History 2002: IBM’s Mylex for LSI

The twisted workings of decision making and power at Big Blue are sometimes uncommonly complicated.

We never understood exactly why IBM acquired, back in 1999, RAID specialist Mylex, and at an exorbitant price, $240 million, only to do nothing with the firm.

This company, which was founded in 1983 and based in Fremont, CA, was for many years the number one independent supplier of RAID controllers, with about 500 employees before its acquisition.

At the time, we heard rumors that the purchase provoked considerable grumbling within IBM, and more particularly among its own teams also working in RAID technology. The acquisition ultimately became a fairly obscure division of IBM Microelectronics. We even got the impression there was an anti Mylex faction within IBM.

At one time, Big Blue decided to resell Compaq’s StorageWorks RAIDs, before more or less giving up. Then, for its FAStT500 and 700 line, Big Blue opted to go with LSI.

In March, IBM signed a deal worth $200 million over the next 3 years with Adaptec, for the purchase of RAID components for IBM’s xSeries servers. It would seem then that Mylex has served almost no purpose for IBM, apart from furnishing the odd enclosure, particularly since the company is getting out of hardware manufacturing and Mylex products are produced in the Singapore hard disk drive factory now passing under Hitachi’s command.

Finally, although not without some difficulty, IBM seems to have found a buyer for the Mylex business unit, LSI Logic, another RAID maker that for some time now, has been looking to get a firmer grip in the RAID market.

In 1998, it acquired Symbios for a small fortune, at $804 million, followed in 2001, by the RAID activity of American Megatrends.

The acquisition price paid by LSI for Mylex in a cash transaction was not disclosed, but it is probably less than $50 million.

Already rich in major OEM customers such as IBM, NCR, SGI, and StorageTek and Sun, LSI will now also get Mylex’s OEMs, including Eurologic, Fujitsu-Siemens, NEC and Xyratex.

This article is an abstract of news published on issue 175 on August 2002 from the former paper version of Computer Data Storage Newsletter.