Tony Pearson is a Master Inventor and Senior IT Architect for the IBM Storage product line at the
IBM Executive Briefing Center in Tucson Arizona, and featured contributor
to IBM's developerWorks. In 2016, Tony celebrates his 30th year anniversary with IBM Storage. He is
author of the Inside System Storage series of books. This blog is for the open exchange of ideas relating to storage and storage networking hardware, software and services.
(Short URL for this blog: ibm.co/Pearson )
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It has always been the case in fast pace technology areas that you can't tell the players without a program card, andthis is especially true for storage.
When analyzing each acquistion move, you need to think of what is driving it. What are the motives?Having been in the storage business 20 years now, and seen my share of acquisitions, both from within IBM,as well as competition, I have come up with the following list of motives.
Although slavery was abolished in the US back in the 1800's, and centuries earlier everywhere else, many acquisitionsseem to be focused on acquiring the people themselves, rather than the products or client list. I have seen statistics such as "We retained 98% of the people!" In reality, these retentions usually involve costly incentives,sign-in bonuses, stock options, and the like. Desptie this, people leave after a few years, often because ofpersonality or "corporate culture" clash. For example, many former STK employees seem to be leaving after their company was acquired by Sun Microsystems.
If you can't beat them, join them. Acquisitions can often be used by one company to raise its ranking in marketshare, eliminating smaller competitors. And now that you have acquired their client list, perhaps you can sellthem more of your original set of products!
Symantec had acquired Veritas, which in turn had acquired a variety of other smaller players, and the end result is that they are now #1 backup software provider, even though none of theirproducts holds a candle to IBM's Tivoli Storage Manager. Meanwhile, EMC acquired Avamar to try to get more into the backup/recovery game, but most analysts still find EMC down in the #4 or #5 place in this category.
Next month,Brocade's acquisition of McData should take effect, furthering its marketshare in SAN switch equipment.
Prior to my current role as "brand market strategist" for System Storage, I was a "portfolio manager" where wetried to make sure that our storage product line investments were balanced. This was a tough job, as the investmentshad to balance the right development investments into different technologies, including patent portfolios.Despite IBM's huge research budget, I am not surprised that some clever inventions of new technologies comefrom smaller companies, that then get acquired once their results appear viable.
The last motive is value shift. This is where companies try to re-invent themselves, or find that they are stuck in acommodity market rut, and wish to expand into more profitable areas.
LSI Logic acquisition of StoreAge is a good exampleof this. Most of the major storage vendors have already shifted to software and services to provide customer value,as predicted in 1990's by Clayton Christensen in his book "The Innovator's Dilemma". The rest are still strugglingto develop the right strategy, but leaning in this general direction.
Chris Anderson, of Wired magazine, wrote a great article called The Long Tail.
This article became a book by the same name published earlier this year, and I just discovered it on a recent visit to Second Life. A lot of IBMers are now alsoSecond Lifers, and I suspect it is just a matter of time before we are conductingour customer briefings there, and getting our year-end bonuses paid directly in Linden bucks.(Those of you not familiar with Second Life can watch this 3-minute video fromthe folks at Text100)
Anyways, the Long Tail describes the new economy of entertainment thanks to digitalstorage. Here are some of the key insights.
In the past, entertainment was all about hits: hit songs, hit movies,hit novels, and this was primarily because of the economic realities restricted byphysical space. Chris writes: "An average movie theater will not show a film unless it can attract at least 1,500 people over a two-week run; that's essentially the rent for a screen. An average record store needs to sell at least two copies of a CD per year to make it worth carrying; that's the rent for a half inch of shelf space."
Things have changed. To drive the point home, Robbie Vann-Adibe (CEO of eCast), poses the trick question"What percentage of the top 10,000 titles in any online media store (Netflix, iTunes, Amazon, or any other) will rent or sell at least once a month?" The answer will surprise you. Write down your guess first, then go read here. His digital jukeboxes are able to play from a list of150,000 songs, not the few hundred you'd find at the Tap Room which is rated as having the best jukebox in Tucson.
The phenomenon is not just limited to music. "Take books," Chris writes, "The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon's book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are..."
This has incredible implications for the storage industry. For one, content providers are going to dig deep into their archives to digitize and deliver "long tail" offerings. If they don't have a deep archive, many will start to build one. Second, the need to search through that large volume of content will become more critical. Classifying and indexing with the appropriate tags and metadata will be an important task.
For those of you worried about my mysterious absence on the blogosphere, I am getting better. Sorry for not posting much lately, I have had more serious issues to worry about. I am awaiting results on whether I have Dengue fever from Brazil, Avian flu from Thailand, Malaria from Kenya, or perhaps it is just food poisoning from the otherwise fabulous French cuisine I ate last week in the South Pacific. Well, I am back in town for a while, and hopefully will recover to full health, and have some time to reflect my thoughts on storage topics.
Speaking of which, a lot has happened while I was out. Let's take a quick look.
Following our introduction of the world's first encryption-capable tape drive, the TS1120, IBM now offers higher capacity 700GB cartridges, in standard 3592 format.
The DS8000 Turbo disk system now is being offered with a flexible choice of warranty periods, 1-year, 2-year, 3-year and 4-year. Since IBM was the only one to offer 4-year warranties, it was sometimes difficult to compare apples-to-apples with our competition that offered lesser warranty periods. Now, we can match the warranty period you need, so the focus can shift on the added value the DS8000 Turbo provides at the right price.
IBM's newest low-end half-high tape drive, the TS2230 Tape Drive Express Model H3L, part of our Express portfolio of offerings designed for small and medium-sized businesses (SMB). It supports the latest LTO Generation 3 specification, so fully compatible with our larger tape systems, as well as the LTO-based gear from HP and Quantum.
Here we are again at Top Gun class.In between class topics, we often show short video clips.
This week, we saw IBM Executive Bob Hoey's wisdom on selling mainframe computers. Bob is the VP of Sales for our System z server line, but the lessons might also apply to high-end disk or enterprise tape libraries.
An astute reader brought this to my attention. The newest addition to our "IBM Express Portfolio"set of SMB-oriented offerings is the new TS3100 tape library. This has one LTO Gen 3 drive and up to 22 cartridges, which can be a mix of WORM and rewriteable cartridges,beautifully packaged in a small 2U high (3.5 inch) rack-mountable chassis. Each cartridge can hold up to 800GB uncompressed, or 1.6TB with typical 2-to-1 compression.
This tape library would be a great complement to TSM Express for backup, and to theDR550 Express for archive and compliance storage.
And now, for a limited time, there is a $1500 rebate, check website for details.