on track to sell 500 of these systems by June."

The HDS systems start at $400,000 and typically cost hundreds of thousands of dollars more, said Mark Canepa, executive vice president of Sun's network storage division.

EMC, unsurprisingly, scoffs at Sun's latest challenge.

"They've got a credibility problem," said spokesman Greg Eden, referring to the repeated storage product overhauls over the years. Sun's "priority remains server sales."

EMC has seen some improvement in the harsh environment that led to layoffs and other drastic measures last year. Competition from HP, IBM and HDS in 2001 crushed EMC's gross margins, a key measure of profitability. But gross margins increased from 30 percent in the third quarter of 2001 to 37 percent in the fourth, Eden said, boosted by success toward the company's goal of cutting $200 million in fixed expenses each quarter and by better sales of software and networked storage systems.

Among Sun's new products announced Wednesday:

• SAM-FS and QFS, two new file systems software that governs how information is written to hard disks. The products are designed for maximum speed and for quicker recovery when a server crashes. Prices range from $15,000 to $20,000 per terabyte.

Veritas has a rival file system that has long been popular with Sun servers, and indeed is a component of a strong partnership among Sun, Veritas and database maker Oracle. Zander acknowledged that the new products compete with Veritas' software, but that Sun thinks only Sun's largest customers would be interested. Disney and AOL Time Warner are using the new file systems.

• The StorEdge 3900, a high-speed storage system based on Sun's T3 line. The new system is designed to pump data to servers as fast as possible for customers. Speeds run as high as 1.6 gigabytes per second.

• The higher-end StorEdge 6900, which adds features such as balancing work loads with other storage systems and dealing with larger numbers of database transactions. The 6900 also includes "virtualization" technology.

The goal of virtualization--all the rage among storage companies--is to pool storage systems together instead of having individual islands of storage that often have lots of unused capacity. Through virtualization, jobs that need the capacity can use it, and it's easier to increase or decrease how much capacity is available without having to turn off computers and storage systems.

The 3900 and 6900 have "phone home" capabilities, so Sun can diagnose and sometimes fix problems over the network.

•  Four software packages that consolidate earlier software offerings. One new feature is the StorEdge Network Data Replicator (SNDR), which lets a server take a "snapshot" of a storage system at a specific point in time that can be restored if problems crop up after the snapshot has been taken. SNDR also lets a server write to two storage systems simultaneously so that services are available even if one system fails.