Brad O'Neill, an analyst at the Taneja Group in Hopkinton, Mass., said that while the WinTarget software is an entry-level technology, it signifies Microsoft's opening salvo into the end-to-end storage market that is led by players such as EMC Corp., Hewlett-Packard Co. and Network Appliance Inc.

"Microsoft is slowly becoming this unavoidable presence in the block-level storage landscape. It's almost happening announcement by announcement so people don't even notice it," O'Neill said.

"If you fast forward 18 months, it's easy to imagine Windows supporting NAS and iSCSI with good midrange performance characteristics," he said.

Last spring, Microsoft began shipping an iSCSI software driver for its Windows 2000 servers, Windows XP clients and Windows Server 2003 platform. At that time, the company said it would not sell iSCSI target software. Lorenson said demand from customers prompted Microsoft officials to reverse course.

Microsoft would not disclose the financial details of the deal, but Lorenson said that three of String Bean's four employees will join Microsoft next week. It was not clear what String Bean Software will focus on in the future; company officials referred all questions to Microsoft.