Mashup in blogland - will there be a future feeding frenzy in 09?

Dave at Netapp blogged this weekend about the last big slowdown in IT spending.   A lot of people are wondering what's going to happen over the next several months in our industry.  Me too. 

The massive consolidation in the financial services arena - as evidenced by the Wachovia wrestling match - could significantly reduce IT spending.   

If the wheels come off the bus, what scenarios could play out?

Massive industry consolidation among IT products vendors is a likely scenario.  There have been rumors for a long time about the possibility of Cisco acquiring EMC.  That's never seemed very likely to me, but if the valuation of companies in the technology sector deflates, then the old "cash is king" dynamic could re-order the storage universe in a rash of of bargain hunting.  Companies like Cisco and Microsoft who have been sitting on money piles for years could suddenly decide to spend voraciously.   

I had mixed emotions about the bailout.  As a taxpayer, I was not crazy about it.  I think the prognosticators underestimate the depth of our collective consumeristic schizophrenia. As a guy working at 3PAR making storage products, I thought the bailout was an exceptionally good idea.  It was a great conflict between life in and out of the workplace. Now that its done, here's to avoiding a fire sale in the industry in '09.

Comments

[Nik Simpson]

I would say that we've already seen the first signs of what's going to happen with HP's purchase of LeftHand. Considering what Dell paid for Equalogic, $360M seems like a bargain.

[Steven Schwartz - The SAN Technologist]

@Nik,

Clearly you don't know anything about LeftHand Networks or Equallogic. LHN is a software company. EQL was a storage vendor (hardware and software). LHN was considered in all market shares a "other" at less then 1% of the market. EQL held the largest share of the iSCSI market by a private company, the largest share over all vendors for pure iSCSI storage.

LHN just barely broke 3000 customers combined SAN-IQ and VSA in JULY of '08, EQL had almost 5000 customers Q4 '07.

LHN never published revenue numbers, but was estimated between $40 million and $50 million for CY'07(of which someone needs to remove the revenue driven from server sales at low margin), EQL's S-1 had revenue for CY '07 at roughly $180 million.

So between customer base, market share, product revenue, and profitability, Equallogic was clearly worth roughly 4x LHN.