At any given time, all of these people serve as the face of the company they represent.
This is no different in the storage industry than with other types of companies. But because information is stored for a long time, customers may not interact with storage companies as frequently. That means their impressions could have a longer term impact.
As an example, I was working with an IT director of a major company recently and the director was upset with what a salesperson had done in engaging the CIO of the company. The IT director did not have a problem with the specific person, but with the company. This director vowed to not buy a solution from that company for the problem we were trying to solve. It didn’t matter whether the sales person was using company-endorsed sales practices or not. A new barrier had been created.
This isn’t an isolated incident. I find that the negative perception caused by an individual can affect a sale even when the customer knows the vendor representative doesn’t represent the entire company. The customer might consciously or sub-consciously associate the vendor with one person, and the way that the customer has been dealt with may impact all future relations with that vendor. That could impact the customer’s ability to make objective decisions. But that is human nature and does require additional thought or effort.
The lesson here is that at any moment during external communications, the company employee must remain keenly aware that he or she is the “face of the company” right then. Saying outrageous things or taking a condescending attitude ultimately reflects on the company. It only takes one bad encounter to give someone a negative view. In the case of storage, this view could last for years.
(Randy Kerns is Senior Strategist at Evaluator Group, an IT analyst firm).]]>
Vendor strategies must start with a few basics: What is the best way to position a product, and what product characteristics are necessary to meet future needs? Positioning a product is foremost about fitting customer needs. Describing how it fits those needs can be done in many ways, and typically there are multiple approaches taken in addition to data sheets and product specifications. These include:
• A short description of how the product can be used to meet the customer’s needs.
• A longer document that has details of usage in a specific environment.
• A white paper that explains the product in context of the value it can bring.
Positioning statements usually includes how a product fares against the competition. One sign of misguided focus is when the lead information about how competitive the product is starts with the negatives of a competing product. By starting with competitors’ negatives instead of laying out its product’s advantages, a vendor risks wasting the limited time a customer will spend on the material. For us at Evaluator Group, when we put together our Evaluation Guides for customers, starting with the negatives is a big red flag.
Delivering a product that meets future needs is another area where a company can get its focus skewed. Common focus miscues include:
• Lacking an intimate understanding of customer operational characteristics and their business processes.
• Lacking good judgment of the adoption probability within a specific timeframe of new technology by customers.
• Using general surveys to predict future customer needs.
• Watching what competitors are doing and trying to follow their lead.
These mistakes lead vendors to look in the rear-view mirror. Instead of looking out the windshield when making plans, they look back to see what has already happened.
Keeping the pressures in perspective and maintaining focus on how to position and deliver products can be tough for some companies. Those that do it well are more successful and from our perspective have a better handle on the competitive environment. Companies that have allowed their focus to shift make big mistakes and become less competitive.
(Randy Kerns is Senior Strategist at Evaluator Group, an IT analyst firm).]]>
The reasons most often listed for acquisition of a start-up company are:
• Technical infusion (technology acquisition)
• Expansion into a new business area (new technology and staff)
• Complementary solutions (filling in a product line hole).
These reasons would lead to the conclusion that startups bring new technology to customers more effectively than large established companies. Considering that popular technologies such as data deduplication, thin provisioning and iSCSI storage were originally brought to market by startups, there is merit to this line of thinking. But it is not such a simple issue. Large vendors do have brilliant and dedicated people, but developing and bringing a product to market in these companies can be a complicated process. That’s because they create a corporate structure that often makes it difficult to take a new idea or approach and bring it to reality.
Large companies have processes that their people are required to follow, making it difficult to innovate. Any initiative or idea must conform to their interpretation of the company process, and there are organizations and people inside each company that can create enough resistance to hinder realization of the new ideas. I call these people and processes the Department of Revenue Prevention.
If a large company has an entrenched Department of Revenue Prevention, it is easier for people with ideas to take them through the startup route. That route has less resistance, and innovators’ time and efforts are not spent battling the department but actually moving the innovation to market. Unfortunately, the rewards may be limited based on what must be given up to get the funding necessary to take the technology innovation to a product stage. Ultimately a startup may not be successful for a variety of reasons, including:
• A bad board assigned by investors that do not understand the market, the technology, or what is required to bring the technology to fruition
• Missing or subpar key people in areas such as strategy, marketing, and sales.
• Technology that may not meet customer needs at the right time -– either being too early or too late.
Large companies that understand how to nurture and develop the ideas of their talented people will be more successful than those that succumb to the bureaucratic sprawl and paralyzing Department of Revenue Prevention structure. Even inside these great companies, things change over time and bureaucracy spreads. To re-invigorate a company requires periodic review and change to enable innovation. It’s either that, or continue to acquire other people’s ideas.
(Randy Kerns is Senior Strategist at Evaluator Group, an IT analyst firm).]]>
Despite the speculation, it’s a lot more likely they will go on as competitors and in manay cases partners than they will merge into one company.
It’s hard to say exactly how the rumor got started. There was a note from a Wall Street analyst Wednesday speculating on companies that Oracle might buy. EMC was on that list of 12 companies, listed as a potential long-shot. Still, that touched off a spark among investors, who had probably been hearing whispers that Oracle wants more storage and is intereted in VMware. EMC owns more than 80% of VMware, but is unlikely to sell that valuable asset on its own.
“I don’t know who started this talk,” a Wall Street analyst who covers storage told me. “I am sure there are bankers pitching EMC to Oracle, even if that deal doesn’t make any sense. Usually the target leaks these things, but I’m pretty sure EMC did not leak or start the rumor.”
After all the big deals we’ve seen this year in technology, more credence is given to rumors than usual. But this deal doesn’t seem credible, for several reasons:
Too expensive – Most analysts say EMC plus VMware would be worth more than $50 billion. Oracle would have to finance at least two-thirds of that, and that might not be so easy to do these days.
Too complex – Integrating large companies always brings about a transition period where product development and sales take a hit. The bigger the company that gets integrated, the longer this period usually lasts. Oracle is just about finished with its Sun integration, is this a good time to start another?
Too much technology – Oracle has shown with Exadata and its recent ZFS Storage Appliance upgrades that its strategy is to sell storage specifically to make its databases run better. While EMC would make a case for its storage doing that, what about all of its other products? Does Oracle want EMC’s full backup, security, and content management platforms? It would have to pay for all those pieces whether they fit or not. It could sell off the parts it doesn’t want, but that just adds to the complexity of the deal.
If Oracle CEO Larry Ellison wants a broader storage portfolio than he got from Sun, he’s better off going for a smaller company such as NetApp. If he wants VMware, he’s probably out of luck.]]>
The Oracle CEO appeared envious of NetApp when addressing financial analysts Thursday, guessing that 60% of NetApp’s business comes from storing Oracle databases. “We’d love to have that 60 percent,” Ellison added.
Oracle gobbled up Sun earlier this year, and Ellison and Oracle CFO Jeff Epstein said Thursday that Oracle is still shopping. Ellison said a chip company is on his shopping list. A lot of people in the IT industry think he would like to add storage as well although Oracle expanded its storage line at Oracle OpenWorld this week with its Exalogic cloud product and an enhanced ZFS Storage Appliance platform.
In any case, Ellison’s comments will certainly increase speculation that NetApp is an acquisition target, and is likely to send it stock price soaring as rumors of IBM and Dell interest this week did for Brocade’s shares.
Storage blogger and Storage Magazine/SearchStorage.com contributor Stephen Foskett this week made a case for Oracle buying either Hewlett-Packard or NetApp, and concluded that NetApp is the more likely target:
“An Oracle acquisition of NetApp makes so much sense, I’m surprised it hasn’t happened already,” Foskett wrote on his Pack Rat site. “Combine very little product overlap, a ‘doable’ price, and a poke-in-the-eye for IBM and you have a winner for Larry Ellison. No other available company offers the solid enterprise storage portfolio and sales of NetApp, and few other companies could make the purchase. The recent NetApp/Oracle ZFS settlement makes it look like something could already be in the works. Unless Oracle really is content to stand pat with Sun’s ZFS storage systems, I expect a NetApp deal within a year.”]]>
But that didn’t stop at least one analyst from playing matchmaker. Kaushik Roy of Wedbush Securities sees Brocade as a good fit for Dell. Dell’s rival Hewlett-Packard bought Ethernet networking vendor 3Com earlier this year and then outbid Dell for storage systems vendor 3PAR. There has been a lot of speculation that Dell would look for another target after failing to match HP’s final $2.35 billion offer for 3PAR.
“We believe that Brocade is an attractive acquisition candidate and its stock is cheap,” Roy wrote in a research note today. “Dell is following on the footsteps of HP and we think that acquiring Brocade would give Dell access to storage and data networking, important components of the data center.”
Brocade would give Dell something HP lacks — its own Fibre Channel networking products. Dell and HP both sell devices from Brocade and Cisco through OEM and reseller deals. HP was believed to be a suitor for Brocade last fall until it bought 3Com, but is unlikely to chase Brocade now just for its FC business.]]>
Storage Systems vendor 3PAR has now received four bids in two days and six in two weeks with Dell and HP making three offers apiece.
Dell disclosed this morning that it would match the $1.8 billion offer HP made Thursday evening. 3PAR was obligated to accept that offer under terms of its original agreement with Dell that gives Dell the right to match competing bids. Dell opened the bidding at $1.15 billion Aug. 16, and HP bid $1.6 billion on Monday. On Thursday morning, Dell raised HP’s bid by $20 million and HP countered with its $1.8 billion bid after the market closed.
3PAR’s board has accepted all of Dell’s offers and none of HP’s, which seems to indicate 3PAR management favors Dell. However, 3PAR has to accept any matching bid due to its original agreement with Dell. That agreement also allows 3PAR to negotiate with any company that makes a superior offer. That means HP – or another company – can win even if 3PAR management prefers Dell. 3PAR is legally bound to send any superior offers to its shareholders, who will ultimately pick the winner.]]>
Dell’s latest offer of $24.30 per share beats HP’s $24 per share. Dell’s first offer disclosed Aug. 16 was for $18 per share or $1.15 billion.
Dell also said 3PAR has accepted today’s offer and signed an amendment to their original agreement. The revised agreement increases the termination fee to $72 million that 3PAR must pay Dell if it accepts another offer. The previous termination fee was $53.5 million. HP’s offer to 3PAR did not include a termination fee.
After receiving HP’s offer Monday, 3PAR gave Dell three days to respond. That three-day window ended today. Now we await HP’s response to Dell’s revised bid.
According to financial analyst Aaron Rakers of Stifel Nicolaus Equity Research, Dell’s response was not surprising and he expects HP to raise the ante again.
“… this acquisition makes sense for Dell when thinking about the need to diversify deeper into the enterprise data center market,” Rakers wrote today in a note to clients. “As it relates to HP making a counter offer, our discussions led us to believe it is likely that HP will counter in this situation, given that they had an offer on the table for 3PAR prior to Dell’s original announcement, the 33% premium on [HP’s] original counter offer, availability of cash on hand, and the company’s desire to have a proprietary offering in the high-end storage market.”]]>
3PAR gave Dell three days to make a counter offer following HP’s offer on Monday, according to the latest SEC filing by 3PAR.
3PAR’s filing confirmed that HP was Company B in its previous filing, and said HP’s offer probably fit the definition of a “superior proposal” to Dell’s under terms of 3PAR’s previous agreement with Dell. HP’s offer of $24 per share was 33% higher than Dell’s $18 per share bid, which would total $1.15 billion.
The filing said that after receiving HP’s offer Monday, 3PAR told Dell it would open its books for HP and discuss the latest offer. 3PAR’s filing emphasized its directors have not yet taken any action on HP’s proposal and “continues to unanimously recommend that 3PAR’s stockholders accept the offer by Dell.” You can expect that to change, of course, if Dell declines to make a counter offer.
The three-day window would expire Thursday, which means any Dell counter offer – or a refusal to make another offer – would likely be public by Friday morning.
Meanwhile, speculation continues about other possible bidders. RBC Capital Markets analyst Amit Daryanani raised the possibility of EMC getting involved as a defensive position against its long-time partner and recent competitor Dell.
“We would not be shocked to see a competitive bid from EMC (or by way of VMware) as a defensive move to primarily keep Dell out of the high-end, scale-out, SAN marketplace,” Daryanani wrote in a note to clients. “EMC would likely view a winning bid from Dell for 3PAR as most negative, as it would add a fourth, large competitor in the high-end SAN market. In addition, given Dell’s OEM/reseller relationship with EMC since October 2001, Dell has intimate knowledge of a large segment of EMC customer environments. Therefore, if Dell were successful in acquiring 3PAR, we believe EMC would likely scuttle its reseller/OEM relationship with Dell, as Dell would likely target EMC’s midrange and high-end enterprise storage customers’ environments with the 3PAR products.”
Daryanani said NetApp would probably find 3PAR too expensive to make a bid, and he doesn’t expect larger vendors such as IBM, Oracle, Hitachi Data Systems, Cisco, or Fujitsu to get involved. Some in the industry have speculated that Oracle was Company A in 3PAR’s previous filing. That was the company that showed some interest in an acquisition but declined to bid. Daryanani pointed to Oracle’s recent acquisition of Sun and Oracle CEO Larry Ellison’s heavy investment in private SAN vendor Pillar Data as reasons why Oracle is unlikely to bid on 3PAR.]]>
The document lists Dell, Company A and Company B as the interested parties. Company B made an offer July 23, and is apparently Hewlett Packard based on HP’s claim that Monday’s $1.6 billion offer was not its first for 3PAR. Company A first talked to 3PAR about a “commercial relationship” – likely an OEM deal — and asked to be contacted if 3PAR put itself up for sale. But after offers from Dell and Company B, Company A declined to bid. 3PAR also reached out to a Company C, but that company was not interested in a deal.
3PAR CEO Dave Scott first talked to Company A executives May 3. Scott then met with Michael Dell and Dell SVP of corporate strategy Dave Johnson May 7. Company B contacted Scott July 8 to discuss “a possible business combination” between the companies.
Company B made a non-disclosed non-binding offer to acquire 3PAR on July 23, and Dell made its first non-binding offer of $15 to $17 on July 30. 3PAR asked Dell for $18.25 per share on July 31 and Dell made its $18 per share offer the following day. Company B declined to make another bid, and 3PAR agreed on an exclusive negotiation period with Dell through Aug. 15. The two companies agreed on the $18 per share deal on Aug. 15, and made the deal public the following morning.
The filing also said Dell and 3PAR discussed a reseller agreement beginning late last year.
Dell has yet to say whether it will raise its bid to beat the counter offer of HP (or should we say Company B?)]]>