Allaw Technologies Pty Ltd, based in Sydney, Australia, has moved to fill the gap left by Emulex Corp’s withdrawal from the Digital Equipment Corp market by manufacturing the DEC-compatible products itself. The move has meant a rapid ramping of Allaw’s existing manufacturing facilities to produce the products it once sourced from Emulex, the Australian magazine On$deck reports. According to Laurie Stevens, Allaw’s Managing Director, the changeover could mean cheaper storage systems for DEC users, as Allaw accepts lower margins and strives for more efficiency. Stevens already has his sights on the North American market, where Allaw can use the existing network of Emulex resellers to market its own products to DEC users. By the beginning of August there should be five or six Allaw resellers in that market. To succeed, Allaw must produce just as competitively as the Asian companies expected to begin manufacturing Emulex-type products. Although competitive, the market is unlikely to become a free-for-all, since each producer must buy the core technology from Emulex. Effectively, Stevens said, Allaw’s status had been upgraded from a distributor of Emulex products to an OEM customer with manufacturing rights; this relationship will continue to cover all Emulex communications and DEC products. The DEC-compatible systems will be ready from the Allaw Plus division shortly after manufacturing begins in early August. Future plans include marketing hierarchical storage controllers based on Emulex technology, which promise to farm data across specified drives according to priority settings by system managers. Allaw has been in the DEC storage market for most of its six years, over which it recorded growth rates of up to 50% to reach annual revenues of about $22.4m. Most recently, Stevens said, the firm had a financial roller-coaster ride as good business in the first half of the 1991-2 financial year trailed off in the first quarter. Although business has since picked up, the 1991-92 financial projection is for an 8% lift in revenue to $24.6m. Scott McVey, vice-president of worldwide sales at Emulex, said his firm would now concentrate on SCSI network products and computer interfaces. The decision came after the company spend months battling with DEC over the patents for DEC’s interfaces. The change of direction leaves a big hole in the Emulex business, since DEC-compatible products accounted for about 30% of sales for the nine months to March 29. Still, this side of the business was losing money, sources say. Emulex expects to take a $15m to $20m charge for the restructuring this quarter and expects to lay off 160 people (CI No 1,944). Allaw’s Laurie Stevens said Emulex simply pulled out of the DEC market because it saw greater profitability in other areas, notably non-proprietary markets like networking. Emulex chip designs, for instance, offer a greater return on research and development investment because they can succeed in a market not dominated by a single vendor. The switch reflects DEC’s combative stance on intellectual property rights for its DSSI storage systems, where it has won high royalties from compatible storage vendors or sought injunctions to force others out of the market. Stevens argued that DEC’s efforts to make DSSI a closed shop could be against its own interests – despite its technical benefits over SCSI, he said, users and vendors alike are attracted to the open connection SCSI offers. If DEC keeps prices high, more users will take the non-proprietary alternative.
