Sun/StorageTek deal could affect HP reseller pacts

03.06.2005
Von 
Lucas Mearian ist Senior Reporter bei der Schwesterpublikation Computerworld  und schreibt unter anderem über Themen rund um  Windows, Future of Work, Apple und Gesundheits-IT.

Though they disagree on the timing, analysts this week said the planned buyout of Storage Technology Corp. by Sun Microsystems Inc. will likely force the cancellation of StorageTek"s reseller agreement with Hewlett-Packard Co.

Questions about the reseller agreements emerged in the wake of Thursday"s announcement by Sun that it will spend US$4.1 billion to buy StorageTek in a bid to strengthen its portfolio.

Brian Babineau, an analyst at Enterprise Strategy Group Inc. in Milford, Mass., said he expects that Sun rival HP will likely drop its reseller agreement with StorageTek once the buyout is complete.

"I"ve got to believe that if you"re HP and you have other choices for tape vendors ... you"ll be able to rationalize changing your entire tape portfolio without having StorageTek in the mix," Babineau said. "One can expect that the StorageTek business at HP will dwindle quickly."

Shebly Seyrafi, an analyst at Merrill Lynch & Co., agreed that HP will shift suppliers but said that the change will occur over the long term. In the near term, she expects that HP"s focus on revitalizing its storage business will lead it to stick with StorageTek and Sun.

Enterprise Strategy Group estimates that 5 percent to 7 percent of StorageTek revenue is currently derived from HP reseller sales.

Babineau said he believes that San Jose-based Quantum Corp. and San Diego-based Overland Storage Inc., both of which already sell automated tape systems to HP, have an opportunity to take over StorageTek"s reseller business.

Patrick Eitenbichler, director of marketing at HP"s StorageWorks division, said both Sun and StorageTek reassured him that the companies will continue to support any existing reseller agreements.

Nonetheless, the deal caught HP off guard.

"I haven"t found anybody inside HP who wasn"t surprised by this. I think everybody would have expected Sun to go more in the software direction. To buy a tape storage hardware vendor is difficult to understand. The tape market is ... declining right now," said Eitenbichler.

Brenda Zawatski, general manager of StorageTek"s Information Lifecycle Management group, said, "We don"t anticipate any changes in our OEM agreement. It"s like the relationship ADIC has with IBM and EMC [Corp.] on the tape side," she said, referring to reseller agreements Advanced Digital Information Corp. has kept with the competitors.