ie8 fix

Storage networks

By | January 6, 2009, 12:15am PST

Summary: Storage area networks sprang up largely in response to the complexities of managing storage in a Microsoft client-server world - itself ultimately a response to the small machine limitations inherent in both Windows and x86. Today, however, those limitations are receding for most small to mid range businesses and the technologies they spawned should, logically, go out with them.

Back in 1977 Dennis Fairclough had a good idea: build something that would allow multiple small computers to share a single disk drive and in 1979, after his investors forced him to hire Ray Noorda to run the business, this became the first Novell product to reach industry standard status.

Today’s replacement for that solution to the costs of sharing and managing storage is called a SAN -and its time is past because we’re all going back to Novell’s original implementation of the shared storage server idea.

The specifics of the SAN solution evolved in response to three main sources of pressure

  1. the Microsoft rack mount approach to SMP necessitated a lot of server to server networking - and no single x86 machine had the power to provide data services to all;
  2. the typical data center found itself responsible for backing up, storing, and recovering data from hundreds to thousands of desktop PCs - each storing multiple gigabytes of mostly duplicated material; and,
  3. legal, audit, and cost pressures aligned with IT management desire for more centralized control to make data centralization the only naturally acceptable solution.

As a result the idea evolved that you could set up a separate server network dedicated to acting as a virtual disk drive and then use software running on the machines in that network to manage your data more or less in parallel as a way of getting past the small machine limitation.

The key to making this work, of course, lies in interconnecting the storage rackmounts to facilitate both communication between the servers “parallelizing” data storage and communications with the external layer in the local network hierarchy -and out of that we got separate fiber channel (and now FC over 10GB ethernet) networks for storage management and the whole business of “fabric” switches ranging from Brocade’s 256 port “Intrepid” at $4.5 million down to things like IBM TotalStorage SAN32M-2 Express Model at about $11,000 for 16 ports.

Looked at objectively SAN technologies are very advanced and reasonably effective - but also completely unnecessary because they all fundamentally respond to a small machine limit that really only exists in the wintel world.

In the mid nineties, of course, nobody wanted to use big machine solutions: the idea of using a two million dollar, four processor, DEC Alpha running OSF/1 to connect PC networks to terabytes of centralized data storage just wasn’t a big seller to NT true believers. Instead, therefore, the industry choose to expand the client-server paradigm to evolve fiber channel networks to do the same thing using from dozens to hundreds of NT machines.

Today, however, that Alpha can be more than replaced by machines like Sun’s 74XX storage servers that fit in a 4u rackspace and don’t incur the costs, risks, and commitment to expertise needed to make a bunch of small machines approach storage parallelism.

In effect the new machines replicate the simplicity of Novell’s original approach -itself based on using a 16bit MC6800 processor to serve data to multiple 8bit machines built on z80s and 8080s - and therefore allow the same usage options including physical distribution in the enterprise, automated backup and recovery, and simple storage connectivity.

Historically, of course, better technologies are rejected by the majority of IT decision makers, so what makes this different? The arrival of 10Gb ethernet as the next generation SAN standard is already forcing consolidation in the SAN vendor community -and because that will force some customers to change, the survivors are likely to be those who choose to pre-empt customer choices between traditional SAN costs and complexities on the one hand and the simplicity of Sun’s low cost approach on the other, by trying to compete with Sun and thus drag the whole industry forward to where it was going in 1979.

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Topics

Paul Murphy (a pseudonym) is an IT consultant specializing in Unix and related technologies.

Disclosure

Paul Murphy

I do not work for, or otherwise receive anything from, any of the companies I write about. I have some money in a number of funds that bet on the markets, including the technology market, but have no direct control over how these funds are administered or what investments are made. I use Sun and Apple technology both at home and at work.

Biography

Paul Murphy

Originally a Math/Physics graduate who couldn't cut it in his own field, Paul Murphy (a pseudonym) became an IT consultant specializing in Unix and related technologies after a stint working for a DARPA contractor programming in Fortran and APL. Since then he's worked in both systems management and consulting for a range of employers including KPMG, the government of Alberta, and his own firm. In those roles he's "been there and done that" for just about every aspect of systems management and operation.

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My experience
Mark Miller 8th Jan 2009
My experience is that IT workers ARE knowledge
workers. They end up learning intimate details about
the business and how to work the systems. When they
leave that knowledge goes with them. I'm not saying
that they represent a competitive threat when they
leave, but sometimes a significant vacuum can be
created when they do. Other workers have to try to fill
the gap, and it can be a nightmare for them. From what
I've seen management can be oblivious to the
problems this causes. IT often has problems that need
to be resolved, "fires" that need to be put out. So while
business has this view of them that they are
commodities, if they were to look at the situations I
have more realistically I think they would come to a
different conclusion.
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Back me up
Roger Ramjet 6th Jan 2009
The main selling point of SANs was the promised ability to do "offline backups". IOW since you have moved all of your data into one place, you should be able to back that stuff up to tape - in the background. Every sysadmin would welcome giving up the spaghetti mess that is backup administration! No more finding out that the only machine not being backed up was the one that just fell over . . .

This never happened. Not because it wasn't important - but because the design of SANs made it difficult (read impossible). Whereas a simple LAN can accommodate NFS drives (file-system access), there was no solution for block-level access. This was needed (supposedly) for large databases. So in order to provide this block-level "drive", the World Wide Number was born.

It is the limitation of the WWN that prevents SAN backups. A WWN from a drive can only be assigned to a specific HBA (or 2). In order to back up a SAN drive, you would need to add the backup server HBA WWN to ALL SAN drives. Then you would have to handle things like shared access and database quiescence. After all of that, you would still have to map the nameless drives into restoring a certain file for a certain server. That's a lot of crap to go through just to say you can back up SAN from the SAN.

So what happens is that each and every Virtual Machine needs its OWN copy of backup software, and the backups still go over the LAN - as they have since the beginning of time . . .

So I guess that there IS a cost for creating a VM. So what was that about taking the "load" off of the network? What a bunch of hooey.
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Most people I know
murph_z 6th Jan 2009
never back up their SANs. What they do is duplicate the data on the SAN and copy specific files (or groups of files - like the logs and backup server outputs) to tape.
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Until the data center burns down
Roger Ramjet 6th Jan 2009
Having multiple copies of data - in the same rack, is a SPOF. Having something like SRDF where you mirror data between datacenters is a better solution (until you start trying to diagnose "slowness" issues).

As for that new 10Gb LAN - that is the revenge of Cisco (for losing out on the SAN gold rush earlier).
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Cisco
civikminded 6th Jan 2009
"As for that new 10Gb LAN - that is the revenge of Cisco (for losing out on the SAN gold rush earlier). "

You do know that Cisco has ~45% of the SAN switch market right?


10gb LAN will no doubt have impacts on the storage side of any enterprise. How much remains to be seen. It will probably be minimal because to get anything close to 10gig performance you will need TOE cards, and there just isn't the platform availability for TOE cards as there is for fibre HBA. And then at that point you are spending just as much on Ethernet gear as you are fibre gear. We aren't going to see the massive commoditization of 10gigE as we did 1gigE because there will be no drive to deploy 10gigE to the desktop. 802.11N (and future protocols) will be the deathblow for premise wiring, removing any economies of scale that might benefit 10gigE
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Mickey-Mouse Data (McData)
Roger Ramjet 6th Jan 2009
[You do know that Cisco has ~45% of the SAN switch market right?]

They were late to the game, or they would have a much bigger slice. They let nobodies like Brocade and McData beat them to the punch. They did come on strong later.

Cisco also tried to push iSCSI - with little success. Today, iSCSI looks useless/redundant whereas FcLAN will be a game changer. The death knell of a separate network ONLY for storage is coming.

802.11N and future protocols will not replace premise wiring (entirely). Wireless is just too insecure - and adding encryption only slows it down (and makes administration tougher).
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Still wrong
civikminded 6th Jan 2009
In another one of Murph's columns I told you how there are many ways to run your backup traffic through your FC fabric. I guess you chose not to listen and decided to continue to post misinformation.

Your knowledge of backup architecture in a SAN environment seems to be limited at best. Hint: There are Fibre Channel tape drives for a reason. Also, SANs inherently don't remove the need for backup software. These applications are still very much needed.

Another misconception is that you seem to think that a SAN would be backed up as single discrete unit. A SAN is never 'backed up' You back up the hosts attached to the SAN.
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Maybe Wong but not Wrong
Roger Ramjet 6th Jan 2009
[Your knowledge of backup architecture in a SAN environment seems to be limited at best. Hint: There are Fibre Channel tape drives for a reason.]

What do you feed them? Can you back up a single "meta" from the EMC storage array? How does it get mounted for the tape drive to back it up (sans server)?

[Also, SANs inherently don't remove the need for backup software. These applications are still very much needed.]

It was the promise of moving backup traffic off of the LAN and onto the SAN that was appealing. As for backup software, paying for a license for each VM make it an expensive proposition - especially if you could do it all at the storage array level . . .

[Another misconception is that you seem to think that a SAN would be backed up as single discrete unit. A SAN is never 'backed up' You back up the hosts attached to the SAN.]

SAN = storage array (not area) network. The storage is carved into "metas" and presented as a LUN. Each LUN (usually) needs to be backed up - somewhere. Which is better:
1). Every LUN gets backed up straight from the storage array to tape.
2). Every server instance (VM) needs a (purchased) software to back up the LUNs OVER the LAN to backup servers (tape or tape+disk). There is also a cost for maintaining the backup environment.
Why would anyone go for #2?
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"Serverless" Backup Concepts
civikminded 6th Jan 2009
What do you feed them? Can you back up a single "meta" from the EMC storage array? How does it get mounted for the tape drive to back it up (sans server)?

The host already has it mounted. You will have a 'dedicated storage node software' in EMC-speak loaded on the host. The backup server directs the backup client on the host to back up its data via the fibre tape drives which are zoned to the host. Voila, no data traveling over the LAN. Here is the cool part -- those fibre tape drives? They don't have to be tape drives at all! They could be a VTL, or a Deduplication appliance that is simply emulating fibre tape drives.

It was the promise of moving backup traffic off of the LAN and onto the SAN that was appealing. As for backup software, paying for a license for each VM make it an expensive proposition - especially if you could do it all at the storage array level . . .

In the grand scheme of things most backup vendors simple filesystem clients are pretty cheap and are usually sold in at least 5-packs. In a VMWare world there are ways of creating crash-consistant images that allow for file level restore using VMWare Consolidated Backup. VCB require some network traffic but is much nicer on the LAN than trying to it on a VM - by VM basis.

I'm confused at your beef a little bit. You seem to be saying that if you own a SAN you should be able to totally rid yourself of backup infrastructure. It doesn't work like that. Backup over fabric is but one piece of what storage networking provides.
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Broken Promises
Roger Ramjet 6th Jan 2009
[You will have a 'dedicated storage node software' in EMC-speak loaded on the host.]

Proprietary? Extra Cost? Why does the server have to do ANYTHING?

The idea of SAN was to remove the disk administration task from the server side. No volumeing, partitioning, etc. was needed anymore - you just get "presented" with a LUN and you mount it. No muss, no fuss. Sysadmins didn't have to deal with VERITAS-type software on JBODS (you just create an entirely new job classification called storage admin).

Now, if all of the storage tasks are supposed to be "taken care of", then why should you worry about backups? Shouldn't that be done in the background - since it is a storage "task"? As a sysadmin, just give me the LUN and I trust that you are backing things up.

That was the promise of SAN. Paying for all of that incremental infrastructure (separate network, a new department filled with new storage admins) needed justification - MORE than just "We moved the disks from there - over to there". The promise of keeping backup processing off of the LAN (and the server) was key - as networks were overwhelmed with the amount of data needing backup. Consolidate the backup with the storage - and there's savings!

Without the promise what you have is this - I spent millions and created entirely new departments and job classifications (and these guys cost big bucks) - just so I could move disks from the server to that storage array over there.
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I have contracted to hospitals that were required (by law) to back up information (medical records and studies). They had a growing SAN (kept adding storage arrays) and a tape backup system that backed up the contents incrementally. The tapes were then moved to an off site storage location. Even with mixed platform environments (Windows/Linux/Unix) it just isn't as hard as you claim it is! Backing up VM's also is not that hard to do (be it VMWare, Xen, Solaris Zones, etc).
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Not hard, just stupid
Roger Ramjet 6th Jan 2009
Not hard - just redundant. Backing up data from a server is not hard. But if you have to use the LAN, then why are all your disks on some highly expensive (little utilized) network - and to do your backups you must schedule things at off hours because of the strain on the LAN? YOU SHOULDN'T HAVE TO!

My points:
1. The SAN should support backup sans server.
2. Backup software license costs increase linearly with each new VM.
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I have been in a situation where, due to federal regulations, backups had to be maintained off site (common in many businesses). Internally, there was a SAN storing medical studies. Each night, these sets of these studies were mirrored to other disks (thus always having an available on-line backup). Even with this, you still have to back up the contents (as it is medical data) and put a copy of-site (via tape). This is a practice also done when there is customer data (as with SaaS providers).

Due to that the data was being actively used (in the federal example), it was stored on a SAN and accessed by several researchers. While this can be done via NFS (or SMB or DFS) exports, backing up each node in the network, this is not practical (workstations can crash or be turned off, SAN only goes down when a SA takes it down unless there is no redundant power during a prolonged blackout). All data was exported (or mounted) from centralized servers with SAN switched RAID devices containing the studies.

There are multiple ways for this to be managed, though. One could use a filer (thus having a device that supports SAN and NAS protocols) but this is not always done for financial reasons (or knowledge of both protocols, administrative experience, etc.)

As per backing up the VM, VM's reside on disks and can be backed up as either VM contents only or the whole VM. It all depends on what you are backing up and the costs of backing up the VM v. the data contained in the VM. Some VM systems do support taking snapshots of the VM, thus you only have to backup the snapshots.

Backing up data over a network on off-hours is common, and backups are the responsibility of the local sysadmins typically. Saying that one should not have to just illustrates a lack of experience. backups and mirrors are run by cron jobs (or the Windows equivalent), the sysadmin only does verification (and rerunning a backup when it fails).
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The Emperor has no clothes
Roger Ramjet 6th Jan 2009
How it works today is not relevant to what I'm saying. Yes it's popular. Yes it works well. Yes it provides jobs, etc. I'm just trying to point out that SANs (in this context meaning fiber, switches and storage arrays) are an exorbitantly expensive option. Sheeple tend to not question why (they just do and die).

When I talk about VMs, I mean that each VM attaches to a LUN from the SAN - and that LUN must be backed up. I'm not referring to the actual VM "image".

[Backing up data over a network on off-hours is common, and backups are the responsibility of the local sysadmins typically. Saying that one should not have to just illustrates a lack of experience. backups and mirrors are run by cron jobs (or the Windows equivalent), the sysadmin only does verification (and rerunning a backup when it fails).]

It's been done like that forever (I did that myself). So why did we buy a big expensive SAN in the first place? Answer: Because everyone else did.
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Any systems administrator (Windows or Unix) can manage storage networks. There are specialists, they may focus on storage or Cisco or Brocade or whatever, but in many of the companies I have been at (Federal government, ASPs, semiconductor, search engines, (etc.) storage management is often handled by systems administrators. This includes: SAN, NAS, JBOD, etc. This is part of the sysadmins job description.

As per why did one get a SAN (or NAS or Filer), it is because (often) there is shared datasets or information/resources that are centrally managed. I understand from your posts here (and your blog) that you have limited experience and/or skills, but unless the organization is of rather significant size or specific product knowledge is needed quickly, this is the domain of a systems administrator.
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RE: Storage networks
godfather55vv 6th Jan 2009
the way storage and prices are we too are going forward by going backward. we are replacing our emc ax100 w/ standard servers chucked full of big disks. when we got the ax100 we figured we progress toward at bigger emc or similar product but given the economic constraints and looking the rather small benefits we were receiving we opted for the big box of disks, suse sp2 and OES to fill our needs. It was just natural progression being we have been a novell shop.

tx
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Avoiding SANs
Burana 6th Jan 2009
Overly complicated and too expensive.

I really prefer NFS. Anyone who knows Unix, knows NFS. You can train a monkey to manage NFS systems. Try that with SANs/FC.
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wink

Sorry - couldn't stop myself..
happy
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So you prefer SANS? nt
transposeIT 6th Jan 2009
nt
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Needs
civikminded 6th Jan 2009
It's all about needs.

When you say 'NFS' you really are saying 'NAS' which is somewhat of a holy war in storage managment.

Really NAS will work fine for many shops. The downsides from my personal perspective would be reliability and throughput, as compared to FC-SAN brethren. Feature wise, it all depends on whats hosting your NAS. With high end vendors like Netapp you'll get much of the functionality that a SAN would get you.

I do take a little issue with the point that NAS is 'less complicated' than SAN. Larger NAS implementations can get complicated fast. Really I think the issue is that NAS protocols/components are just more familiar to most people.

Again there is no silver bullet, its all about needs.
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NAS
Roger Ramjet 6th Jan 2009
NAS devices can provide file-level access via NFS. They cannot provide block-level access - which seems to be the only reason for SANs to exist (because they do provide it). With the upcoming FcLAN (Fiber-channel over LAN), you will now be able to provide block-level access over the LAN (so no more need for SAN). It would be nice if there was a NFS/automount solution for FcLAN . . .
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iSCSI supports block level access
murph_z 6th Jan 2009
At least in Sol10+ (8.4?)
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Also..
civikminded 6th Jan 2009
iSCSI can be routed too.

FCoE (never heard the term FCLAN) strips off IP and plops FC right on top of ethernet. That means you'll need dedicated interconnects and VLANS for storage anyway, so I don't see how this helps reduce storage complexity.

I'm not changing my bets on the storage horserace. FC for high end, iSCSI for mid to low end storage. Still looks like the winning ticket.
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Needs
Burana 6th Jan 2009
Of course there is no one size fits all and SANs work well if well trained people manage them. But finding somebody who really knows the FC protocol inside out and also has good knowledge of the operating systems attached is difficult.

We have to do a major firmware upgrade to our EMC Symmetrix arrays soon, and it is a pain in the a*. You have to check all kind of software/firmware levels (HBA, OS patches, Powerpath Software, SAN switches) and apply patches etc. in a certain order. Boring and wasted time.

Something that is much simpler when using IP-based-protocols. It just works (tm)! (most of the time)
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Company reputation and Comes the Revolution
Anton Philidor 6th Jan 2009
Murph, you wrecked an interesting discussion in the final paragraph.

Your argument this time is better than simply Sun will win because it has the best technology. Sun may win nothing despite the quality of its technology.

Paraphrasing your argument, 10Gb ethernet is forcing consolidation among companies (Okay...) and customers who are changing vendors may look at Sun solutions from Sun and other companies which have decided to emulate Sun's approach.


Here's your original:

Historically, of course, better technologies are rejected by the majority of IT decision makers, so what makes this different? The arrival of 10Gb ethernet as the next generation SAN standard is already forcing consolidation in the SAN vendor community -and because that will force some customers to change, the survivors are likely to be those who choose to pre-empt customer choices between traditional SAN costs and complexities on the one hand and the simplicity of Sun???s low cost approach on the other, by trying to compete with Sun and thus drag the whole industry forward to where it was going in 1979.

[End quote.]


Murph, there's a reason customer lists have such value in a merger or acquisition. It's that many people will delay change until it's too late. Unless you believe that customers despise all vendors but their own, there's no reason your (hypothesized) consolidation is going to make a very large number of customers suddenly open to new vendors and their new solutions.



The other difficulty is that a new solution is not advantaged by coming from or even being endorsed by Sun. Not with that company's reputation.

Quoting unfair but strongly felt evaluations:


"The U.S. economy presented Sun with significant challenges in the third quarter, masking our progress in developing nations and economies across the world," said Jonathan Schwartz, CEO of Sun Microsystems.

"Masked" is not the right word. Sun does not have any meaningful and growing demand for its products. The company's PR did not show revenue by region so investors cannot see the break-out of Sun revenue and operating income by regions.

http://www.247wallst.com/2008/05/sun-java-earnin.html


Sun Microsystems (JAVA): Better Than Expected, But Still Awful

Sun (JAVA) turned in better-than-expected preliminary earnings, but they were poor nonetheless. Wall St. staged a relief rally. Shares moved up from a close of $8.80 to $9.57 after hours.

http://www.247wallst.com/2008/07/sun-microsystem.html


Sun (JAVA): The Worst Tech Stock In The World Makes Its Case Again

There has been some debate recently about which of the well-known tech stocks is the worst. AMD (AMD) is often in the running. So is Palm (PALM).

Sun (JAVA) won the race today with spectacularly poor numbers for the last quarter.

...

The company whined and gave excuses along with saying how bright the future was. That is the stock and trade [sic] of Sun CEO Jonathan Schwartz who keeps his job by way of some unknown miracle. His comment: "We believe Sun is well positioned to weather the downturn and ultimately become the biggest beneficiary in the open source revolution in both systems and software."

Jonathan, there is no way in hell you will be around to see that day. It isn't coming.

http://www.247wallst.com/2008/10/sun-java-the-wo.html

[End quotes]


This author may enjoy overstatement, but he doesn't expect his potential audience to be aggravated or to feel he's very wrong.


Murph, an argument based on acceptance of Sun approaches by a large number of susceptible customers and even competitors is very unlikely.



By the way, Novell, originator of the idea you discuss (sort of) is being propped up by Microsoft, for as long as Microsoft's Linux salesmanship lasts.

Quoting:

For the full year, Novell said it narrowed its losses to $9 million, or $0.02 per share, which included a $29 million impairment charge on some auction-rate securities. Although still bleeding red ink, the loss was much smaller than the full year net loss of $44 million, or $0.13 per share, that Novell tallied for fiscal year 2007.

Linux sales also came through in a bigger margin. Revenue from Linux hit $120 million, which is an increase of 38 percent over fiscal 2007. Russell cautioned that Novell's Linux business continues to be dependent on large deals, most notably the one with Microsoft that began in late 2006. As part of that original deal, Microsoft agreed to purchase $240 million worth of Novell SUSE Linux Enterprise Server subscriptions. In August of this year, Microsoft expanded the deal with an option to purchase up to an additional $100 million worth of Novell Linux subscriptions.

http://itmanagement.earthweb.com/osrc/article.php/3789391/Novell+Expands+Margins+with+Linux.htm


I wouldn't expect much industry-leading-by example from Novell either.
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steps:

1 - quietly buy up options or actual shares on IBM, HP, Dell (even Apple, MS etc)

2 - loudly announce Sun is going under and sell (at a small loss) a few tens of thousands of Sun shares.

3 - watch sheepie investors buy up your IBM, Del, HP etc at a premium

4 - buy back some Sun shares at their new, lower, price

5 - wait a week or two while Sun's price partially recovers

6 repeat
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Ahhh.. I see
civikminded 6th Jan 2009
Wow! Ive been swindled! Here I thought things like profitability (JAVA EPS -1.40$ - IBM EPS 8.48 and revenue growth (JAVA -7% - IBM 4%) were behind it all.

Those darn Wall Street guys have tricked me for the last time!
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Efficient market hypothesis
murph_z 6th Jan 2009
Probably works ok over the long term and across large numbers of companies - but often fails for companies people love or hate.

Check google's valuation lately? Amazon's? Microsoft's? None of these make financial sense - and then there are the ponzis - the social sites with huge values and no business model.
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Connections
Anton Philidor Updated - 6th Jan 2009
I'd thought a worthwhile approach was simpler: Buy Sun after a quarterly report or open source sacrifice, wait for a technology announcement, sell. Repeat every three months or so. Hope rises and sets.

Vultures would find Sun gamy.


Your steps to profit assume that driving Sun's share price down increases share prices for HP, Dell, IBM et al to such a degree that the stock market plunger is able to make a substantial profit.

That makes IBM et al's share prices very reliant on Sun's misfortunes. It also makes the plunger hope that nothing distracts buyers of IBM shares from Sun. Such as, say, a profit report or an action by IBM itself.


Also, would that "partial recover[y]" of Sun's share price fully compensate for that small loss following your negative campaign against Sun shares?

You may succeed mostly in driving down Sun shares. Which is not too far up the list of unexampled successes.
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whiplash effect
murph_z 6th Jan 2009
happy
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Scaling economics not IT
Mark Miller Updated - 6th Jan 2009
What you said that jumped out at me was:

In the mid nineties, of course, nobody wanted to use
big machine solutions: the idea of using a two million
dollar, four processor, DEC Alpha running OSF/1 to
connect PC networks to terabytes of centralized data
storage just wasn???t a big seller to NT true believers.
Instead, therefore, the industry choose to expand the
client-server paradigm to evolve fiber channel
networks to do the same thing using from dozens to
hundreds of NT machines.


I've talked to people about this when it comes to
installing alternative energy solutions. Installing solar
panels on your roof that are sufficient to power your
home costs tens of thousands of dollars. It's all up-
front cost, unless you finance it, but then you've got to
watch the interest. I think one can reasonably make the
argument that people who do this end up saving
money in the long run when compared with what they
would pay to the electric utility. The problem is getting
people to see that.

In the majority of cases though people can't afford that
kind of outlay. They don't have the budget for it. It's
more affordable for them, given their monthly/yearly
income, to pay for their electricity in small increments
from the electric utility.

I think in some of the situations you talk about,
besides the cultural bias for Windows, there were
probably situations where they said to themselves, "We
don't have the budget to spend two million dollars on
central storage right now, but we have $200,000." So
they spend some money on a smaller scale storage
solution, which they can scale up later when they get
another $200,000. I don't know how companies
expense this sort of thing, but I suspect the increased
labor costs of this smaller scale, scale-up solution
somehow doesn't raise any eyebrows, even though it
should. It's all in the accounting. I've been saying for a
while that most businesses run things like they're in
the Industrial Age, not the Information Age. In the
Industrial Age all capital investment is in equipment,
not people. As long as you save money on equipment,
that's good enough, because you can always scale
personnel costs at a finer grained level (so goes the
thinking), growing and shrinking it at will (employees
are commodities after all, right?), than you can
equipment.
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I used to run a high tech business for someone else. The
major shareholder was a banker. The business was very
labour intensive, and required highly skilled staff. There
was a shortage of people with the skills we needed, so I
asked for capital to automate critical areas of the business.

The banker said: "You can't lay off equipment, or stop
paying the lease on it - But if the business goes quiet you
can lay people off".

You might think that that was a cold-blooded, short term
view; but that is how many bankers think.

However, the banker did give me some excellent advice:
"Don't fall in love with the product, or your current
business processes - You may need to change them
suddenly. If you have a lot of capital tied up, it will be
difficult for you to cut your losses, so you won't make the
necessary hard decisions".

It worked for me when I set up my own company and, No I
didn't lay people off...
0 Votes
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Information Age vs. Industrial Age
Mark Miller Updated - 7th Jan 2009
I wasn't talking about warm hearted vs. cold hearted. I was
going off of the economic theory I heard Lester Thurow talk
about many years ago. He said that in the Information Age your
capital investment is going to be in your people. You will
enhance your business through what they know, the
information they can provide your business and/or your
customers. He pondered the question: "What are businesses
going to do when their capital investment decides one day to
walk out the door?" Some businesses I've encountered are
cognizant of this, and they've come up with their answer: don't
educate, don't train. Fortunately not all businesses are like this.
Several years ago some were using education and career
advancement as a recruiting tool to try to get and retain the
best people.
0 Votes
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Capital investment and people
Tim99 7th Jan 2009
I agree, people ARE the business.

In the first industrial age, capital investment was what
distinguished the 'efficient' automated industries from the
small craft based workshops. You were not going to be
able to compete on price with a factory full of water
powered looms if you were a croft weaver employing your
wife and daughters to produce the spun thread (spinsters).
It did not matter how skilled you were - The quality of
industrial cloth was at least as good as most craftsmen
could make by hand, and factory produced cloth was much
cheaper.

In the early days of the industrial revolution, your
competitors were other people who had factories. Their
factories were similar to yours. The level of skill of your
employees was such that you could replace most of your
workers with others because the skills required could be
easily taught to new workers - This meant that most of
your workforce were commodities.

Later on an enterprise's most dangerous competitor was a
more efficient business with access to capital who could
install the latest automation. In a global economy with
sufficient access to capital and a pool of sufficiently
educated workers, the cost of the workers is what tends to
distinguish the successes from the failures - You cannot
realistically compete if your workers cost $20 an hour and
your competitor's workers expect $2 an hour (As an aside,
a country whose economy is based on $2 is always going
to beat you - Their costs for factories, roads and houses is
also going to be based on $2, your infrastructure costs are
based on $20.).

When I worked for the banker, I had to educate and train
our staff in the job because there were very few people
available with the required skills; so, Yes, our people
tended to be poached by big payers. Now those skills are
no longer scarce so wages have stabilized.

I was lucky when I set up our software company, skills
were in very short supply. The capital costs were relatively
low (a few computers), and the employees were
shareholders paid from profits - Margins excluding
salaries were ~90%, so we all did well. Today, many IT jobs
are commoditized so it is much harder to get rich.
Fortunately for me, I retired before this happened...
0 Votes
+ -
My experience
Mark Miller 8th Jan 2009
My experience is that IT workers ARE knowledge
workers. They end up learning intimate details about
the business and how to work the systems. When they
leave that knowledge goes with them. I'm not saying
that they represent a competitive threat when they
leave, but sometimes a significant vacuum can be
created when they do. Other workers have to try to fill
the gap, and it can be a nightmare for them. From what
I've seen management can be oblivious to the
problems this causes. IT often has problems that need
to be resolved, "fires" that need to be put out. So while
business has this view of them that they are
commodities, if they were to look at the situations I
have more realistically I think they would come to a
different conclusion.

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