January 24, 2005

By Johna Till Johnson, President, Nemertes Research

The recently announced acquisition of Computer Network Technology Corporation (Nasdaq: CMNT) by McDATA Corporation (Nasdaq: MCDTA, MCDT) highlights the ongoing trend towards storage consolidation and virtualization across data centers.

McData, one of the pioneers in the area of fibrechannel-based storage-area networks (SANs), will pay approximately $235 million for CNT, whose heritage is in providing channel-extension storage solutions for mainframes. The combined company will have annual revenues of roughly $550 million ($180 million from CNT and $370 million from McData). The combination of the two companies highlights the ongoing trends in the storage market, including:

• Ongoing growth. 85% of companies that participated in a recent Nemertes benchmark indicated they anticipate their storage requirements will increase over the next 12 months, with most saying they anticipate growth rates of between 10% to 40%.
• Consolidated solutions. SANs, network-attached storage (NAS), and mainframe channel-extension used to comprise three distinct storage “islands”. As enterprises increasingly seek a consolidated approach to handle their storage requirements, vendors need to offer a broad technology portfolio (rather than being merely a SAN or NAS vendor).

The complete Impact Analysis is available to Nemertes clients. For more information, please contact Chris Zimmerman at christine@nemertes.com