As chief executive of Adaptec, Stephens has supervised the company's shift from a maker of components used for data storage purposes to a builder of complete storage systems.
Under Stephens' watch, Adaptec has gobbled up a couple of companies that make networked storage devices -- which hold data separate from computers to allow for more efficient use of resources. Adaptec bought Eurologic in 2003 and snapped up Snap Appliance in July.
At first glance, the move to make whole systems is a curious one: Why would Adaptec want to threaten the supplier relationship it enjoys with companies like Hewlett-Packard by competing against them? And why, in the Snap deal, enter the so-called network-attached storage market when heavyweight Microsoft is making a major push there?
New revenue opportunities, of course, in the growing data storage market. Adaptec earlier this month predicted that it would bring in more than US$200 million in storage systems revenue for the year ending March 2006. That's a hefty chunk for a company that overall took in $452.9 million for the year ended March 31.
And Stephens says his company can navigate the challenges. As he sees it, Adaptec can continue to team up with the big guns of storage by building more-complete products for them. Indeed, the company recently announced that it is supplying technology used in new storage products from IBM.
In a recent interview with CNET News.com, Stephens discussed Adaptec's goal to be both a parts and systems company, and hinted at a possible partnership with Microsoft.
Tell me about your strategy in moving Adaptec from being a components company to a full-fledged storage system seller. It seems kind of counterintuitive. You're going up against big guns like EMC, IBM and HP--even Microsoft, with its network-attached storage effort. What's more, you risk upsetting partners in your components business. Why is this the right approach for Adaptec?
You have to go back in history a little bit. When most people think about Adaptec, they think about it as a hardware-centric company, and that has historically been true. But even going back five years, at least, you find that the primary engineering work inside of Adaptec is software. Two-thirds of our engineering effort is really around software.
It's a very natural extension to move from a SCSI host bus adapter business to starting to manage storage within a disk array. (SCSI host bus adapters allow servers to use the small computer system interface for exchanging data.) So more than seven years ago, we staked out a position in RAID, which is all about software, really. (RAID refers to redundant array of independent disks, a technology to protect data against disk failure.)
So then the next natural extension to that thinking was that we were very host-centric, in our view -- that is, managing storage that was either in the server or directly attached to the server. So it made sense to manage spindles that were part of either a storage fabric SAN (storage area network) or some kind of external environment away from the server.
What makes this unique is that we are the only ones that come out of external storage with a host view. You mentioned EMC as an example. EMC really doesn't have a host footprint. They don't sell to Dell or IBM or HP.
What about some others? HP is certainly a competitor, as is Dell. They both are server vendors.
Right. And so the first acquisition that we did outside of the RAID area to facilitate our move into external storage was Eurologic. And when we did the Eurologic acquisition, I talked with a number of our OEM (original equipment manufacturer) customers, because I wanted to make sure, to your point, that they were comfortable with our direction.
They were very comfortable -- both IBM and Dell, to be very specific. HP was a little equivocal, to be candid with you. Six months later, when HP looks at it, it says, 'Well, this makes a lot of sense.' What it was looking at wasn't immediately obvious to it, in the context of the architecture. What we're really talking about here is not proprietary external storage, and that's what's different.
To give you an example of this, if you go onto the Intel Web site, there is a white paper about Adaptec's approach to external storage, using Intel's (input-output processors) and standard Intel architecture. We were the first ones to do that. We can save our OEMs 30 percent to 35 percent just in development efficiency -- in being able to move products seamlessly from the host environment to the external environment.
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