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June 7, 2005updated 19 Aug 2016 10:11am

StorageTek: A Little Old School for Sun?

There's nothing disastrously wrong with Sun buying StorageTek. It's a profitable company and a better home for $4.1bn of Sun's cash than the bank. But there's nothing sexy or cool about it either, which is why it's left analysts and shareholders

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There’s nothing disastrously wrong with Sun buying StorageTek. It’s a profitable company and a better home for $4.1bn of Sun’s cash than the bank. But there’s nothing sexy or cool about it either, which is why it’s left analysts and shareholders scratching their heads.

While Sun may well have had its share of difficulties of late as it tries to balance the new market forces that dominate the computing landscape – forces like Linux, Intel-powered computing and mobile – with its heritage in Unix-powered systems, it’s just about managed to hang on to its original spirit of innovation. That has manifested itself in the likes of Java, its willingness to contribute certain technologies to the open source movement, even its plucky StarOffice.

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Like I say, there’s nothing particularly wrong with StorageTek either. It’s profitable, with its most recent quarter’s net income coming in at $23.4m. But it’s not the most dynamic of companies. Revenue was down to $499.3m, from $515.1m in the prior year.

But it’s not just about sales. StorageTek has stuck to what it knows best over the years – high end tape systems and libraries. If there’s been any real excitement in storage over the past 10 years it’s been seeing how much storage can be packed into new, ever more compact form factors – the kind of storage that helped the iPod wow the world. Yet this is a segment StorageTek has been happy to leave to others. Perhaps that has been a good thing, as it has enabled it to concentrate on its bread and butter. But it hasn’t done an awful lot for the company’s image, either.

Put it all together and it is an acquisition that may well make sense for Sun financially, but will do little to reinvigorate its well-deserved reputation for ‘sexy’ innovation. Perhaps the deal that does that will not be too far off.

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