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One Way Out: Page 3 of 4

But don’t count on it. Perhaps EMC or another systems vendor will grab Softek to shore up its SRM package, or one of the struggling tape vendors will consider CommVault a good fit both technology- and revenue-wise and make an offer the startup can’t refuse. If recent history tells us anything, it is that the latter scenario has a lot better chance of happening than an IPO.

The odds are much better that acquisitions will continue. While market leaders such as email archiver KVS and security appliance Decru have been among the acquisitions over the last year, targets are more often companies with desirable technologies that have yet to make a financial splash.

And there are plenty of them out there ripe for the taking. Continuous data protection (CDP) vendors such as Mendocino Software and Revivio Inc.; NAS virtualization startups Acopia Networks Inc., NuView Inc., ONStor Inc., and Rainfinity; and WAFS startups such as Riverbed Technology Inc. and Tacit Networks Inc. are well positioned players in hot technologies. Brocade already has a financial stake in Tacit, so don’t be surprised if it swallows the entire company if its OEM deal works out well.

In any case, you can expect to see more startups become pieces of big companies than stand alone on their own. The exit path for startups these days is a one-way street.

— Dave Raffo, Senior Editor, Byte and Switch