Storage Technology Corp. was founded in 1969 by four former IBM engineers, and through thick and thin StorageTek has been distinguished as the oldest high-tech company with its roots still firmly planted in Colorado.
Its acquisition by Sun Microsystems Inc. will bring an end to an era and mark the disappearance of yet another Colorado nameplate and headquarters. But it is hardly a takeover of strangers. Sun has a major operation in Broomfield, just across Colorado 36 from StorageTek in Louisville.
The $4.1 billion purchase has raised some local anxieties, but the two companies barely overlap and so there is room to hope that Sun will power growth for its new storage-technology unit.
StorageTek, which employs 7,000 people worldwide, produces data storage systems. By one estimate, 36 percent of the world’s computerized records are archived on its tapes. That’s a remarkable record, but it can be an uncertain business; before STC’s 1984 bankruptcy reorganization, it employed 15,000 people.
Sun, headquartered in Santa Clara, Calif., produces server computers and software, and is five times the size of StorageTek.
We all hope that most of StorageTek’s and Sun’s Colorado jobs survive the takeover. Sun actually employs more people on Colorado 36 – 2,700 – than does Storage- Tek, with 2,000 across the highway.
The companies have been longtime business partners, and Sun CEO Scott McNealy noted, “It’s a broadening as opposed to just creating scale, so there’s very little overlap.”
StorageTek posted a net income of $191 million in 2004, while Sun had a $388 million loss.
Although StorageTek has done well for the last five years, sales of tape-based storage systems haven’t grown, and new-generation disk storage systems account for only about 8 percent of its sales. The product mix could change under McNealy and the Sun team.
Over the years, shake-out and consolidation have been common in Colorado’s Silicon Gulch. Now that StorageTek’s time has come, and gone as an independent entity, we can only hope that it will be an innovative success under the Sun.
