Adaptec buys Aristos, Tom Cruise, XIV, and Logical Assumptions

Adaptec is the gift that keeps on giving. They buy companies, get seemingly nothing but headaches from them, and sell them a year or two later for pennies on the dollar – often back to the same people who sold them in the first place (Eric Kelly of Snap, sold to Adaptec for $100M, bought back via Overland for $3.6 or so, and there are other examples). This is the company that pretty much invented SCSI, but felt fibre channel wouldn't make it. They have acquired a zillion companies over the years, and then put themselves on the brink of bankruptcy only to somehow crawl back to life to buy someone else the following year. Yesterday they bought ailing storage chip maker Aristos Logic, whose investors must be psyched that Adaptec was still around. The best deal Adaptec almost did was back in 1998ish when they decided not to buy Symbios Logic from Hyundai Electronics after previously making the high bid – which allowed LSI to buy them instead. That little move gave LSI about $5 billion in revenues I figure, a giant IBM OEM deal (DS4000, which IBM has shipped about a trillion of) and a bunch of other wins. Up until that point, LSI wasn't even a storage system vendor, but they parlayed that play into becoming the only real OEM player in the space – a space previously owned by the likes of Adaptec. Instead Adaptec bought Mylex out of IBM leveraging reverse logic that I still can't figure out. Companies, like people, often try to be something they are not by making big plays to distract folks. Who remembers Playts? That's right – no one. Adaptec bought them for $150M or so in 2001 – a leader in IP storage routing chip technology. Where did they go? How about Eurologic? DPT? Elipsan?

My question is how are they allowed to do that over and over again? They had one big investor sue them a while ago to try to get them to stop being so silly, but why would anyone buy that stock to begin with? Eventually Charlie Brown knows Lucy is going to pull the ball away – right? If you ask the world what Adaptec does the world will say "PC RAID controllers", a business that while insanely boring continues to be one that big PC vendors buy into. It's like if I wanted to be tall and good looking and I kept buying things tall good looking guys would buy, even though I can't use any of them – like a pair of $5,000 custom Italian shoes in size 14 – they sure are nice and expensive but wearing them will only make me trip and fall.

In typical fashion, I avoided the mall until the last possible moment before school shopping this year. I am a child of the Internet, and will go out of my way to buy anything without ever engaging a human, not that I'm anti-social. With two days to go before school began, I begrudgingly grabbed the 14 year old Jason and 16 year old Kaitlyn and trekked to hell – the "Natick Collection". Growing up in Massachusetts, the Natick Mall was an Eastern Bloc replica whose only redeeming qualities were that Jordan Marsh made fresh cookies and presented them as you walked in, and it was next to the Twinkie factory. Now it looks like Vegas without any of the good parts.

I lasted approximately 16 minutes with my daughter before deciding I would rather do anything else. Really, I'd rather listen to someone explain to me how fibre channel is not only going to survive, but thrive (it isn't, and it won't), or perhaps watch the Susan Lucci story over and over again while being poked with a branding iron. Therefore, Jason and I decided to go to the adjacent movie theater. Of course Kaitlyn's phone was dead, and Jason left his in the car so we had to all walk back to the parking lot (think Caesar's to the MGM), where Jason could not find his phone. Irritated, I called him and low and behold his phone rang – it was in the hood of his sweatshirt. Funny kid that Jason.

I handed Kaitlyn a credit card and slapped my son in the back of the head and off we went, deciding to see Tropic Thunder. I highly suggest the film, even though I only got to see an hour of it because the Natick Collection closes at 9pm on Saturday night. My assumption that it was a mall right before school season and that the million people there were interested in spending money proved erroneous. Vegas, it isn't. The movie (which I had to finish the next night) was one of the funniest, unexpected films I've ever seen. There were some outrageously funny lines and fantastic self-deprecating acting going on. The two funniest – and most surprising – actors in the film were the two that most defied the assumptions I and many others have made about them. Tom Cruise was absolutely hysterical in his portrayal of a movie mogul. His language, mannerisms, and look were the exact opposite of what I had associated with the actor. The same holds for Robert Downey, Jr. He couldn't have been any funnier and a big part of it was that he was completely different than what people assume when they think of him.

The lesson here is one shouldn't assume that what you see is always what you get, that everything is more interesting when people don't expect it, and that completely inappropriate, politically incorrect topics are really funny. The best lesson is probably to lighten up a little bit.

This gets me to XIV. XIV is the Israeli storage company started by EMC guru Moshe Yanai after being tossed by Joe Tucci for being psychotically attached to the ways of the Symmetrix and the Symmetrix only – which he invented and which became the foundation of an industry and made great big piles of money for lots of people (except me). (I have taken some liberties in my condensed version of 20 plus years of history, but that about sums it up.) Moshe, as the story is told, then starts XIV to pee on the cornflakes of EMC and the very Symmetrix that made him wealthier than many sovereign nations. IBM pays $300 plus million bucks for Moshe and Sunshine band as General Andrew Monshaw of IBM and Moshe appear to share the same deep rooted (and possibly psychotic) hatred for the evil machine corp.

The story is most likely far more interesting than the truth in this case. Anyway, post acquisition there wasn't much news. That is, until the last week or so. There has been more XIV bashing in the blogosphere in the last few weeks than there should be in 8 years. I was blissfully trying to avoid the whole thing but there is something afoot, so I starting paying attention. Here's the poop:

All of a sudden all the EMC bloggers starting tossing XIV grenades, starting with Barry Burke – aka the Storage Anarchist about how the XIV box sucks – (I specifically adore the reference to a lack of performance benchmark data from IBM seeing how EMC will literally shoot anyone who even suggests the thought in the center of their corporate quad at noon). He goes on to talk about how the XIV box sucks more power than a Sym or a Clariion (which is comical on several levels). There are LOTS of media blogs on the subject, basically questioning everything from is it worth the money to how IBM is going to die because they are hiring 1985 EMC sales people to sell the thing. I liked Robin Harris' (storagemojo) blog on the subject although it misses the larger point as well to a degree. Bottom line – none of the blogosphere XIV questioning/bashing/defending or debates are wrong – however let me suggest some more interesting (at least to me) considerations, in no specific order;

1. Who cares? The very fact that XIV/IBM is getting this much attention tells me a few things – namely that the EMC bloggers, who leave nothing to chance, are legitimately concerned. Why would anyone spend any time talking about XIV at all – let alone make such absurd arguments about power costs????? How many deals has EMC won or lost on power costs? None. If it gets to that, they win anyway because their sales people are better in general. They will write a check for the difference. Saving $20 grand on power on a million buck deal is a silly argument – especially considering that the total IT power/cooling budget is about as relevant to the overall business as I am to Giselle the supermodel – nice to talk about amongst my crowd but her response is most likely going to be "who?" or "please have him arrested". Why would that argument even be made is a better question. Why would anyone at EMC be worried about XIV? XIV has conceptually better stuff than anything at EMC (we'll have to wait for Maui to see what it's really all about) if one needs new world storage – scale-out, self-optimized stuff built for a generation of data where EMC does not play anyway. If XIV and the Flock of Seagulls generation sales team (no offense, mostly) they have mustered are spending their time trying to unseat the empire in core transactional application areas they are out of their minds – no one is gonna chuck the Symm for XIV. The reason to be worried is that at least some of the people at IBM have figured out that as the distributed era of computing created new data usage opportunities which in turn created new storage opportunities – with capacities that DWARFED the transactional based computing data era – the same is happening in the Internet era. That's why they speak of Web 2.0 et al. They are right. It ain't about the Symm – it's barely about the Clariion – the XIV play is about the next thing. I hope IBM lets their folks know that – if they spend any time at all trying to convince Citibank that they are the new thing for their Oracle system it will be ugly.
2. Which gets me to the block vs. file argument. Who cares? I agree that the new world is a file world but that's an interface. Everything talks blocks eventually. What IBM should do immediately is get into bed as deep as they can with Ibrix, and they will find they can sell servers and XIV until the cows come home – because that's how commercial entities can build their own Google/Amazon infrastructure. Ibrix is enabling Dell, HP, IBM, etc. to sell huge piles of low cost servers and storage in massive quantities all over the place. EMC has had a relationship with Ibrix for the longest time –even unseated Netapp in Pixar, but would rather ignore them largely. The Internet era is going to have customers buying from sole-sources again – and the server/virtualization/file system provider is going to be the one who gets the storage deal – the days of separating those decisions are going to be gone if the server guy has a reasonable (read: good enough) story on the storage side. Growth rates are so big and so hugely unpredictable that customers simply will not be able to deal with anything that can't grow infinitely, dynamically, in any dimension at any time, with a 7-year old to manage it. It is exactly why Google/Amazon had to build it all themselves – because stuff built to handle the requirements of the transactional and distributed era (which is a file vs. block mini-version of the transactional era from an I/O perspective) is NOT the stuff that is required in the Internet era.
3. If you really do want to care, and I can't say strongly enough that you shouldn't, but if you do then there is one little thing that is overlooked in these arguments – it is IBM. Last time I looked they are still a gazillion dollar company in every nook and cranny of the globe with a top 5 brand. The fact that they have screwed the pooch in enterprise storage hasn't kept them from selling billions of dollars of stuff. No – they absolutely have had their arses kicked by the EMC and others – but in a pretty small slice of life – comparatively. I don't think (at least I hope) a move like XIV is about reclaiming glory of days gone by – it's about the opposite. It's about being grown up enough to realize that the game of yesterday is past, and maybe we lost, but the battle for tomorrow is yet to be fought – and it happens to be a much bigger battle, with much higher stakes. As cool as the last 20 years have been for the "enterprise storage" market – it's a fairly small percentage of the overall spend, and 20 years is a fairly small period of time. Maybe I just say that because I'm bored, but I think we're in a mongo-inflection point in this business, and that means that while things could end up the same, there is opportunity in turbulent times that if nothing else, will keep me interested.
4. It's interesting is that EMC owns VMware – who would like to have all storage be dumb and take all the storage value and stick into their file system. I bet the VMware guys would like to see XIV successful. This is a weird dynamic. They like Netapp because a file server is simple – and the share is there no matter where the vmdk ends up. VMware still has a really big valuation – much more so than the value EMC gets from Symm and Clariion. Understanding larger motivations can shed insight into possibilities. I'm a conspiracy theory lover, however.
5. I'd love someone to give me $300M bucks, but let's face it, Adaptec has pissed away a lot more than that over the years on bran muffins, or other irrelevant buys. IBM can drop $300M on the floor and no one is going to notice. It ain't the money that is going to be the issue.

So why all the attention? IBM isn't even formally announcing until September – in that storage juggernaut called the "South of France" of all places. I can't make it, but would have loved to talk the merits of scale-out RAID X vs. RAID Y over a fine Medoc and a nice Gruyere while watching beret and scarf wearing academics smoking while carrying small dogs and arguing about the good vs. bad of the changing face of France.

IBM has received (and I would suggest – benefitted from) more attention and coverage because of the blog bashing than they could have hoped for on their best day of PR. Ah, maybe this is a brilliant move by them – perhaps they were able to plant a time bomb in Barry's ear to get him to start the ball rolling, and then sat back and watched. My advice to IBM – shut up. This is working perfectly, don't ruin it by joining the fray – at least until it all dies down.

You see kids, assuming anything is dangerous. Assuming everything is suicide. Enjoy the weekend.

Comments

[Richard]

Yes…the next 20 years of storage will be very different.

As you say correctly … “everything talks blocks eventually”. Modern data centers will standardize on relatively ‘dumb’ storage running over unified, switched fabric. This pretty much defines the ‘new’ hardware architecture.

With virtualization, most of the storage ‘intelligence’ can migrate upstream, closer to the file system, where it belongs …. be it under Google FS, Hadoop, Ibrix , GFS (Red Hat), pNFS, etc. Also, I suggest that Ingress, Oracle, SQL, etc., do not have a problem.

This is an opportunity for open source to standardize Data Center management, similar to the way that Wintel server architecture enabled Linux. A clean separation of software and hardware enables much simplified system integration and the ‘BYO’ data center model.

Standardized ‘open’ functionality provides little opportunity to differentiate at the storage level…. very bad news for all of the ‘big iron’ storage vendors, including IBM.