Compaq Invests in SSP Pioneer StorageNetworks

If there was any doubt that the market for storage service provider (SSP) solutions was heating up, Compaq Computer Corp.’s (www.compaq.com) mid-April partnership with StorageNetworks Inc. (www.storagenetworks.com) should help put it to rest.

SSPs are part of the next wave of the outsourcing trend that began sweeping through enterprise IT departments in the late 1990s. By consolidating storage at a single remote location or at a number of distributed storage points-of-presence, SSPs say they can help dot-com companies and other organizations deal with the problems of deploying and managing storage.

Aside from eliminating the procurement costs associated with the multiterabyte storage capacities required to support many e-commerce ventures, SSPs expect to do away with the problem of storage management, as well.

"Storage costs are going down, but the cost of managing all of that storage is going up," observes Ruya Atac, senior director of field marketing at StorageNetworks.

"What’s happening is that if you look at the numbers again, you’ll find that for every dollar you spend expanding capacity, you’ll spend an additional 80 cents to manage it."

Compaq’s alliance with StorageNetworks marks the latest in a series of partnerships between the SSP pioneer and big-name investors. StorageNetworks earlier had received about $200 million in funding from a number of other vendors, including Dell Computer Corp. (www.dell.com).

Compaq's relationship with StorageNetworks is to develop and deliver SSP solutions for e-businesses. Pursuant to the terms of the agreement, the two companies plan to use Compaq enterprise storage and Compaq Open SAN solutions to provide both private utility storage -- a model in which storage resources are located on a customer’s own premises -- and public utility storage, in which a centrally managed storage infrastructure has both storage capacity and service levels adjustable by customers based on demand.

Through this effort, says Howard Elias, vice president and general manager of Compaq’s storage products division, the two companies hope to provide Internet-based and other e-business ventures a competitive advantage in a frenetic e-commerce space.

"This joint relationship offers our customers managed storage as a utility -- public or private. It also provides them with a competitive advantage as the Internet becomes fundamental to developing and implementing business strategies in today's e-commerce driven economic environment."

Additionally, StorageNetworks agreed to implement Compaq storage solutions in its Global Data Storage Network. Moreover, both companies agreed to competitively market storage solutions to both Internet and e-commerce customers and traditional enterprise customers.

Compaq also revealed that it had made an undisclosed equity investment in StorageNetworks.