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Loss of Innocence.

HAL: They've got some nerve!

MARK: Whoa, Hal! Don't get upset.

HAL: You'll be upset, too, when you hear what--

MARK: No names, please!

HAL: Okay. I'll just give you a few hints. There's a company--a powerhouse in the storage industry--that just announced a new product line to replace an already successful product that it's been OEMing and branding for years.

MARK: Hmmm. No news there.

HAL: Wait a second. They phoned me to tell me they were making a "significant storage announcement," even though they admitted that the product wouldn't ship for months.

MARK: No news there, either. But I think I know whom you're talking about, now. Is this the same company that scheduled this "earthshaking" announcement for the trade press on a Monday morning, at 7:30 a.m.--West Coast time? Is this the same company that gave the whole story to the business press the Friday before--so the news was already in the New York Times and The Wall Street Journal that Monday morning--before their "press conference" even started? Is that the company you're talking about?

HAL: You've got it. We can complain off-line about their attitude toward journalists like us, who write for their customers instead of just their stockholders. But that's another story.

MARK: It makes me wonder if they're worried about us on the West Coast--that we know too much. Maybe they figured that if they kept us troublemakers out of the loop, we wouldn't ask any really probing questions.

HAL: Let's drop the guesswork: the company was IBM.

MARK: And the product was their Enterprise Storage Server, code named Shark.

HAL: "Shark." Yes. They got that right. Of course, they're careful to say "ESS" now.

MARK: They designed it to replace the RAMAC Virtual Array.

HAL: Right. IBM has been selling the RAMAC since 1994 and has been purchasing it on an OEM basis from StorageTek. IBM reportedly has 6,000 customers using RAMACs, about one-fourth of the total market so far, for high-capacity RAID subsystems. But it seems that the market is so attractive that IBM doesn't want to share it any more, especially with an OEM supplier. So they developed their own version.

MARK: Hmmmm. There are equally plausible explanations. IBM acknowledged that their OEM contract with StorageTek expires at the end of 2001. So maybe they simply couldn't reach an agreement to extend it. Maybe they can't license the RAMAC's "virtual" storage technology, or some other vital component--and if they have to re-invent that function in house, that's going to take time. So maybe the ESS they announced in August is just a placeholder, until they can come up with something better down the road.

HAL: It's possible.

MARK: But then again, maybe it's all about money, after all. StorageTek itself has been branding and selling the RAMAC all along. Do you think StorageTek will lose a lot of sales, once IBM stops buying it and starts making the ESS in competition?

HAL: I don't think it'll be too hard on StorageTek. They have a healthy installed base of their own and a good sales force. Add the 6,000 IBM RAMAC customers to their own and StorageTek could boost its support and upgrade business too.

MARK: If I had a RAMAC and I were happy with it, then when it came time to add another array I'd probably just stay with the RAMAC hardware, rather than switch to ESS. Why would I move to a brand new box that nobody has any experience with?

HAL: I'd do the same. StorageTek's going to take advantage of that, I'm sure. On the same Monday that IBM pulled a--sorry. On the same Monday that IBM made its announcement, StorageTek announced an extended warranty and support program for RAMAC, and a commitment to maintain and upgrade the hardware themselves. I wish a lot more vendors had that kind of putting-the-customer-first attitude.

MARK: Not like . . . well, you know. It sounds like StorageTek has a pretty sound strategy.

HAL: StorageTek might actually become more competitive as a result, providing even better support and maybe even better value too.

MARK: The game certainly changes when, suddenly, you're competing with IBM, instead of selling to them.

HAL: IBM's description of the ESS didn't make it sound like an especially strong competitor--at least, not initially. The ESS will be less flexible and harder to upgrade than the StorageTek version. It'll have storage capacities and response times similar to what the RAMAC has now. But the first units won't have that "virtual" storage capability that the "RAMAC Virtual Array" is famous for.

MARK: I'm sure IBM will eventually offer that.

HAL: Ummmm ... eventually.

MARK: IBM did say it'd be very aggressive in its financing strategies. They may make it easier for some companies to buy an ESS than to buy StorageTek's system. IBM has also promised that ESS would support systems running NT, or Unix, which the present RAMAC doesn't support. Those are not trivial factors when you're building a market.

HAL: True. Making ESS compatible not only with S/390 mainframes, but also with AS/400 and RS/6000 and other client/server platforms will be key selling points for IBM. They announced support for Fibre Channel, ESCON, and Ultra SCSI too. As difficult as IBM can be sometimes, you have to give them credit for knowing how to sell iron. But StorageTek is no slouch. They'll undoubtedly provide similar functionality, to remain competitive.

MARK: So, Hal, explain to me why this whole episode got you so angry.

HAL: I just don't think they played fair. I don't know what they told StorageTek, or when they told them, but they certainly didn't tell their latest customers--the ones who acquired RAMAC over the past few months or so. Of course, the ESS will be considerably less desirable without the RAMAC's virtual storage function. Who knows when IBM will be able to match that? Go with ESS and you'll be in deep water, swimming with the Shark.

MARK: Hold on, Hal. I think our distaste for IBM's press-relations gaffe may have made us knock IBM--the storage company--a bit harder than it deserves in this case. I'm sure that ESS will meet the needs of many customers, right out of the box. If you agree, drop me a note at

HAL: I agree that, despite what IBM did, its customers will be okay. It certainly shouldn't have to worry about--or be responsible for--what happens to StorageTek after the OEM contract runs out. But I do think that IBM is firing a warning-shot across StorageTek's bow with ESS and that it could have found a way to build on their shared technology, instead of undercutting its former ally. Let me know if you agree with me. I'm at
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Title Annotation:Product Development; IBM's Enterprise Storage Server RAID array system, to let OEM contract with StorageTek expire
Author:Glatzer, Hal
Publication:Computer Technology Review
Date:Sep 1, 1999
Previous Article:Letters to the Editor.
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