Bucks Before Breakfast

It's 12 days since EMC bought RSA or did you happen to miss the orgy of coverage in which we've indulged? (See Did EMC Overpay?, EMC Secures RSA for $2.1B, and EMC's Blockbuster.) No sooner do we come up for air, though, than we're hit with a fresh onslaught of M&A. (See Storage Shopping Spree.)

As the coffee perked this morning, word went out that CA bought XOsoft, Iomega gobbled CSCI, and Opsware now owns Creekpath. (See Iomega Buys CSCI, CA Buys XOsoft, and Opsware Gains CreekPath.) While only the Opsware/Creekpath transaction terms were announced ($10 million to $15 million), an Israeli paper opined that CA plunked down $100 million for XOsoft. So any way you view it, big bucks were bouncin' before breakfast.

Now, $110 million plus isn't $2.1 billion, but everything's a matter of perspective. The point is, consolidation has become a rule of the storage game, and that won't change for the foreseeable future.

How can one be sure? Well, there are lots of signals. We'll spare you the blather about data growth, compliance, and so forth. But a couple of other M&A drivers are worth noting.

For one thing, there is pent-up demand for technology that hasn't fully evolved. Users need a ton of help with things like backup, security, policy-setting for storage networking, remote-site access to storage, and cost control. This situation is spawning multiple solutions by aggressive startups, as well as lots of activity by larger players.Suppliers can't afford not to act. At the same time, the proliferation of problems that need solving makes it impossible for even the biggest vendors to develop a full roster of products to keep up. This encourages partnerships, which in turn fosters more consolidation.

Another M&A spur is the state of "technology transition" that results when vendors are pondering or readying the next wave of products, while users are holding off in anticipation of same. Now, for instance, talk of faster disk arrays, emerging CDP (continuous data protection), competing Fibre Channel/iSCSI solutions, and the ongoing combination of WAN optimization and wide-area file services (WAFS) has IT buyers doing a lot of fence-sitting, while vendors are casting around for ways to keep pace. Expect to see churn, as big vendors gamble on getting the next first-mover advantage. (See Signs Point to Storage Slump, After the Flush, and Insider: CDP Is Work in Progress.)

All this activity has no guaranteed outcome. Indeed, given the vagaries of the market these days, it is entirely possible that EMC overpaid for RSA (in fact, a handful of financial gurus swear it's so), while one of this morning's trio of buyers just may be getting a bargain.

Plainly, the storage market is a hotbed of consolidation and will continue to be so for the foreseeable future.

— Mary Jander, Site Editor, Byte and Switch