EMC Snacks on Software Startup

For the second time in less than a month, EMC Corp. (NYSE: EMC) has quietly acquired a small software company with a focus on SMBs. The latest target is Allocity Inc., an EMC partner that sells storage management and provisioning software for Exchange users running Clariion storage.

EMC closed the deal October 22 but did not announce it. The Allocity deal is even tinier than the acquisition of SMB backup and recovery software player Dantz Development Corp. last month (see EMC Dances With Dantz). While EMC said it paid less than $50 million for Dantz, a source with knowledge of the deal said it paid around $10 million for Allocity.

EMC spokesman Dave Farmer confirmed the sale but would not comment on the price. It’s a small tactical technology acquisition in line with our ongoing strategy to reach the SMB market,” Farmer says.

Like the Dantz buy, Allocity should bolster EMC’s software revenue, in this case by targeting a new market -- capacity planning and automatic provisioning.

Farmer says Allocity has fewer than 30 employees, who will be integrated into EMC’s sales and engineering departments. Integrating the product should be a snap -- Allocity’s LiveEx software was bundled with Clariion storage even before the sale.LiveEx is designed for organizations with from 500 to 10,000 Exchange mailboxes. It is especially aimed at Microsoft Corp. (Nasdaq: MSFT) users going from DAS to SAN -- a big piece of the SMB market most of the major storage vendors are chasing, and the specific target for the AX100 entry-level system EMC launched last May (see EMC, Dell Get Small With SATA).

EMC also dipped its toe into the Windows-based NAS market in May (see EMC Joins Rush to Windows NAS).

Before getting gobbled by EMC, Allocity had hoped to score partnerships with EMC’s rivals in the SMB space, particularly Hewlett-Packard Co. (NYSE: HPQ).

Allocity raised $21 million in funding from Mohr Davidow Ventures, Redpoint Ventures, and Sequoia Capital. It was founded in July 2001 with plans to develop SANs built from commodity components. In 2002, it changed its focus to application-specific software and began shipping product last April.

A source familiar with Allocity says it had hoped for $1 million in revenue this year. Allocity’s headquarters is in Mountain View, Calif., and it has an office in Boulder, Colo.Both Dantz and Allocity acquisitions come as EMC devotes much of its energies to integrating the three software companies acquired last year for more than $3 billion -- Legato, Documentum, and VMware (see Unknown Document 62081 and EMC Gobbles VMware).

— Dave Raffo, Senior Editor, Byte and Switch