Zerowait Corporation

Over the next few weeks the Zerowait folks are going to be at some trade shows and also I will be featured on a panel on cloud computing. The events start this week on Friday with Cloudslam09 the virtual conference on cloud computing. If you want to learn more about cloud computing sign up for Cloudslam09.

Next we will be doing a small government show in the DC area at NRL on May 14th, and the following week we will be at the EMC World Conference in Orlando May 18th – 21.

A lot of customers can’t go to trade shows this year because of budget constraints, which has caused the Zerowait staff to travel more than we normally do. Business has to go on, and savvy businesses are embracing our high availability services to maintain their legacy equipment for longer periods than in the past. The upgrade cycle pushed by their storage vendor is often cost prohibitive and for today’s budget minded enterprises. Vendor’s with punitive support pricing models are causing customers to review their strategic storage purchases, and our company is there to help customers maintain their service levels while they review their future storage purchases.

It is going to be a busy few weeks.

Oracle buys Sun, this is a brilliant tactical and strategic business move by Oracle and they should be commended for it.

NEW YORK – Information technology company Oracle Corp. said Monday it is buying Sun Microsystems Inc. in a cash deal the company valued at $7.4 billion after IBM abandoned its bid to buy the networking equipment maker.

For the storage business it will be an interesting few years as HP and Oracle have a partnership and Oracle runs on EMC, Hitachi, IBM and NetApp. But Oracle has been able to solve these contradictions in its business before and they continue to grow. Strategically, it would seem that Oracle will have to marginalize its hardware partners over the next few years to rationalize the purchase of SUN. I expect to see them do it.

This may be a precursor to other OS and DB companies buying major hardware manufacturers. Creating proprietary hardware and software solutions is the best way to lock clients into your solution long term. In tough economic times I expect we will see more companies try to lock in their customers this way.

Update
“Right now, it looks like Oracle is going to stay in the hardware game, meaning they’re going to be competing with their biggest partners,” said Brian Babineau, senior analyst at Milford, Mass.-based Enterprise Strategy Group (ESG). “EMC and NetApp are going to have to work even harder to convince customers that an integrated application stack isn’t the way to go.”

IT budgets are under pressure and shrinking in many companies, but according to Computerworld one company is focusing on the price of coffee cups their IT department uses.

Companies are also looking beyond technology and personnel to cut IT costs. For example, Herbalife is saving $70,000 annually just by eliminating the purchase of Styrofoam coffee cups for IT workers, said Hansen.

These guys must be drinking a tremendous amount of coffee, and I wonder how many folks are in the IT department.

Uline sells coffee cups for $41.00 for 1000 12 oz cups. I calculated this out and if the $70,000 figure is true …. $70,000.00 / $41.00 = 1707.317 packages of 1000 cups (1,707,317 cups) with 250 working days a year 6829 cups a day… That is a lot of coffee and must be a huge staff. Imagine what they are paying for the coffee itself!

I don’t know how much storage and infrastructure these folks manage, but they must have excellent coffee and one great plumbing system. How do they get any work done?

“Stop buying storage. You heard me right: Stop buying storage,” Salem said. “How? Reduce the amount of information that you store in the first place, and make the storage you do have more flexible and efficient.”

I read this and thought “Wow – here is a guy that may actually understand the value of maintenance and storage management. “

Other things mentioned in article:

If you want to stop buying storage, Salem said, there are four key opportunities that everyone should be looking at right now: storage resource management, thin provisioning, data deduplication and intelligent archiving.

“If you’re like most companies,” Salem said, “you have a lot of ‘orphan storage.’ It’s time to give your orphan storage a loving family. You often have more room to grow than you realize.”

“Most enterprise data centers utilize only about 15 to 35 percent of the entire storage capacity available. The remainder is used for unexpected overhead, locked out of accessibility, intentionally kept for some other purpose or simply lost track of over time.”

All of it requires spinning disks and electricity from the grid that costs money on the bottom line, whether or not the storage is in service.

“We had one customer who told us that they were managing massive information growth. They estimated they were using 50 percent of their storage. We showed them they were only using 20 percent,” Salem said.

“What you need are storage management solutions that work across different platforms and give you an end-to-end view of the storage you have, the storage you’re using and the storage you’re not.

Storage efficiency is a concept that is often lost in the marketplace of ideas because so many people and experts define efficiency in so many varied ways. It is not just electricity usage, maintenance, square footage, information density or response time that defines storage efficiency it is all of them and viewed from different perspectives depending on the application using the storage resource.

If one solution fit all situations we would be all driving the same cars and all our houses would look the same. And there would be no innovation at all. When things get hard, it is a good time to look at your storage infrastructure and rediscover the inefficiencies, and concentrate on solving those bottlenecks. Actually, now is a good time to review all of your infrastructure costs.

By the way, I hope you can join us at EMCworld this year in Orlando May 18 – 21.

I received a few calls over the weekend about takeover rumors regarding NetApp. People want my opinion as to what I think will happen. I have no special information nor do I see any particular strong synergies between any of the companies said to be interested in a purchase and NetApp. The IBM / Sun merger talks seem to be hitting some snags, but that could be last minute bargaining. Since IBM is a NetApp distributor, I think there will be some fireworks if the merger goes through, since IBM is a big part of NetApp’s sales and Sun and NetApp are tied up in legal wrangling. If there is a purchase, it might be a reaction to an IBM / SUN merger, more than a long term strategic match up.

The history of NetApp’s own acquisition strategy seems questionable – but maybe there was some hidden value in the Spinnaker, Topio, and Decru purchases that are not visible from my vantage point. It might be that NetApp is a niche player, and does not fit well into the jigsaw puzzles of larger companies.

NetApp’s enterprise storage products remain reliable, and a lot of our support customers are looking to maintain them for a long time. The enterprise storage customer is always looking for balance in long term value, scalability, and reliability, and as long as NetApp focuses on these attributes they should remain a viable niche storage company.

And remember that “NetApp CEO Daniel Warmenhoven said in an interview last month that he wants NetApp to remain a stand-alone company. “

The purchase of SGI by Rackable has a lot of interesting aspects. SGI was started by Jim Clark and Kurt Akeley. Kurt and I knew each other since we were teenagers and flew Radio Control Airplanes together here in Delaware. Kurt went to the U of D and so did I. After graduation Kurt went to California and met Jim Clark at Stanford. together they started SGI which became a big company, and Kurt and I lost touch for many years. I caught up with Kurt again in 2002 after a friend of mine in Palo Alto asked me if I knew him, because the friend had worked for Kurt at SGI. Small world.

NetApp had hired a lot of folks that used to work at SGI over the years, and as in every market niche there are a lot of folks that know each other and have worked with each other. SGI was a great company, with great technology but somehow they lost their ability to respond to market conditions and myopically stuck to their view of what the market should be. Some of the great folks that SGI attracted over the years migrated across town to NetApp as SGI unwound.

I hope NetApp does not suffer the same fate as SGI over the next few years, and I hope they can adapt to the rapidly changing market landscape. Time will tell.

There has been a lot of discussion in the trade press about the IBM and SUN merger and some folks are looking at the storage side of the merger .

It’s perhaps the storage side that will see the most fireworks, as there is more than a whiff of monopoly in some market segments, not to mention a large amount of product overlap. The complete IBM storage line up, of course, will probably remain intact. At the high end, in particular, IBM has its own mainframe-based storage with the DS8000, whereas Sun resells a Hitachi solution.

Otherwise, both Sun and IBM OEM their entry and enterprise midrange storage from LSI, so there is no real conflict there. Similarly, on the virtual tape library (VTL) side for open systems, both have leveraged Falconstor, although IBM recently bought Diligent for VTL — a solution that also has the much in demand deduplication technology. In addition, Schulz thinks IBM will probably continue with its OEMing of NetApp-based N series while boosting its own capabilities by combining the best of Sun/IBM hardware and software technologies for NAS as well as object-based and archiving solutions.

The tape side, however, is where things could get really contentious and possible fall afoul of regulators. Uniting Sun’s StorageTek holdings with IBM’s considerable tape offerings give the resulting firm a huge market share and control over much of tape landscape. This may not pass muster with the DOJ.

If that regulatory minefield can be negotiated successfully, there might well be major Sun casualties in the StorageTek line. However, Olds said he believes Sun’s low-cost ‘open source’ storage line will survive as it can be used as a weapon against major competitors such as EMC

Over the last twenty years in business I have noticed a strong correlation between salesman, compensation schedules, and the strength of a product line’s sales. When looking at the merger and its effect on product lines, I would think that the merged company would provide a better compensation schedule to sales folks on products that it makes the most margin on. Therefore, I would expect products where the combined company is making margins as a reseller to slowly fade away.

There is a lot of discussion about the possible acquisition of SUN by IBM. Whether it happens or not presents the issue again of how to manage legacy equipment in your data center. Critical components in your data center might be unsupported after an acquisition because they are not profitable or compete with other components owned by the acquirer. Hardware companies and software companies go out of business all the time, and customers are left looking for third party support to get them over the transition.

Most companies have some sort of formal or informal D/R plan, but very rarely have I seen a plan where a company deliberately has competing vendors in their data center in case of the acquisition or collapse of one of their vendors. One of our customers in the Southeast, keeps us in their data center in case NetApp gets acquired or for whatever reason terminates support for their legacy equipment. This strategy also works to lower the cost of maintenance and support because two companies are competing for the business, forcing sales folks to sharpen pencils.

NetApp and SUN have seemed to compete and cooperated for many years since they co exist in many data centers. The lawsuits between them seem to have strengthened the the wing in each organization that wants to compete instead of cooperate. If IBM purchases SUN the competition wing of SUN might not want to continue the OEM relationship that IBM has for NetApp’s filers.

I am certain that the lawyers are having some interesting discussions about this and other subjects related to cooperating with the competition.

WSJ on Saturday

By WILLIAM M. BULKELEY

Teams of International Business Machines Corp. lawyers are examining Sun Microsystems Inc.’s contracts and documents in a due-diligence process that could take a number of days, according to people familiar with takeover negotiations between the two companies.

These people said it isn’t clear how many days will be needed for the lawyers to finish their work.

Barron’s on Saturday
SATURDAY, MARCH 21, 2009
PLUGGED IN
IBM Deal May Hurt NetApp
By MARK VEVERKA | MORE ARTICLES BY AUTHOR
NetApp’s dimmer outlook.

IBM’S ACQUISITION OF Sun Microsystems might make sense if Big Blue could snap up Sun on the cheap. Then IBM could justify a potential deal as an inexpensive way to acquire Sun’s customer base, provided it succeeds in drastically slashing costs at the Silicon Valley computer maker. From a hardware perspective, however, there are many questions regarding overlap and fit (see Follow-Up).

The biggest loser in an IBM (ticker: IBM) takeover of Sun (JAVA) could be NetApp (NTAP), a maker of networked storage systems, as the pool of potential buyers for the company would shrink.

This morning’s news of negotiations between IBM and Sun could have a direct effect on NetApp users and also on the NetApp / IBM relationship of re branded filers. After all Sun makes the ZFS powered Thumper and there are lawsuits between Sun and NetApp about ZFS and Ontap. If IBM buys Sun – wouldn’t that mean that IBM is now suing its partner NetApp?

Also, how would IBM position its re branded filers against its own Sun products? IBM is a big portion of NetApp’s sales and this acquisition could seriously jeopardize the relationship between the two.

Here is the article:

Technology Alert
from The Wall Street Journal


March 18, 2009

International Business Machines is in talks to buy Sun Microsystems in a combination that would bolster IBM's heft on the Internet, in data storage and in government and telecommunications areas, according to people familiar with the matter.

It is unclear whether the negotiations will result in a transaction, but if the deal does go through, IBM is likely to pay at least $6.5 billion in cash to acquire Sun, the people said. That would translate into a premium of about 100% over Sun's closing share price Tuesday.

Cisco is looking to reduce the TCO (Total Cost of Ownership) of the complete data center and they seem to be looking to partner with EMC and NetApp to enable an integrated solution. NetApp is famous for talking up interoperability while in fact locking customers into their set of solutions. It will be interesting to see if Cisco can herd NetApp and EMC salesman into the same room with a customer to see if they can work together to close a sale to the customer. I predict a collision of interests as both companies are fighting for market share and floorspace within the customers data center.

Cisco has a lot of leverage, but salesman never change .

Let’s watch this as it develops.

Starting in the second quarter of 2009, it plans to offer complete systems of up to 320 compute nodes housed in 40 chassis, with data flowing across 10 gigabit Ethernet.

Critical to its challenge will be its ability to draw on the expertise of key partners. Its compute capabilities, UCS B-Series blades, will be based on Intel Nehalem processors, the follow-on generation from Intel Xeon; VMware will supply the critical virtualisation software; BMC will enable “a single management environment for all data centre devices”; EMC and NetApp will be responsible for the storage system units; Emulex and Qlogic will input storage networking technology; Oracle will deliver middleware; and key systems software will come from Microsoft and Red Hat.

The company is already making bold claims for the savings that clients will reap from such an integrated fabric. UCS “reduces total cost of ownership: up to 20% reduction in capital expenditure and up to 30% reduction in operational expenditures”.