Business Tech

The storage software industry has seen its first quarterly sales decline after more than five years of solid growth, according to a report from market researcher IDC.

First-quarter 2009 revenue for the industry sank 5.2 percent to $2.8 billion from the previous year. The slump has impacted several key vendors, including Hewlett-Packard, EMC, and IBM, all of which sell storage software to enterprise clients.

"The combination of the normally slow first quarter for most companies with the continued economic climate was displayed in this quarter's results," Michael Margossian, research analyst for storage software at IDC, said in a statement. "A majority of companies displayed either negative or very low year-over-year growth."

The software storage industry includes areas, or submarkets, such as data protection and recovery, archiving, data replication, and storage device management. Most of those segments were battered by the weak business climate.

"On a yearly basis, a majority of the sub-markets declined from the previous year's first quarter," Laura DuBois, IDC's research director for storage software, said in a statement. "Predominantly affected were the Device Management, Replication, and Infrastructure markets, all segments closely aligned with the storage systems themselves."

Among the top five players, HP was hit the worst with quarterly sales of $97 million, a 21.5 percent drop from $123 million the previous year. EMC watched its revenue fall 14.5 percent to $612 million, from $716 million a year earlier. Only Symantec eked out a small gain, with sales of $531 million, 2.5 percent higher than the year-ago quarter's $518 million.

The sales decline for the major companies has rippled through the entire software storage industry. But IDC expects the market to bounce back once the top five recuperate.

"The overall Storage Software market was pulled down by the underperforming large companies that make up a bulk of the submarkets," said DuBois. "Once they start to recover, they will bring the entire market up with them."

The software report follows IDC's accounting late last week on the first quarter's poor performance in the disk storage business.

[UPDATE: Clarification that CA "acquired some of their data center automation and policy-based optimization expertise and assets" rather than the company as such.]

Although it's hardly unique to this area of technology, it seems as if the start-ups in the forefront of developing data center automation tools have had a particularly tough time flourishing as standalone businesses even before the current spending downturn.

The latest casualty is Cassatt, from whom CA is acquiring data center automation and policy-based optimization expertise and assets on undisclosed terms. From Tuesday's press release:

Cassatt's Rob Gingell, executive vice president of Product Development and Chief Technology Officer, and Steve Oberlin, Chief Scientist and co-founder, have joined CA, along with their team of developers, engineers, and other key employees. In addition, CA has acquired several Cassatt patents and patent applications, as well as other intellectual property.

"Cassatt has long been a champion for using a cloud-style architecture to manage data centers like a 'compute utility,'" said Cassatt Chief Executive Officer and founder Bill Coleman. "This is a great move for both organizations because of the vision we share -- delivering a new, dramatically more efficient way to run data centers. The acquisition of Cassatt's data center automation technology and expertise by CA, one of the world's largest and most successful software companies and an innovator in business-driven automation, will help make this vision into a reality for customers."

It's not surprising that someone would acquire Cassatt. The company has been peddling very innovative policy-driven automation software for a number of years now. Along the way, company execs have updated their strategy more than once with an eye to making their technology more consumable and more directly responsive to near-term IT concerns.

For example, the company packaged together a product specifically oriented around data center power optimization. More recently, it has spun its story around the idea of constructing private clouds.

Automation technologies such as Cassatt's address very real problems. But they're tough for a small company to sell for a couple of reasons.

The first is that they remain on the leading edge of the adoption curve. Large IT departments are indeed handing off more and more operations to their management software. But relinquishing control of data center operations has long been a slow and incremental process.

The second is that automation software is primarily interesting at large scale. If you only have 10 servers, you probably don't feel a pressing need to automate. It's when you have a thousand servers and you can't run things manually any longer that you are most driven to turn to software for help.

But adopting a management platform for large swaths of a data center is a big commitment and requires a level of trust that enterprises are more likely to place in a CA, Hewlett-Packard, or IBM than they are in a start-up--however great the products.

The result is this, as CNET Blog Network blogger and former Cassatt employee James Urquhart noted in late April:

In the end, though the pipelines were always big, the deals dragged on for months and months and often failed to close in the end. Coleman himself acknowledged as much in the Forbes.com article:

"What frustrates me is my own naivete," he says. "I thought I could give companies something radical that had a proven return on investment, and they would be willing to change all their companies' computer policies and procedures to get that. Right now it's hard to get people to get beyond proof of concept tests or a data center energy analysis."

From CA's perspective, it seems like a good acquisition. The traditional management players such as CA, BMC Software, and Symantec have not been at the forefront of the real action in the data center the past few years. Virtualization and other technologies that largely came in from the grassroots level have had far more impact of late than enterprise-spanning products such as CA's Unicenter.

All of these companies have been fighting back, but they've had to make up for seriously lost momentum. Cassatt brings CA some very good technology that CA should be in a better position to get into the hands of customers than Cassatt ever was on its own.

CA announced Thursday plans to acquire Israel-based Eurekify, in a move to expand its identity and access management software portfolio.

IT management software company aims to use Eurekify's analytics engine to reduce the time and effort it takes for customers to shift through employee's duties and responsibilities and to monitor their access management settings.

The combined CA Identity Manager and Eurekify Enterprise Role Manager will aim to help customers clean up existing identity data and build a model that "serves as the foundation to automate the user provisioning process and enhances identity lifecycle management," according to Islandia, N.Y.- based CA.

The acquisition is expected to close by month's end. Terms were not disclosed. Last month, CA made another security-related acquisition with its purchase of IDFocus.