Sun buys a Tape storage company
Used to work for Sun, this one boggles me. Wrote this up for some Friday humor…
Acknowledging a strategy outlined by John McArthur, an analyst at International Data Corp., who says he recommended the StorageTek deal privately to Sun six months ago. “It’s a good way for Sun to boost short-term sales as it waits for its longer-term research and development spending to pay off”, he says.
“Tape drives are still a multibillion-dollar market, and that doesn’t go away overnight,” he said. “People have been talking about the death of tape for decades.”
Also, Gordon Haff, an analyst at the research firm Illuminata, called StorageTek an interesting fit. Sun has a decent storage product lineup. But the firm has struggled to market products effectively, he says.
“This is not about buying a tape-drive business,” Haff said. “Sun is really buying a broader information management strategy.”
Scott McNealy, CEO of Sun Microsystems adds “This is a solid business strategy, while our technical visionaries are finishing the design and production of groundbreaking chip, operating system, chassis, display, data entry and keypunch technology., we are looking at ways of keeping our existing customer base, and the parents of these customers, running with the technology they have, and continue to base their future on.”
Sun has rolled out an integrated strategy to increase spending on “traditional technology” acquisitions in order to approach an equal balance between revenue and expense over the next several decades. Sun today has announced several upcoming acquisitions that will occur over the next 180 days:
Vacuum Tubes, Inc (http://www.vacuumtubesinc.com/) for $2B in Google Stock, Grundig podcast transmitters, and Silvania video monitors. Again, a technology some thought had gone away, literally thousands of home audio and video components, as well as at least three large supercomputer facilities, and several museums also have equipment that continue to require vacuum tubes. Since these devices are really consumables, much like magnetic tapes, the market just isn’t going away. “Plus, VTI’s advanced e-commerce engine will revolutionize our corporate image as well as the Sun Store”, added Ingrid Van Den Hoogen, Sun’s VP of Brands that Swoop and make Fun Sounds.
Cardamation (http://www.cardamation.com/): for $175, two SparcStation 5’s, and 2 miles of Thick Ethernet cable. “A survey of existing StorageTek and VTI customers showed a high correlation for a need for card scanning, reading, punching and sorting equipment. While larger companies exist in this space, Sun has a tradition of buying the 3rd or 5th player in a space, because they always try harder, and we won’t disrupt the space in case the acquisition fails”, confirmed Pat Sueltz, recently returned to Sun, as President, Legacy Technologies. “Recent advances in areas such as electronic voting, make this again an up and coming industry”, said Jeb Bush, who’s committed $100 and two cases of orange juice over the next 3 years to advancing the state of the art in electronic/mechanical interfaces.
Aeromotor Windmill (http://www.aermotorwindmill.com/) for $1.3B in cash and deeded water rights in Prague: Acknowledging the fuel crisis, and the additional power requirements the new resurgence of vacuum tubes, card readers, and tape drive motors will have on data centers, auxiliary power sources will be needed by many growing data centers. “We know there are newer versions of this technology”, McNealy said, “but new isn’t always better, and these units are ubiquitous. They have been in the same business for 117 years. They obviously know how to keep revenue and growth at a balanced level, and are well recognized by our target customers worldwide. They have a mindset of evolution and growth we can integrate perfectly with.”
Weber of North America (http://www.webernorthamerica.com), for $1.1B in cash and scrap metal from used tape drives. Weber is the continued leader in the manufacture and remanufacture of gasoline engine carburetors. “Carburetors have been around since the early days of fossil fuel engines, although they’ve fallen out of fashion in recent years, there are millions of engines who still use these devices, and they continue to have a strong and steady market for now, and the foreseeable future”. While a departure from traditional electronics and computing industries, COO Jonathan Schwartz commented “it’s all about diversification. First, we distrupted the development industry with Java, the leading platform in the computing industry. Then, we turned the industry upside down by leasing computing resources for dollars an hour, followed by the concept of joining things, rather than buying things, in a software strategy that has put us in the very forefront of the non-Windows and non-Linux computing industry. Now, we’re diversifying beyond electronics, and using our extensive experience in mechanical engineering in other industries. Also, this technology is widespread in our fastest growing development centers in China”
In a logical follow-on, Sun’s also acquiring American Cart and Harness for $2M in cash and carburators: (http://www.horsecart.com/). Sun EVP of outsourced products John Fowler said of this purchase “we’re trying to cover all our bases. The increase in power and fossil fuel consumption, will also drive the development of alternate methods of moving information. Horses are a very real and established form of transportation, delivery, and infrastructure, especially in upcoming markets such as India, Pakistan, Russia, the Czech Republic, China, and Lancaster County, PA,. With Sun’s strong growth, both in sales, as well as hiring in these regions, we felt we needed to own a piece of infrastructure. More horses are born each day, this is a market on the move!”
Also, in what is universally considered a simple fall-out of a “yes-man” strategy traditionally used by companies trying to move into transition, a strategic partnership with Wang (not that Wang, but http://www.verawang.com/) was also announced. CEO Scott McNealy was heard to remark simply “I thought they were still a key player in the computing market. It’s right here in this issue of “Byte”! What, Vera Wang makes WHAT? Why didn’t someone tell Jonathan so he could tell me? Hey, maybe we can get people to join a wedding dress club or something. We’ll get back to you on that.”
Jun 03 2005