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2001, September week 1

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Worldwide Server Factory Revenues Decline 16% in Second Quarter

September 7, 2001 - The global economic situation proved to be a killjoy for the worldwide server market during the second quarter. According to IDC, worldwide server factory revenues declined 16% from $14.4 billion in 2Q00 to $12.1 billion in 2Q01. Although the United States experienced the most downturn in the market, the slowdown has definitely spread to other areas of the world, with most regions experiencing a decline.
Worldwide Server Factory Revenues Decline 16% in Second Quarter

USB-ADB and USB-SUN Adapters Connect Mac® & Sun Computers to Legacy KVM Switches

Data Respons to Sell Themis Computer Ruggedized COTS Servers and Single Board Computer Solutions in Scandinavia

Interphase Announces Exciting New "Gateway on a Card" Product

Adtron Delivers Flash or Disk Mass Storage in a Single Slot 6U VME Card

JNI Corp Ships 100,000th SBus Fibre Channel Host Bus Adapter

HP and Compaq Agree to Merge 3 year Anniversary

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fibre channel
Fibre-channel adapter cards on
Megabyte found that Fibre-channel was a really quick way of getting around.

View from the Hill

Re: Compaq's proposed merger with HP:

short term bad, long term good

The September 3, 2001 press release, announcing the agreement to merge of two of the world's top 10 storage companies continues the trend of mergers and acquisitions we've been seeing in this market all year. You're going to hear a lot about synergy and the complementary roles of these two organisations and their product lines, from their marketing departments. My view is that both these companies were in trouble before the recession kicked in. The effect of the IT recession made it harder to hide these problems.

The source of these underlying problems can be summarised as follows:

  • Aside from printers and imaging, which it dominates, HP has been #2 or #3 (market share slots) in a lot of segments within the IT market. The #1 company is nearly always more profitable in these kinds of markets, unless the #2 company is satisifed with its role. HP was not satisifed, and burned marketing effort and resources to try and climb these unscalable mountains.
  • Compaq got indigestion from acquiring DEC in the 1990's and never really recovered its manufacturing lead. It did however, become the world's largest VAR, for storage products. But VARS don't make as much profit as their principals.
  • When people buy a PC, they prefer to buy it from Dell Computer rather than Compaq or HP.
  • When people buy a mid range server they prefer to buy it from Dell Computer rather than Compaq or HP.
  • When people buy a mainframe class server they prefer to buy it from Sun Microsystems or IBM rather than Compaq or HP.

Who will be the winners and losers from this merger?

  • HP's storage business will get a bigger route to market by using Compaq and its channels. They've been working hard to secure their future in this strategic segment, and the new company will have the critical mass to make this work.
  • I suspect that the newly merged business will sell less servers than the sum of the two separate companies.

    In the short term the sales and marketing departments in both companies will spend less time thinking about customers, and more time worrying about their jobs. As a result Dell will pick up a lot of unexpected PC business from traditional HP and Compaq customers, while Sun and Dell will find it easier to sell their server products against HP, Compaq and their VARS, relying on the fact that no-one can be too sure which product lines are going to continue and which ones will be scrapped.

    In the long term, the new HP will emerge as a larger, more profitable company, and when the recession is over it will be well positioned to retake any lost ground. That's when the benefits of the merger will really become clear.
Despite declining revenues in the overall server market, the rack-optimized segment proved to be the bright spot in the server market once again. Shipments increased 46%, resulting in revenue growth of 13%. By comparison, revenues in the non-rack-optimized server market fell 23%.
"Even though we knew that the server market would be affected by the economic situation, we did not expect a decline of this magnitude," said Vernon Turner, IDC's vice president of Global Enterprise Server Solutions. "This is the biggest decline that the server market has experienced over the past five years."

According to IDC, the regional revenue declines in this space are as follows:
  • United States - 25%
  • Western Europe - 8%
  • Japan - 20%
  • Asia/Pacific - 3%
  • Canada - 13%
  • Rest of World - 11%
Despite declining revenues in the overall server market, the rack-optimized segment proved to be the bright spot in the server market once again. Shipments increased 46%, resulting in revenue growth of 13%. By comparison, revenues in the non-rack-optimized server market fell 23%.

"This shows that infrastructure-oriented technology is still being deployed in the traditional enterprises," Turner said. IBM continued to slowly grind away at its competition and was the only top-five player to increase its revenues in the worldwide market, with a 5% growth. While Dell avoided declining revenues in this space, year-over-year revenue growth came in flat. IDC rates the top five vendors in the worldwide market according to revenue share as follows:
  • IBM 26%
  • Sun Microsystems 16.5%
  • Compaq 16.1%
  • Hewlett-Packard 14%
  • Dell 7%
Although worldwide shipments declined 3% to 1.04 million in 2Q01 from a year ago, Dell and IBM were the only top five vendors to increase their shipment counts, with 31% and 6% growth, respectively. Dell appeared to keep one step ahead of the travelling downturn by growing its business outside of the United States. According to IDC, the top five vendors by shipment share are as follows:
  • Compaq 25%
  • Dell 17%
  • IBM 14%
  • Hewlett-Packard 10%
  • Sun Microsystems 7%
Finally, the writing on the wall for Netware-based systems must be getting brighter as the operating system showed a much larger revenue decline than any other environment. Year-over- year revenue comparisons from IDC found a 34% fall-off, which was much larger than any other server platform. ...IDC profile
USB-ADB and USB-SUN Adapters Connect Mac® & Sun Computers to Legacy KVM Switches

AURORA, OH - September 7, 2001 - Network Technologies Inc today announced two new adapters for its popular line of keyboard-video-mouse switches. With these new adapters, users can now connect USB-enabled PC, MAC and SUN computers to NTI's Universal Multi-Platform and Universal Matrix KVM switches.

The new USB-ADB Adapter connects a MAC G3/G4 computer to the NTI KVM switch (compatible switches listed below). The adapter fully supports keyboard soft power-on and -off. A unique feature of this adapter is that users can "wake up" the attached Mac G3/G4 by moving the mouse or typing on the keyboard. The adapter utilizes two female 4 pin miniDIN connectors and a female USB Type B connector. A ½ meter USB cable is supplied with the adapter. An NTI MKTINT-xx-MM cable (sold separately) connects the adapter to the NTI KVM switch. Priced at $49, the USB-ADB adapter is immediately available.

The USB-SUN Adapter connects a SUN Blade (or other SUN USB-enabled computer) to the NTI switch. It fully supports special keys on SUN keyboards. The adapter utilizes a female 8 pin miniDIN and a female USB Type B connector. A ½ meter USB cable is supplied with the adapter. An NTI SKTINT-xx-MM cable (sold separately) connects the adapter to the NTI KVM switch. Priced at $55, the USB-SUN adapter is immediately available.

Both the USB-ADB and USB-SUN adapters are compatible with the following NTI KVM Switches:
  • The ST-nU Universal Multi-platform KVM switch – allows one user to control multiple computers.
  • The ST-nXm-U Universal Matrix KVM Switch, which allows up to eight users to control up multiple computers.
NTI units connect between computers and peripherals, are easy to use, and require no special tools or software for immediate operation. High-resolution video is supported up to 1900x1200. Customer satisfaction is supported with a one-year warranty on all parts and labor and a 30-day satisfaction guarantee. ...Network Technologies profile

Editor's note:- the applications notes for the USB-SUN Adapter say you can use it to connect a legacy Sun keyboard to a new USB connected Sun system. So there are other uses for these converters, even if you don't need a KVM switch.
Themis Computer
Data Respons to Sell Themis Computer Ruggedized COTS Servers and Single Board Computer Solutions in Scandinavia

FREMONT, California - September 6, 2001 - Themis Computer announced the selection of Data Respons to sell its UltraSPARC-based Ruggedized Enterprise Servers and VMEbus single board computers to defense, telecom and industrial customers in the Nordic region.

Established in 1986, Data Respons is headquartered in Hoevik, Norway and has customer support and sales offices in Oslo, Bergen, Trondheim, Kongsberg, Copenhagen, Stockholm and Gothenburg. Since it's founding, Data Respons has grown to become a market leader and is recognized for its high standards of support and technical competencies in custom hardware and software development, training courses, and technical support. Guiding it's growth, the company's vision has remained fixed upon becoming one of Europe's leading suppliers of embedded solutions focusing on real time, wireless applications and machine-to-machine communications, making the ruggedized COTS solutions from Themis Computer an ideal match for the company's growth objectives.

"Themis Computer with its unique UltraSPARC based products will be a perfect partner for us", stated Svend Heier, president of Data Respons. "Their long tradition and reputation to providing high performance solutions for demanding applications is impressive. We look forward to bringing the Themis products to the Nordic defense, telecommunications and aerospace markets".

"I am excited that Data Respons is onboard selling Themis Computer systems and board products," stated William E. Kehret, president of Themis Computer. "Their vision and drive to become one of Europe's leading companies within the embedded solutions markets matches our growth goals and expectations. Data Response is highly regarded in defense, aerospace and telecommunications organizations and will provide us even greater penetration in these industries, making them an excellent choice for selling our high performance servers and single board computers into many new applications." ...Data Respons profile, ...THEMIS COMPUTER profile

Editor's comment:- my wife used to be a marketer for Sun partners in the Nordic region, many moons ago, and I'm told there are many wonderful places to visit. For readers there, see also:- Sun resellers in Norway, Sun resellers in Sweden, and please let me know if we should add more to the list.
Interphase Interphase Announces Exciting New "Gateway on a Card" Product
The 4539 accommodates a variety of network platforms including UMTS radio network controllers (RNCs), CDMA2000 base station controllers (BSCs), converged network signaling gateways, and broadband access infrastructures. The new controller is a versatile PCI mezzanine card (PMC) that can be used in CompactPCI, VME or proprietary systems. It has four software selectable T1/E1/J1 interfaces, accessible via a passive rear transition module. Its TDM and UTOPIA interfaces provide access to other slots on CompactPCI systems, and its front access Fast Ethernet port allows direct access to local area networks. Its unique inverse multiplexing for ATM (IMA) capabilities enable the aggregation of up to four T1 spans, and the integrated channel service unit (CSU) allows significant network equipment and network access cost-savings.
DALLAS, Texas, September 5, 2001 - Interphase Corporation today announced the general availability of the 4539 PMC Quad port T1/E1/J1 + Fast Ethernet Communications Controller - the most advanced PMC T1/E1 controller for third generation wireless, broadband access and converged next generation networks (NGNs).

The 4539 is unmatched in the industry because it serves as a "gateway on a card" to interconnect ATM/SS7 circuit-switching with IP/Ethernet packet-switching. The integrated ATM to IP interworking function is ideally suited for the universal mobile telecommunications system (UMTS) market in particular because Third Generation Partnership Project (3GPP) standards mandate that ATM be used to connect UMTS network elements. In addition, this solution provides network equipment providers with an integrated, low-cost, scalable gateway that eliminates the need for expensive, multi-card solutions that connect circuit-switched and packet-switched networks. For example, previous methods employ two cards to interconnect ATM and Ethernet traffic, but the 4539 combines both functions into one integrated solution.

"We are excited about the 4539 because of the capabilities it presents our customers for building next generation infrastructures faster and more cost-effectively," said Greg Kalush, President and CEO of Interphase Corporation. "Interphase telecom controllers provide excellence in platform design by reducing implementation time and development cost for network equipment providers, thus enabling them faster time to market as well as preservation of their R&D investment."

The 4539 includes a comprehensive board development kit for customer integration. It is also initially offered with a Wind River VxWorks 5.4 board support package, offering on-board ATM AAL0, AAL2 and AAL5 protocol support. Interphase professional services complement the 4539 telecom controller and its comprehensive software packages by providing value-added customized software development kits for customer-specific solution needs.

The product is on display in the Wind River Partner Pavilion (booth 811) at the Embedded Systems Conference in Boston, Massachusetts this week. The 4539 has a starting list price of $1,995 and is currently available. ...Interphase profile
Adtron Adtron Delivers Flash or Disk Mass Storage in a Single Slot 6U VME Card

PHOENIX, AZ. September 4, 2001 - Adtron Corporation now offers flash memory or hard disk based mass storage on a single slot VME 6U plug-in card. The flexible design of the SV6I provides up to 5.4 GBytes of flash storage, or up to 120 GBytes of hard disk storage. The board emulates industry standard 3.5" and 2.5" SCSI and SCSI-2 fast and narrow disk and DAT drives. The simplicity of installation eliminates drive mounting brackets and cabling. Flexibility of the storage media allows customers to choose between hard disk configurations for greater economy, or flash memory for high reliability and durability in demanding applications.

The SV6I plugs into the rear chassis connector P1 for power, and either P2 or the front panel connector for the system SCSI bus. Connector P2 supports either a Force or Motorola defined SCSI pinout. The front panel high-density 50-pin SCSI connector brings the SCSI bus to the front of the chassis for easy connection to external SCSI devices or controllers.

Configuration options include disk or DAT drive emulation, setting the logical capacity "destroking," 256 Byte or 512 Byte sector sizes, and 1 to 7 logical units. Other Adtron VME products include a dual slot Type I/II/III PC card drive.

"The efficiency of the SV6I enables simple installation of high capacity storage for both new designs and existing systems. This approach to integrated system storage eliminates troublesome cabling and mounting of traditional 2.5" and 3.5" disk drives. Telecommunication and military COTS customers can use this production volume product without system hardware or software redesign," says Alan Fitzgerald, President of Adtron.

OEM pricing for a 2 GB Flash version is $3,600; a 30 GB hard disk version is $700. Lead time is stock to eight weeks ARO. ...Adtron profile
JNI JNI Corp Ships 100,000th SBus Fibre Channel Host Bus Adapter
According to Sun, more than 3 million SBus slots have been shipped to the market. Today, it is not unusual for Sun's high-end Enterprise 10000 server to ship with as many as 64 SBus slots in a single system.

SBus is ideal for storage network connections because of several features unique to the bus architecture. SBus operates as an individual channel within the server, rather than as a shared bus like PCI. This means each SBus channel operates at its full bandwidth potential, rather than the cumulative bandwidth potential of a shared bus architecture. In addition, SBus was designed to be isolated from the server. Coupled with Solaris operating system design functions, SBus enables Fibre Channel host bus adapters to be hot-swapped, isolated and reconfigured without shutting down or rebooting the server, mandatory features in today's 24x7x365 mission critical computing environment.
SAN DIEGO, Sept. 4, 2001 – JNI® Corporation today announced it has shipped its 100,000th SBus Fibre Channel host bus adapter for the Solaris platform, the most of any manufacturer based on independent research.

"By focusing on the Sun Microsystems architecture in our early years, JNI has dominated what has become the world's largest server operating system, Solaris, with high availability, enterprise quality products," said Neal Waddington, president and CEO of JNI Corporation. "We've used our seven years of product delivery in Solaris to create a world-class organization whose technical innovations, product development philosophies and unrivaled customer support produce 'best of breed' products that exceed the high expectations of Solaris customers around the world. We're proud of our reputation as the recognized Solaris leader, a position that is emphasized when customers ask for JNI products by name when building Solaris-based storage networks."

JNI dominates the Solaris market in Fibre Channel host bus adapters, based on sales statistics from the independent research firms Gartner Dataquest and IDC. JNI sold approximately $80 million of SBus and PCI bus Fibre Channel host bus adapters in 2000 to the Solaris market.

"Two years ago people were telling us SBus was dead, it had no future," said Waddington. "But Sun customers and JNI knew better; they kept ordering their systems with SBus connections and we kept developing new SBus HBAs and Solaris drivers. Within the last year, every major competitor introduced a new SBus host bus adapter and have announced plans to follow JNI in introducing SBus HBAs that support the new 2 Gb Fibre Channel standard just beginning deployment today." ...JNI profile

Editor's notes:- SBus first made its appearance in 1989, as the expansion bus for the Sun Microsystems SPARCstation 1 (a desktop workstation). In 1996 Sun launched the first SPARC systems using the industry standard PCI bus, but SBus remained the dominant bus in the SPARC market till 1998.

At its height, the SBus was supported by more than 250 independent manufacturers, many of whom have since dropped out of the Sun compatible market altogether. This directory, which you're now reading on the web, started life in 1992 as a fat book called the SBus Product Directory. more SPARC market history
Compaq Computer

HP and Compaq Agree to Merge

PALO ALTO, CA and HOUSTON, TX, September 3, 2001 - Hewlett-Packard Company and Compaq Computer Corporation announced today a definitive merger agreement to create an $87 billion global technology leader. The new HP will offer the industry's most complete set of IT products and services for both businesses and consumers, with a commitment to serving customers with open systems and architectures. The combined company will have #1 worldwide revenue positions in servers, access devices (PCs and hand-helds) and imaging and printing, as well as leading revenue positions in IT services, storage and management software.

The merger is expected to generate cost synergies reaching approximately $2.5 billion annually and drive a significantly improved cost structure. Based on both companies' last four reported fiscal quarters, the new HP would have approximate pro forma assets of $56.4 billion, annual revenues of $87.4 billion and annual operating earnings of $3.9 billion. It would also have operations in more than 160 countries and over 145,000 employees.

Carly Fiorina, chairman and chief executive officer of HP, will be chairman and CEO of the new HP. Michael Capellas, chairman and chief executive officer of Compaq, will be president. Capellas and four other members of Compaq's current Board of Directors will join HP's Board upon closing. The merged entity will be headquartered in Palo Alto and retain a significant presence in Houston, which will be a key strategic center of engineering excellence and product development.

The new HP will be structured around four operating units that build on the companies' similar go-to-market and product development structures to provide clear customer and competitive focus. Leadership and estimated revenues (calculated by combining the two companies' trailing four reported fiscal quarters) are as follows:
  • A $20 billion Imaging and Printing franchise to be led by Vyomesh Joshi, currently president, Imaging and Printing Systems, of HP.
  • A $29 billion Access Devices business to be led by Duane Zitzner, currently president, Computing Systems, of HP.
  • A $23 billion IT Infrastructure business, encompassing servers, storage and software, to be led by Peter Blackmore, currently executive vice president, Sales and Services, of Compaq.
  • A $15 billion Services business with approximately 65,000 employees in consulting, support and outsourcing to be led by Ann Livermore, currently president, HP Services.
...Compaq profile, ...HP profile

Editor's comments:- the merging of two of the world's top 10 storage companies continues the trend of mergers and acquisitions we've been seeing in this market all year. How will this affect Sun? The likely effect will be that Sun will benefit from the confusion which will take place when the sales and marketing organizations from the two separate server companies are merged. There was a similar effect when Compaq acquired DEC in the 1990's. The resulting HP will have a stronger Pentium server product line, but in reality the worrying threat to Sun won't be from the enlarged HP. It will be, as now, from Dell Computer. 3 year Anniversary

Highview Farm, September 3, 2001 - Megabyte the Mouse is 3 years old this month. Millions of computer users on the web know that Megabyte is one of the cartoon characters on the computer directory called During the past 3 years, the Byte family has been extended to include Spellerbyte the wizard (who is used as the metaphor for software), Terrorbyte (used for tape libraries and other massive storage), Cheaperbyte (used for VARS and channels), Killerbyte (used for military storage) and the bikes (used as the metaphors for fibre-channel).

In just 36 months has become the #1 enterprise storage portal, with a readership more than twice as large as the 9 year old Sun buyers guide called the SPARC Product Directory, from the same publisher ACSL.

Commenting on the 3 year anniversary, publisher Zsolt Kerekes said "It's gratifying to see how well STORAGEsearch has been welcomed and adopted by the storage industry. We get inputs from thousands of readers, and it's their contributions which help to make our content sharp and relevant. But no matter how good a web site is, we can't do it all. People have multidimensional needs for information, and that's where our collaboration with other leading information sources including market research companies and conference and trade show organisers has made a significant impact on our readership during the past year."

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