IBM plans to pay $23.5 million in cash for the Shared Storage Business Unit of Mercury Computer Systems in a bid to expand its presence in the storage sector.
IBM's Tivoli Systems will control and manage the unit, which will become part of its Storage Solutions Business Unit (SSBU). SSBU sells the Sanergy line of Storage Area Network (SAN) devices, which Big Blue intends to target at the ecommerce market.
Under the terms of the deal, Mercury will receive an initial payment of $4.5 million, followed by 12 equal quarterly payments and an ongoing revenue stream.
Jay Bertelli, Mercury's president and chief executive, said the company wanted to sell the business unit to a company that had the channel and resources behind it to exploit the shared storage market.
A SAN comprises a relatively complex blend of hardware, software and services and will typically include several storage devices which can each be accessed from several servers. In the past, each server was assigned a storage system of its own.
IBM estimates that by 2002, 70 per cent of all medium and large customers will implement SANs as they move towards ecommerce.
Jan Lindelow, Tivoli's chairman and chief executive, said: "The Internet has created a new set of requirements for our customers and managing storage networks represents one of the significant challenges. Customers are required to share this information between internal departments or with their suppliers, which creates complexity."
Server companies such as Dell, Hewlett-Packard and Compaq also hope to penetrate the SAN market.
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