StorageNetworks cuts half its workforce

Storage service and management software vendor StorageNetworks is to lay off half of its workforce, replace its chief executive...

Storage service and management software vendor StorageNetworks is to lay off half of its workforce, replace its chief executive officer and co-founder, Peter Bell and tighten its links with outsourcing giant EDS.

The company, which moved from a mostly hosted-storage model to providing on-site storage, services and storage resource management (SRM) software, has seen sputtering sales during the past year.

Revenue dropped from $31.5m (£19.7m) in the fourth quarter of 2001 to $22m (£13.8m) for the same period in 2002.

"Because of the current economic climate and the immaturity of the SRM software market, we have decided to focus our energies on the opportunity we have to work with our partner EDS in further enhancing our storage management software products," new chief executive officer Paul Flanagan said.

Bell, who co-founded StorageNetworks in 1998, will continue to serve as chairman of the board of directors. Flanagan has also joined the board.

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Q&A: StorageNetworks' Dew point

Just months after announcing a strategy shift that will transform it from a pure-play storage service provider to a company that makes selling software its core business, Waltham, Mass.-based StorageNetworks hired former BMC Software executive David Dew to be the company's new chief technology officer. Dew, who has a strong background in software development, reports to Paul Flanagan, who is chief operating and chief financial officer. Dew replaces Bill Miller, StorageNetworks' co-founder and former chief technical officer.

STORos, the software that supports the company's storage management applications, and STORos StorageManager, a policy-based storage management application with integrated backup reporting and administration, are now the company's core products.

These are solid products and a good strategy shift for StorageNetworks, analysts say. But the company faces the challenge of trying to find financial traction in a tough IT spending economy.

Dew doesn't seem daunted by the challenge and, in fact, appears eager to get things moving along. Here he talks with us about how he plans on making this new strategy work.

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