EMC to Buy 'Cloudy' Startup

EMC has agreed to buy Pi Corp. of Seattle in what looks to be a push to accelerate EMC's entry into the market for consumer storage services.

The deal, announced at market close today, will be an all-cash transaction of undisclosed value -- though EMC filed Hart-Scott-Rodino merger notification, which is required for all transactions worth more than $53.1 million. EMC expects the deal to close this quarter and to be dilutive by $.01 per diluted share in 2008 on a GAAP basis.

Pi, founded in 2003, has been working for years on software and services for "personal information" storage of data such as email, video clips, notes, and files. EMC says Pi's software and online services are in beta testing.

Pi's products and services appear to contain a few elements characteristic of cloud computing schemes, including distributed replication of customer data. Pi allows customers to pick the devices or workstations across which their data will be replicated, or to replicate on a hosted Pi network. Pi also has built software that automatically creates "task-appropriate 'skins'" for user information. For instance, if a customer wants to organize his notes, presentations, and files according to a date or a particular meeting topic, Pi software will be able to help.

Originally funded for an undisclosed amount by CEO Paul Maritz and by VC firm Warburg Pincus, Pi has nonetheless been busy for its five-odd years of existence. In 2006, Pi bought another company called Smart Desktop (terms undisclosed), which had been working on technology for organizing PC data according to user preferences. Smart Desktop in turn grew out of a project called TaskTracer. at the Intelligent Information systems Laboratory of Oregon State University.At this point, Pi has roughly 100 employees spread across offices in Seattle, Montreal, Quebec, and Bangalore, India. All of them will be retained in their existing environs, EMC says.

"This is a big deal. It's the first major consumer push by EMC into a new market," says industry analyst Rob Enderle of the Enderle Group. "Even though it may take awhile to materialize, EMC is positioning itself for the future, and doing so with a vengeance."

Indeed, this announcement solidifies more of EMC's cloud computing strategy, which recently came to light when potential partner SAP let the cat out of the bag.

Pi CEO Maritz will become the president and GM of a new Cloud Infrastructure and Services Division at EMC. He'll report directly to Joe Tucci. The division will also incorporate Fortress cloud computing platform and Mozy Enterprise SaaS offering, among other products and services still in development.

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