LSI Fails and bails
This is a sad admission on the part of LSI management that they didn't have a clue as how to manage the Engenio business and move it forward. As a shareholder of LSI I would wonder why they are selling a $750 million dollar revenue stream for only $480 million well actually I have a pretty good idea that it is because they have hit the peak and expect a dramatic fall off in revenue for the future.
The LSI PR release indicates that LSI will be keeping the OnStor product which they had just transitioned from custom silicon to an Intel appliance but keeping it is probably more that NetApp didn't feel the need for that and less that LSI has any plans (or clue) on what to do with it. The LSI controllers have also been moving to the use of Intel processors so putting NetApp IP on top of them should be relatively straight forward.
In addition to Tom Georgens being a former Engenio boss NetApp recently had started to OEM disk enclosures from LSI so bringing that in house brings them more control and direction plus as mentioned in the article the Engenio controllers out perform the FAS controllers in SAN with block level work.
For the LSI OEM partners it would seem that Oracle is least effected and IBM has recently shifted their focus to their Storwize v7000 product range so while the Engenio products are big part of the IBM portfolio they seem well placed to weather it. For NCR and Terradata they are probably happy enough to continue to OEM from NetApp instead. Dell too can probably drop the MD Powervault line but it is a big seller and has good profit margin so they won't be in a hurry lose it.
All in all it will be interesting to see how the business works itself out but for most of the LSI OEM partners NetApp shouldn't be too difficult to work with assuming that NetApp wants to continue the OEM business line.