EdgarScanTM

ITEM 1.  BUSINESS


General
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Storage Technology Corporation and its subsidiaries (StorageTek or the
Company) design, manufacture, market and service information storage and
retrieval subsystems for high-performance and midrange computer systems, as
well as computer networks.  The Company's three principal product lines are
serial access storage subsystems, random access storage subsystems and
midrange computer products.  Serial access storage subsystems include tape
devices and automated library systems.  Random access storage subsystem
products currently include rotating magnetic disk and solid-state direct
access storage devices (DASD).  Midrange computer products include serial
access, random access and other products for IBM AS/400 and other midrange
systems.  The Company also offers software and network communication products
that expand applications for its library and random access products for
efficient storage management and access.

StorageTek operates in one principal industry segment and sells its products
to end-user customers, value-added resellers and original equipment
manufacturers (OEMs) of computer systems.  The Company markets its products
worldwide through sales and service offices located in major metropolitan
areas of the United States, Canada, Europe, Japan and Australia, as well as
through distributors in Africa, Asia, Europe, Mexico and South America.  In
1993, international revenue accounted for 37% of the Company's total revenue.

The Company's strategy is to continue to: Make significant investments in
research and development; expand its product offerings permitting interface to
and between IBM and non-IBM mainframes and midrange computers; develop
software products and services, as well as distribution channels, to address
the non-IBM mainframe market; and, invest in new technologies and businesses
which complement its business and product strategy.  To this end, the Company
has established alliances with other manufacturers, distributors and
suppliers.  As a result of these alliances, it is possible for companies to be
at various times collaborators, competitors and customers in different
markets.

Storage Technology Corporation was incorporated in Delaware in 1969.  Its
principal executive offices are located at 2270 South 88th Street, Louisville,
Colorado 80028-0001, telephone (303) 673-5151.

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Principal Products
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StorageTek has three principal information storage and retrieval product
lines:  serial access subsystems (tape devices and automated library systems);
random access subsystems (rotating and solid-state DASD); and midrange
computer products.

Product sales, including software revenue, accounted for approximately 64% of
total revenue in 1993, while service and rental income accounted for the
balance.  Sales, service and rental revenue from the Company's product lines
for 1993, 1992 and 1991 were as follows:


                         REVENUE BY PRODUCT LINE

                        Fiscal Year Ended December
                        --------------------------
                     1993            1992            1991
                 ---------------------------------------------
                 $ million  %    $ million  %    $ million   %
                 --------- ---   --------- ---   ---------  ---

Serial Access      875.5   62.3    936.6   60.4    907.4   56.0
Subsystems

Random Access      126.0    9.0    193.3   12.5    218.8   13.5
Subsystems

Midrange           306.8   21.8    324.7   20.9    393.5   24.3
Systems

Other Products      96.5    6.9     96.3    6.2     99.8    6.2
                   -----   ----    -----   ----    -----   ----

    Total        1,404.8  100.0  1,550.9  100.0  1,619.5  100.0
                 =======  =====  =======  =====  =======  =====


Additional information concerning revenue from each of the Company's product
lines is found in Part II, Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and geographic information is
found in Part III, Item 14, under Note 15, of this Form 10-K.


Serial Access Subsystems

StorageTek is a principal producer and seller of high-performance serial
access, or tape, subsystems for the end-user and OEM markets.  StorageTek's
current line of serial access subsystems is based on its automated cartridge
system (ACS) library and magnetic tape products.  In 1993, the Company
introduced several key products in its serial access subsystems product lines,
including the PowderHorn 9310 (PowderHorn TM), the Company's second-generation
ACS library, WolfCreek 9360 (WolfCreek TM), a smaller, high-performance
lower-cost library, and Silverton 4490 (Silverton TM), a 36-track cartridge
subsystem.  Also, the Company and Mobius Management Systems, Inc. introduced
new software, View Direct TM, which is designed to expand the range of
applications for ACS


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libraries.  The serial access subsystems product line has generated
substantially more revenue than any other product line of the Company and
continues to be a major element of the Company's plans for the foreseeable
future.

Currently, the Company is developing a number of new products for the serial
access subsystem market, including the TimberLine TM and Redwood TM
subsystems.  TimberLine, designed as a next-generation, high-performance
cartridge subsystem that is IBM 3490E compatible, is based on a new
architecture and is expected to provide performance and capacity improvements
associated with tape subsystems.  TimberLine is currently scheduled for
availability in the second half of 1994.  RedWood is designed as a
high-capacity, high-performance mass storage cartridge subsystem which is
expected to employ helical-scan technology.  RedWood is expected to be
compatible with StorageTek libraries and is currently scheduled for
availability in the first half of 1995.


Random Access Subsystems

StorageTek's current Online Plus product line consists of a number of online
random access DASD products, including solid-state disk subsystems (SSD) and
rotating magnetic disk subsystems.  The characteristics of these products
differ principally in information storage capacity, transfer rate and access
time.  The Company discontinued sales of add-on memory products in the third
quarter of 1993 but continues to service its installed base of memory
products.

The Company announced a multi-faceted Online Plus strategy in the second
quarter of 1993.  The Online Plus strategy includes a number of new DASD
products which are expected to serve as the cornerstone for future DASD
product offerings and as a significant source of revenue for the Company
commencing in 1994.  As part of its strategy, the Company effected a merger
with Amperif Corporation (Amperif) in October 1993.  See Part II, Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", of this Form 10-K for a discussion of operating results and
certain risks that may affect future results.

The new DASD products being developed by the Company include:  Iceberg 9200
Disk Array Subsystem (Iceberg TM), software products for Iceberg, Nordique
9100 (Nordique TM), Arctic Fox and Kodiak.

Iceberg is an advanced, fault-tolerant disk array (RAID) subsystem for the IBM
and IBM-compatible mainframe environment.  Beta testing at customer sites
commenced in the fourth quarter of 1993 and revenue contribution from Iceberg
is expected to begin in the first half of 1994.  Iceberg Extended Facilities
Product and Iceberg Extended Operator Facility are software products designed
for use with Iceberg subsystems and will be generally available in the first
half of 1994.  The Company also plans to introduce additional features to
expand the capabilities of Iceberg's Extended Storage Architecture.

Nordique is a RAID storage subsystem for the intermediate, IBM-compatible
mainframe environment.  The Company expects to begin shipment of Nordique in
the first half of 1994.  Arctic Fox and Kodiak are new DASD products based on
disk technology

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developed by Amperif.  Arctic Fox, a solid-state disk subsystem, and Kodiak, a
high-capacity RAID device, are expected to become available in the second half
of 1994.


Midrange Systems

StorageTek's midrange products include serial access, random access and other
products for IBM AS/400 and other midrange markets.  The Company markets its
midrange products directly through its subsidiary, XL/Datacomp, Inc., and
indirectly through OEM and distributor channels.  In the third quarter of
1993, the Company introduced several new products, including the Alpine 9600
Storage Manager (Alpine TM), a fault-tolerant disk array subsystem, and a
series of smaller, low-cost libraries.  The Company restructured its midrange
business in the third quarter of 1993 in response to disappointing customer
acceptance for Alpine and significant price erosion within the midrange
market.  The Company is changing its midrange product line, organization,
distribution network and service operations to improve operating performance.

New products being developed by the Company for the midrange market include
the Highlands, Northfield and Twin Peaks subsystems.  Highlands and Northfield
are DASD products designed for the IBM AS/400 market and are each currently
scheduled for availability in the first half of 1994.  The Twin Peaks
subsystem (Twin Peaks) is designed as a small form factor cartridge tape drive
and is currently scheduled for availability in the first half of 1995.


Other Products

StorageTek has increased its software development expenditures during the last
several years and plans to continue to invest in the development of new
software products.  In the fourth quarter of 1993, the Company introduced
NearNet 7900 (NearNet TM), a combination of hardware and software that
automates storage management over a workstation network.  StorageTek expects
NearNet to serve as the first building block in a series of network solutions. 
In connection with its introduction of new hardware products, the Company also
plans to introduce new software applications which are expected to enhance
storage subsystem performance, capability, and storage allocation for better
data management and access.

In 1991, the Company and Siemens Nixdorf Information Systems, Inc. merged
their U.S. high-performance, non-impact printer operations into a joint
venture.  The Company began winding-down production of its impact printer in
1993 and expects to sell its interest in the joint venture back to Siemens
Nixdorf in the first quarter of 1994.  The Company currently plans to support
the installed service base of printers within the United States and in certain
areas outside the United States.


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Marketing, Distribution and Services
------------------------------------

StorageTek markets its products through a network of sales and service offices
located in major metropolitan areas in the United States, Canada, Europe,
Japan and Australia.  The Company also sells its products through
international distributors in Africa, Mexico, South America and parts of Asia
and Europe not covered by the Company's sales and service offices or
subsidiaries.  In 1993, international revenue accounted for 37% of total
revenue, compared to 41% in 1992, and 39% in 1991.

As of December 31, 1993, the order backlog was approximately $71 million,
compared to approximately $109 million as of December 25, 1992.  Approximately
17% in 1993 and 26% in 1992 of the backlog amount is attributable to the
Company's library products.  Backlog amounts are calculated on an "if sold"
basis and include orders from end-users, OEM customers and distributors for
products that StorageTek expects to deliver during the following 12 months. 
Backlog amounts do not, however, include orders for Iceberg subsystems or
other new DASD products.  Units being evaluated or covered by letters of
intent are not included in backlog amounts.  Unfilled orders can generally be
canceled at will by the customer.  The Company does not believe that its
backlog is necessarily indicative of future shipments, nor can it give any
assurance that customers will purchase products in accordance with orders
included in the backlog.

StorageTek has a worldwide customer support network to install, maintain and
service its own equipment as well as the equipment of others.  The Company
warrants the performance of products marketed into the end-user market for a
specified period of time, after which it services those products under
maintenance agreements.  The installed service base of data storage products
and the expertise of the Company's service engineers is considered to be a
valuable asset of the Company and is expected to continue to be an important
element of the Company's business.


Manufacturing and Materials
---------------------------

Products currently are manufactured by the Company at its facilities located
in Colorado, Puerto Rico, California, Florida and England.  In 1993, the
Company announced plans to manufacture and develop products in France.  In
late 1994, the Company expects to begin manufacturing and engineering
operations in Toulouse, France, in facilities currently under construction.

The Company also currently manufactures several significant subassemblies,
including thin-film heads for tape as well as printed circuit assemblies for
many products.  Across the Company's product lines, a substantial majority of
its production costs are  subassemblies, parts and components purchased from
outside vendors.  For a discussion of factors that may affect the Company's
ability to obtain materials, see Part II, Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Other Factors that
May Affect Future Results", of this Form 10-K.  The balance of the Company's
production costs relate to in-house assembly and testing.

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Competition
-----------

The Company competes with several  large multinational companies having
substantially greater resources, principally, IBM, Fujitsu Limited and Hitachi
Ltd., as well as other midsized companies.

Because of the significance of the IBM mainframe and midrange operating
environments, many of the Company's products are designed to be compatible
with certain IBM operating systems and many of its products function like IBM
equipment.  As a result, the Company's business has been and in the future may
be adversely affected by modification in the design or configuration of IBM
computer systems, the announcement and introduction of new products by IBM and
other competitors, and reductions in the pricing of comparable systems,
equipment or service.  For further discussion of competitive conditions, see
Part II, Item 7, - "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Other Factors that May Affect Future
Results", of this Form 10-K.


New Product Development
-----------------------

In 1993, the Company devoted approximately 12% of its revenue to develop new
products and improve the performance of existing ones.  In an attempt to
mitigate the substantial investment required to develop its products for the
market place, and to expand the Company's access to new technologies, the
Company develops relationships with other companies.

The Company spent approximately $163 million for research and product
development activities in 1993, as compared to approximately $153 million in
1992 and approximately $123 million in 1991.  Current development projects
include:  New products in the Online Plus family of DASD products, data
management software, new library and tape drive products, and enhancements to
the Company's existing information storage and retrieval products.  The
Company expects to continue to invest significant amounts on research and
development.  As of December 31, 1993, approximately 1,500 employees were
engaged on a full-time basis in engineering and product development
activities.  For further discussion of factors concerning product development,
See Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Other Factors that May Affect Future
Results", of this Form 10-K.


Intellectual Property
---------------------

StorageTek's policy is to apply for patents, or other appropriate proprietary
or statutory protection, when it develops valuable new or improved technology. 
It presently owns a number of U.S. and foreign patents relating to its
products which are considered valuable assets of the Company.  The Company
also owns, has license rights to, and/or has applied to register, trademarks,
mask works, copyrights and proprietary information, which are also considered
to be valuable assets of the Company.

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Certain areas of the computer industry have been the subject of extensive
patent coverage, and from time to time it has been necessary to obtain rights
or licenses under existing patents held by others.  Currently, StorageTek and
IBM are operating under a long-term cross-license agreement.

From time to time, the Company has commenced actions against other companies
to protect or enforce its intellectual property rights.  Similarly, the
Company from time to time has been notified that it may be infringing certain
patent or other intellectual property rights of others.  Although licenses are
generally offered in such situations, there can be no assurance that
litigation will not be commenced in the future regarding patents, mask works,
copyrights, trademarks or trade secrets, or that any licenses or other rights
can be obtained on acceptable terms.  The Company is currently engaged in
certain proceedings relating to its intellectual property and patent
infringement.  See Part I, Item 3, "Legal Proceedings", and Part III, Item 14,
Note 12 to the consolidated financial statements, of this Form 10-K.


Environment
-----------

Compliance by StorageTek with provisions of federal, state and local laws
regulating the discharge of materials into the environment, or otherwise
relating to the protection of the environment, has not had a material adverse
effect on the Company.  However, liability under environmental legislation is
on-going, regardless of whether or not the Company has disposed of such waste
in accordance with existing governmental guidelines.  Moreover, government
regulation of the environment and related compliance costs have increased in
recent years.  Therefore, the Company is unable to anticipate whether future
compliance will have any material effect on the Company.  For further
discussion of specific environmental proceedings involving the Company and/or
its properties, see Part I, Item 3, "Legal Proceedings", of this Form 10-K.


Other Matters
-------------

The Company employed approximately 10,100 persons on a full-time basis
worldwide as of December 31, 1993.

The Company does not consider its business to be highly seasonal, although it
historically has experienced increased sales revenue in the fourth quarter
compared to other quarters due to customers' tendencies to make purchase
decisions near the end of the calendar year.  The Company expects this trend
to continue in 1994, and to be further affected by the growing revenue
expected from new DASD products introduced in 1994.

For the year ended December 31, 1993, no single customer accounted for 10% or
more of the Company's consolidated sales revenue.

No material portion of the Company's business is subject to contract
termination at the election of the U.S. government.

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Reference is made to the following notes to the consolidated financial
statements set forth in Part III, Item 14, of this Form 10-K for certain
additional information:

Note 2            Description of the Company's business combinations with
                  Amperif Corporation, Edata Scandinavia AB and XL/Datacomp,
                  Inc.

Note 15           Information on the geographic operations of the Company's
                  single business segment.

Reference is made to Part II, Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations", of this Form 10-K, for
information regarding liquidity, including working capital, and other factors
that may affect future results.