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Computer Associates did it again - they have to restate earnings. The company looked like it had all its past sins behind it - former CEO's going to jail kind of stuff, and new top dog John Swainson being very frontal and brutally honest in the early going. This new setback is a kick in the pants, for sure, but should be weatherable.
Here's the problem - it doesn't matter if it was a normal accounting error or gross misconduct - the market has reacted with typical panic by shorting the stock into the pits. The consumers, who have mostly not even noticed, are in two camps. The first are the big shops, where CA has been steadily making gains and lets face it - actually doing smart things over the last year or so. These guys are the prime target of the majority of the competition - and the most business savvy - so expect every competitor with a pulse to be in these accounts saying "once CA is out of business, our professional services folks will help you with the migration to our stuff". FUD will run amok. If a big shop is considering a large CA purchase, it will be in jeopardy. EMC or Symantec sales guys are frothing at the mouth when stuff like this happens. The IBM guy is already practicing his "I told you so" speech. Now CA will compared with Sun as one of the "screwed up" ones. Not good.
On a positive side, the bulk customer, like the 300,000 or so ArcServe backup customers, probably have no idea anything is going on. Unless they are in the middle of a proposed move - it won't have any bearing at all on CA. The maintenance checks will keep rolling in. Should Symantec's mid-market unit run by Jeremy Burton go on the offensive here - sure they should, but it will be expensive and the gains hard to come by simply by the nature of this market. If it works, and they know how to use it, they won't be looking to leave, regardless of the marketing hype. We all saw what happened in France last year, with the riots ET AL, and some of us were interested, but none of us altered our daily lives due to it. Same kind of thing.
So, Mr. Swainson needs to get out in front of this one and mitigate the potential damage at the big bread and butter accounts. He should immediately go public - overly public - about the cause of the reporting screw up, the rectification of it - remind the world that this probably occurred because they are HYPER conservative now when it comes to reporting - allude to the fact that many of his competitors may not have even raised it as an issue (whether true or not is not relevant here), and then talk about how all the clean up over the last 2 years has resulted in stunning victories, by big name account, by market growth, or by the fact that speech classes have resulted in a 9% drop in annoying Long Island accents - anything that is positive. The good news is the company has actually done well, by most any metric, since streamlining businesses, dropping 9874985 products (only a slight exaggeration), changing their financial controls and systems, and focusing the sales force.
It would be a shame to have what appears to be a minor hiccup derail the train that finally started moving in the right direction.
I'm giving them the benefit of the doubt that this is, in fact, not a big financial deal, and that Wall St. is overreacting as is their nature. I'll wait to hear from smarter folks to explain what the real deal is. Since they are blaming "commissions" as the cause - I can understand. Sales people are brilliant at working a coin operated system - why no one knew about the missing "accrued" commissions is another story.
This is a good summary of the story. When a CFO leaves a public company - 99% of the time you can bet something stinks behind the barn. Were these events mutually exclusive? I doubt it. I don't believe in coincidences any more.
Here's my latest in CW - an outline of the way we should be doing data protection. Once you read it, let me know if you think it reasonable (as I do) that archiving become a parallel process in this construct. It blows my mind that people backup archives - in the same vein as their production data. One of the biggest values archiving offers is eliminating that data from the backup process - since it's already backed up, and doesn't change. People do goofy things sometimes. That's one of them, if you ask me.
Heidi and I will be working on getting out a more comprehensive piece shortly.
My thoughts on doing business with the storage vendors - my latest in ComputerWorld.
I forgot to post this link to my last CW article. I think I nailed the issue of what's happening in the current market and why it's going to be bad for all of us if things don't change. Let me know your thoughts.
The Tech Target folks continue to have it figured out in terms of what makes a good storage trade show - real users, with real problems, sitting together listening to real speakers (mostly). The allure to the community is that there are no sales pitches. The content is good, but not so overwhelming in terms of quantity that you can't figure out where to go or what to see.
Personally, I love SNW because all my clients are there, but if I were trying to learn something, it would be a bit overwhelming. Even if you could eliminate the thinly veiled vendor pitches, the sheer volume of concurrent sessions is tough to navigate. That leads to other problems, such as poor speakers, which kill a topic no matter how relevant it is.
One guy I'd like to see at Decisions who doesn't speak there for some reason is Jon Toigo. Jon and I seem to disagree as much as agree on things, but he is an excellent speaker when he's not in a overtly disparaging mood to the vendor class he is discussing. Regardless, he is always facilitating controversy, which agree or not, makes you think - and that's really the value that these things should bring.
Unfortunately I'm going to miss this seasons other show, Storage World, (I'll be at the Fall show), but the one I went too last year looked fairly well attended, with what looked like actual end-users. How could I tell? I didn't know everyone there. It will be interesting to see if they can keep up - the vendors are frugal, and I'm not sure there is enough differentiation (perhaps they are trying to be a combo of SNW and Decisions?) to attract a different crowd - which is what the vendors really want.
I'm going to suggest to all of them that opposed to asking for folks to submit speaking proposals, that they ask you, real people, what topics you would like covered - and then find the folks to fill those tracks. I think we spend too much time at these events talking about the latest and greatest the vendors have to offer, or what they think is cool, and not enough on what the user needs to solve problems today. I love the forward looking stuff, but some grounded realistic content is nice as well.
I've been writing a lot about virtulalization lately, and the process has been clarifying. I figured out a few things, such as the fact that none of the stuff we are talking about is new. Most of it is really old actually.
Perhaps the most interesting conclusion I've come too is that all virtualization (computer, anyhow) solutions we've ever come up with have followed identical financial paths. First, they attempt to solve capital expense related problems. Second, the attempt to solve operating expense related problems. And third, somewhat related to second, they attempt to keep people from jumping off buildings - or solving people scale problems.
A storage example would be Volume Manager. VM came about because of capital economics - i.e. when Seagate came out with a 4GB disk drive that was only 1.5X the cost of a 2GB disk drive, people bought them - lowering their capital cost per MB. The problem was that the operating system could only deal with a 2GB disk, so in reality what you added was a more expensive 2GB disk - until VM made it look like (2) 2GB disks. Phase two of storage virtualization was when we came out with RAID arrays - taking a ton of disks and putting them into a single box making it look like whatever we wanted. By doing that we got huge operating efficiencies, because managing a million individual disks is harder than managing one big box. Now we are at stage three, where we have a million big boxes, and people are going to jump of the building.
We are focused on keeping people from killing themselves, so most of the solutions to the Multi-box management problem are just moving the virtualization element to the next step in the process - looking at the boxes instead of the disks, etc. That will help, but it's not the end game, it just is like all the others, a band-aid.
Servers are now doing what storage did years ago. Servers cost too much and we have too many, so use virtual machines instead. Smart. Not new, but smart. Mainframes and big Unix boxes have been doing this since the dawn of time. Now we can do it on Windows and you'd think we've seen the second coming.
What we need is the 4Th motivation -which no one has figured out yet - and that is the ability to virtualize AND control the entire layer - be it storage, server, network, or whatever. That means much more than making one thing look like something else - it requires deep, intimate knowledge of all the underlying infrastructure so that while it masks the complexity from you and I, behind the scenes it controls it - the way an operating system does in your PC. Then you have real business value - that's when we stop doing tactical IT infrastructure stuff and all our efforts go into doing something with the data we have to drive down costs, make more money, or solve world peace - something a tad more meaningful than mastering an array GUI.
This is hard, of course, as recently pointed out in this blog by Greg Nawrocki who comments about another claim about virtualization and cold fusion, by upstart Crosswalk. I read the Crosswalk release, and heck it sounds awesome, but even if you nailed one layer, you have to be able to have understanding deep enough to coordinate between all the primary virtualization layers - be they server, storage, or network.
Howard Smiths blog, Forked Path talks about all sorts of stuff that shows the difficulty of the big picture interdepencies.
This is a good virtualization specific site that spends more time on server side stuff, but it's stuff you'll need to know.
A big part of the problem ultimately is that the different virtualization layers have much different players, and they are solving much different problems without much concern about the other. If you build a hammer, everything looks like a nail, right? 15 years ago you bought your system, application, network, and storage from the same guy, but no one does that anymore. They were forced to deal with each other, or perish. The virtualization guys - who's market is still too nascent, don't have to deal with each other yet. VMware is about a close as it comes since they are owned by EMC - but if you talk to an old time VMwarian, they don't know jack about storage, and certainly nothing about networks.
It's really hard to make things really easy.
What does it mean? First, it means I lost money. Both were good ESG clients. I'm sure you feel sorry.
Let's start with Tacit. Read Brian Garrett's latest on the ROBO world and you'll understand the play. Collapsing remote IT is the natural next step in a world of consolidation. Relieving part time remote IT people of some duties is merciful if nothing else. Putting a WAN optimization player with a WAFS player is inevitable, as they both require each other to really benefit the user. It will be interesting to watch Riverbeds IPO soon. This is a very smart space, because it solves legitimate problems that aren't getting any smaller.
Now for Kashya. EMC did it because in the brave new world of "network based intelligence", InVista only runs locally. They now have replication solutions for customers who want to run on the array, in the host, or in the network. Previously, data migration on a local basis was all InVista offered. Second, they did it because as an adjunct, Kashya has CDP, and EMC knows darned well that CDP is smart and should execute all over the place. Plus, they love getting to dump Mendocino even before that relationship really started.
The biggest takeaway is that this is not your cousin's EMC anymore. This was a bold move - not because of the money, but because of the history. EMC has been notorious for its zealots. Moshe was the king of them - the Symmetrix has arguably been one of the most successful products ever launched in the business. When EMC bought DG for Clariion, it took years of time, and lots of house cleaning to give Clariion a chance (the sales force wouldn't sell it, the engineering team got limited support because everyone knew Moshe hated it, etc.) - but once it happened, they exploded. When something is successful at EMC, it becomes the only way to do that thing - at least historically. EMC moved to the next thing only after exhausting every possible defense. But with Kashya they seem to have grown up a bit. The network represents a new frontier to sell software value - but it isn't even a legitimate market yet AND it (gulp) potentially cannibalizes the likes of SRDF - which has made the company billions over the years. The old EMC would never risk it. The Joe Tucci EMC seems to have figured out that nothing lasts forever, and if you don't cannibalize yourself then eventually someone else will.
All in all, two smart deals, less money for me, and a few less entrepreneurs.
Hu Yoshida, of HDS fame, spoke about a conference in his latest blog, and one of the topics was virtualization.
Hu says that users at a CIO panel commented that "the next step in virtualization is virtualized environments. Where you can swap out a compliance environment for instance and then bring it back later when it is needed".
Exactly. When we speak about virtualization in specific tactical terms, such as storage virtualization for migration purposes, or server virtualization for consolidation purposes, we lose the higher potential of the concept - which is really to do two things: First, it should abstract the user from the infrastructure on thier way to and from the data they care about, and second, behind that abstraction should be a living, breathing, morphable blob that can alter itself in order to best fullfil the requirments from the top of the stack (user) or the bottom (data).
I like the fact that people are talking about the V word more openly, and with less visible disdain - even if it is in terms that are still too simplistic - such as "improved utilization". Eventually people will come to grips with the fact that a fully integrated "Enterprise IT Virtualization" strategy will be the IT equivilant of the industrial revolution.
I wrote more on it in this weeks CW column.
"Our central file system was getting hammered in a way it had never been hammered before. The NFS caches couldn't go fast enough -- they did not have enough RAM on them." Greg Brandeau, Pixar
"My last challenge to the industry as a buyer is to see how fast can you make [storage] cheaper and make storage retrieval faster and occupy less space in my data center, because I'm out of room," said Bob Eicholz, vice president of corporate development at Efilm LLC in Los Angeles.
OK, so physical size, performance, and finding relevant stuff is what matters. Hmmm. The size stuff is working itself out. We need to improve access and general performance by putting a huge centralized cache in between of all the storage devices and the network, (huge meaning capacity, not physical stature). And we need to implement IIM - prepare data (classify,categorize, tag, etc.) so that when we need to manage it (find, archive, move, protect, etc.) it becomes feasible regardless of the volume of data we deal with.
Seems simple to me.
Why is it that people can look at a simple sentence - and interpret it in so many ways? In this Computerworld article, I said this:
"At the end of the day, all the switch guys will need to be able to add significant value in terms of "intelligence" or they will get so marginalized that only one will survive (can you guess who?). It also happens to be better for society as a whole."
Now, how that can mean anything other than what it says is beyond me, but for those with diminished capacities, let me expand. What this simple statement says is that if you are fibre channel switch guy, and you decide that you just want to remain a simple fibre channel switch guy, then ultimately you will become commoditized and marginalized into oblivion - because unless you are Cisco - or a pirate equivalent - you won't have the money to survive that kind of war. Therefore, what you need to do is raise the value proposition - i.e. add intelligence and services to your offerings. It can't be about the cost per port forever.
The last sentence means that I feel that it's better for all of us if there is more than one choice. Duh.
So, I guess that means it's a good thing that Brocade and McData have started to add some smarts. QLogic has launched a smart platform (Troika) that guys like StoreAge run on already. So, the battle for the next frontier is hardly over.
Next time look at the words, not just the pictures.
"67% of all statistics are made up." Greg Duplessie
It does seem like that doesn't it. Remember when SRM was going to be a $11 Billion dollar business in 2008, or something?
That's what I tell my kids, or at least some of them - the ones old enough to learn from such a wonderful statement, yet of course they don't.
Dot Hill got murdered on Friday because Sun took a piece of business away from them and gave it to someone else. Dot Hill issued a press release that fueled the fire, as opposed to quelling it. They got most of the words right - including a statement from Sun saying they still love Dot Hill, but could have probably avoided all the negative spotlight had they A: been more specific about what the piece of business was - i.e. it would have probably been good to know if it was some future thing that the Dot Hill component of equated to an $.08 gizmo (don't know if it was, I'm just saying...) or B: some specifics around the time frame - Dot Cheese Dana Kamersgard said "We do not believe that the loss of this business will substantially affect our revenues in 2006 or 2007." That's a tad nebulous. He could have followed it up with "However, we believe our Netapp business (or Fujitsu Seimens, etc.) will be in full swing by then, more than offsetting any small negative impact this may have had on revenues" or something to that effect, except that's probably illegal to do. I can say that however, so consider it said.
The street, as you know, is a "fickle" (read: stupid, asinine, illogical, etc.) place. A wink, nod, or lint in the eyeball can and will be construed as material and relevant, so maybe someone should teach Dana to start twitching in a semi-random pattern when delivering this kind of news - or good news for that matter.
So to boil it down, while it would be good for Dot to get every single piece of business ever, it probably does not signify the end of the world as we know it to lose a piece here and again. The nature of the OEM business is this - things come and go, you just hope they come more often than they go. Xyratex or LSI certainly know about this. Does that mean Dot Hill is a great buy after getting waxed last week? I have no idea, I don't know if it was a great buy before this happened, or was already priced foolishly - and I still don't. All I know is to react this violently (one way or the other) based on absurdly small levels of actual information seems somewhat emotional, something that shouldn't play a role when it comes to our money.
Now, having said that, if you've ever been lucky enough to see me at a craps table....
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