Although CNT yesterday talked up Inrange’s prospects as a supplier of high-end director-class SAN switching hardware, the company emphasized what may have been a stronger incentive for its purchase, which is the existence of a well-developed professional services organization at Inrange, and a high-end customer base.

Tom Hudson, CNT CEO said: Overnight this acquisition makes CNT one of the world’s largest providers of SAN products and solutions, with 2002 pro forma revenues of approximately $435m. For 2002, Inrange posted a loss of $14.4m, down from a loss of $17.7m on revenue that slumped 14.3% to $223.5m. Beyond its services, Inrange’s products fall into three categories – SAN switching hardware, legacy telecoms hardware, and SAN extension or long distance IP-based storage networking devices. Since over a year ago, the company has been blaming the shrinkage of its revenue at least in part on the decline in sales of its legacy telecoms switches. Its long-distance IP-based storage networking hardware overlaps with the hardware on which CNT has already based its business, as CNT acknowledged yesterday.

Last year Inrange sold $57m worth of its high-end FC/9000 SAN directors – up 35% on the previous year, compared to an overall market growth of around 15%. However the FC/9000’s prospects have been dimmed by the commitment of Brocade Communications Systems Inc and Cisco Systems Inc to take major shares of the SAN director market. Brocade, which launched its first director-class product last year and claims to have taken over 40% of the high-end market already, dwarfs Inrange with a massive mid-range installed base and overall SAN hardware revenue of $550m in 2002. Cisco’s first director has only just begun shipping, through OEM channels.

Around 50% of Inrange’s director sales are to high-end mainframe shops, and the company is reputed to have created a very loyal customer base through the strength of its professional services organization. Hudson said that CNT and Inrange combined professional services organizations will enjoy annual revenues of $60m from over 4,000 customers – one of the largest dedicated to storage networking.

The organization will work with hardware from other suppliers, Hudson made clear. We’ll be a full services solution provider in the industry. This is exactly what customers need in the complex decision making and management [of] large-scale multi-vendor SAN solutions.

Hudson did not write off the FC/9000 as a future revenue source however, and said that while Cisco has no storage networking track record, Brocade has struggled to put in place an enterprise-wide product. The third rival, McData Corp, can offer only 50% of the port density of the FC/9000 he claimed.

One of Inrange’s biggest handicaps has been that unlike McData Corp – its only SAN rival until the arrival of Brocade and Cisco – it has not had an OEM or even a reselling deal with EMC Corp, which is responsible for a huge chunk of SAN switch sales. Inrange hopes it can fix that hole. Since we’ve had a very good relationship with EMC we’d look to introduce this [FC/9000] product and its follow-ons. That may seem ambitious, given that EMC already OEMs McData and Brocade hardware, and is very likely to soon begin OEMing Cisco’s hardware. Hudson said: We think perhaps we have the means to do that – or at least interest them [EMC] to do that.

One deal that Inrange announced last week clearly has no future now. Inrange said then that it is to resell hardware sold by CNT’s rival Nishan Systems Inc – something that it obviously will not do now. Nishan sells long-distance IP-based storage networking gear. Nishan’s marketing director Tom Clark said: Maybe CNT was just trying to find a way to resell our gear. They could have just talked to us.

Source: Computerwire