Sun makes content play with $4.1bn StorageTek buy

Scott McNealy has his eye on dominating the information lifecycle management market, with a multi-billion dollar acquisition that will create the world's fourth-largest computer company by revenue

Sun has launched a proposed takeover of StorageTek, a first step towards transforming itself into a major information lifecycle management player.

The purchase, which is valued at $4.1bn (£2.3bn) in cash, would create a company with combined revenues of $13.4bn if it goes through, making it the fourth-largest computer company in the world behind IBM, Microsoft and HP.

Mike Thompson, a principal research analyst at Butler Group, explained the rationale behind the move. "If you take the view that the 'Network is the Computer', it’s about sharing data, so it’s almost a given that the content part of what is stored is vitally important."

As a result, Sun's move is likely to concern players such as EMC, which acquired enterprise content management vendor Documentum in October 2003 for $1.7bn to take on IBM in this arena.

"I'd be surprised out of my skin if I didn’t see Sun acquiring a content management player of the size and nature of OpenText. If it did, it would have an offering in the storage market that would be equal in functionality to EMC, but would also have the added advantage of its own servers to run on and a very good operating system in the shape of Solaris," Thomson speculated.

Organisations these days are starting to realise the "real value of information", which means that the content space is "definitely the one to be in".

"It’s a huge amount of money, but money well spent. Sun is putting a large piece of infrastructure in place to enable it to serve content," said Thompson.

Scott McNealy, Sun's chairman and chief executive, confirmed that the motivation behind the purchase lay in boosting its position in the up-and-coming market for information lifecycle management, saying that the acquisition would help to make it one of the largest vendors providing systems for creating, storing and archiving corporate data.

"As we looked at the total $65bn available market for storage and things like Sarbanes-Oxley and HIPPA and other regulatory compliance issues, [we saw that] storage, data management and managing critical data assets of companies [were] becoming a more and more important component of solving complex network computing problem," McNealy said during a conference call on Thursday. "We're very interested in the storage business, but this combination here takes us to new level of scale and scope on global basis."


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