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A recent market report by StorageNewsletter finds that computer storage is one of the most dynamic sectors in terms of raising capital.

Paris, France, September 26, 2002 - In a recent market report, StorageNewsletter counted 199 start-up companies around the world involved in storage.

“It’s interesting to note that, given a fairly gloomy computer industry, as well as a storage sector also in the doldrums, there should be so many young saplings in which so much money has been invested,” observed Jean-Jacques Maleval, who directed the report. “It’s the success in recent years of companies like Brocade, EMC, Network Appliance and Veritas that prompted this infatuation, but there have already been some failures.”

Statistical data shows that the typical start-up was founded in 2000 in San Jose, CA; its activities tend to be focused on storage software, and it has raised an average .5 million in investment funding.
This trend has been slowing down: 67 start-ups were founded in 2000, a record year; only 18 in 2001, and just one in 2002.

The total investment in all of the companies combined is greater than billion (in several financial rounds, up to as many as 9!), or roughly 10% of the annual worldwide revenues generated by the global computer storage industry, with record amounts for StorageNetworks (5 million) and Sanrise (3 million).

Geographically, 87% of these companies were founded in the U.S., 53% in the State of California alone. Just behind the U.S. are Israel, Canada and the UK.

“Given the current state of the stock market, these young upstarts have practically no chance of attaining an entry on the stock exchange for an IPO,” commented Maleval. “The only way for founders and investors is to find a buyer, generally speaking a computer heavyweight.” The most successful examples are NuSpeed, acquired by Cisco for 0 million, Highground, acquired by Sun Microsystems for 0 million, or StorageApps, acquired by Hewlett-Packard for 0 million.

The favorite business activity of these start-ups is without a doubt software, as the following table shows,* followed by connectivity components and storage subsystems:

- Software 46.2%

- Connectivity (switches, controllers, etc.) 24.1%

- Subsystems (NAS, SAN, etc.) 24.1%

- Core technologies (optical, holography, etc.) 7.0%

- Storage Service Providers (SSP) (1) 4.5%

- Security systems for storage networks 3.5%

- Storage via Infiniband 3.0%

- Others or unknown (2) 5,0%

(Source: StorageNewsletter)

* The total percentage adds up to greater than 100%, since certain companies are active in more than one sector.

(1) Providers of managed storage-on-demand capacity, usually off-campus.

(2) Several start-ups are in “stealth” mode and prefer not to reveal what business activity they are planning.


The study undertaken by StorageNewsletter, “Computer Storage Start-ups”, offers a highly detailed index of the 199 companies, with the creation date, management team data, specific activity sectors, amount of capital raised and names of investors.

StorageNewsletter is a monthly periodical in English focused on computer storage hardware and software which has been published for the last 15 years.

Press contact:

Christiane Decerle, Global RP, tel.: +33 1 44 19 85 14,

email: cdecerle@globalrp.com

Jean-Jacques Maleval, tel.: +33 1 42 46 30 56,

email: maleval@StorageNewsletter.com

Web: http://www.StorageNewsletter.com



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