Emulex took another step to diversify its products beyond Fibre Channel HBAs Tuesday night when it agreed to acquire Fibre Channel-to-SATA bridge and router startup Sierra Logic for $180 million.
That pricetag includes cash, assumed debt, and Sierra Logic stock options, plus employee equity incentive compensation. Emulex execs say they expect to generate $8 million to $10 million in revenue next quarter from Sierra Logic products.
Sierra Logic makes ASICS for devices that connect SATA drives to Fibre Channel storage systems. It has OEM deals with Emulex partners Engenio, Hitachi Data Systems, Network Appliance, NEC, Sun, Xyratex, and other storage vendors. Sierra Logic claims it has shipped more than two million SATA ports and owns 85 percent market share of the Fibre Channel-to-SATA bridge market.
Competitors for Sierra Logic in this space include newcomer Ario Data Networks, which is in the process of completing a $5.9 million round of funding to add to its $27 million; Marvell Technologies; and SiliconStor. Clearly, competition is taking shape among FC-to-SATA bridging components.
Still, the price Emulex paid for Sierra Logic seems a bit high considering Sierra Logic's current revenue stream, but Emulex is banking on the continued growth of low-cost drives -- and it needs to broaden its product portfolio.