History 2002: Overland into Storage Software

What are they putting in the drinking water of storage hardware makers to make so many of them want to diversify into storage software?

It’s fairly simple, actually: profit margins on hardware continue to shrink, while the operating profit of a Veritas is the envy of the world. To add fuel to the fire, analysts are unanimously painting the storage software industry as the next El Dorado, thanks to the rising costs of managing data that represents a greater and greater portion of end users’ budgets.

Almost all major computer makers, be they Dell, Fujitsu, HDS, HP/Compaq, IBM or Sun are investing heavily into software in order to boost their storage revenues.

Among storage hardware specialists, companies such as EMC have made no secret of the fact that they are scrutinizing the subject – and rumors are spreading about a possible acquisition of BMC Software, following an earlier suggestion that the Symmetrix/Clariion business might be acquired by Dell.

The same holds for ADIC, McData or StorageTek.

The most recent investment comes from Overland Data, which seized the occasion to change its name to Overland Storage, even if it’s venturing slowly. The firm has created a new storage management business unit in Colorado, under VP and GM John Cloyd, with some 20 employees, only 2 of which will focus on R&D, in the hopes of hitting a financial breakeven by 2003 on the basis of $1.6 million in revenue per quarter.

Said Cloyd: “We have been working for the past year on being not just a tape automation company, and being less dependent on Compaq,” an OEM, now integrated into HP, which accounts for 60% of its sales.

So far, the company has not developed its own software, nor has it acquired one of the many start-ups working in this area, which was, according to Cloyd, the initial idea.

In the end, Overland signed accords with 2 young companies in which it may eventually invest, Astrum Software, which has been officially named, and another whose name was not disclosed, although we were able to determine that it is most likely Prisa Networks, in order to add to its catalog three interesting storage management products for small- and medium-sized companies, but not for backup or virtualization applications (see below).

To sell its new products, the company will rely on some 250 channel partners WW, offering margins that range from 10 to 30%.

Overland’s software:

• Storage Resource Manager (StorCast from Astrum), to inventory, monitor and manage storage assets; $20,000 per terabyte, plus 18% per year for the maintenance; currently available.
• Storage Area Planner (Astrum) to design custom SAN architecture beginning with existing storage assets; available next August.
• SAN Manager (VisualSAN from Prisa, in which Compaq has invested, and which it also resells) to trouble shoot and resolve SAN problems and to guarantee quality of service; available next November.

This article is an abstract of news published on issue 173 on June 2002 from the former paper version of Computer Data Storage Newsletter.