StorageNetworks Closes Its Doors

 
 
By eweek  |  Posted 2003-07-31
 
 
 
StorageNetworks Inc. is finally closing its doors, after failing to find a suitable buyer for its technology, officials announced today.

Most employees have been let go, including CEO and President Paul Flanagan, who will remain on the Board of Directors to help the company liquidate, according to a company statement.

The companys original mission was to sell storage as a hosted service. It then changed to being a provider for other service providers. Most recently, it tried to sell its custom management software as a stand-alone product, which experts said gave the company an edge over other management software startups because managing its own subscription service meant it directly appreciated customer pains. But by that point the market was crowded, and the companys stock price had already begun to tumble.

StorageNetworks stock traded as high as $138 in July 2000. It was at $1.47 at noon today.

Besides trying to find a buyer, the company also considered merging or buying other companies. "We evaluated a number of opportunities." Flanagan said in the statement. "In each case we determined… that the opportunity was not one that we felt was the right investment for StorageNetworks and its shareholders."

Company officials in Waltham, Mass., did not return messages.

"They were definitely a victim of the bubble. It [StorageNetworks] got big really, really fast and then got public, at a time when its customer base fell out on it," said Bill Miller, a StorageNetworks co-founder and former CTO, now at XAware Inc.

Large companies like Plano, Texas-based Electronic Data Systems Corp. and Armonk, N.Y.s IBM dominate the hosted IT market today, along with records firms like Bostons Iron Mountain Inc. But a handful of ASP-model storage companies remain, such as Arsenal Digital Solutions Worldwide Inc., in Cary, N.C., and ManagedStorage International Inc, in Boulder, Colo. There are also specialists in hosted data backup, such as Framingham, Mass.-based Connected Corp. and Marlborough, Mass.s LiveVault Corp.

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