EMC to Buy Rainfinity

EMC Corp. (NYSE: EMC) will acquire file virtualization vendor Rainfinity by the end of this month (see EMC to Acquire Rainfinity ).

EMC values the acquisition at "less than $100 million," and it's swallowing Rainfinity whole. For now, all of Rainfinity's roughly 60 employees will continue to work at their San Jose, Calif., headquarters. Though Rainfinity will come under the rule of EMC EVP Howard Elias, Rainfinity CEO John Schroeder will stay in charge, albeit under a new, as yet unannounced, title.

Schroeder says Rainfinity has about 50 customers. Its funding total is undisclosed, but he acknowledges there was at least $45 million by 2001. "That early funding gave us the operating capital to bring us to our present level of success," he says.

Rainfinity is one of a handful of vendors using global namespace and virtualization to manage files in multiple NAS boxes as though they were part of a one big NAS filer. Competitors include Acopia Networks Inc., NeoPath Networks, and NuView Inc.

Rainfinity boasts a range of features, some of which are shared by competitors, including the ability to manage files across Linux, Unix, and Windows; file management across multiple sites; and read/write access during system migrations.Rainfinity's RainStorage works with a number of vendors' NAS systems, including Nearstore from Network Appliance Inc. (Nasdaq: NTAP). It has a reseller relationship with EMC, however, as opposed to a reference-selling marketing alliance with NetApp. EMC will continue to sell it as a heterogeneous solution.

"As with all our virtualization products, RainStorage is absolutely heterogeneous. There will be no restriction on using it only with EMC," says Jack Garrahan, EMC's VP and general manager of Celerra. He acknowledges, though, that EMC will use its new gear to "create synergies" with its NAS products.

Rainfinity also makes RainWall load balancing and content security software. While that resonates with EMC CEO Joe Tucci's recent message about focusing on security and net resource management, Garrahan says nothing's determined (see EMC Casts Wider Net). He also denies speculation that EMC will use RainStorage to bolster Invista, EMC's storage virtualization device due out shortly (see EMC Unveils Invista).

"The strategic reason for this acquisition was to focus on storage virtualization," he says. Once the deal is done, EMC will think about how RainWall may or may not fit in. As for Invista, that's a block-oriented product, while RainStorage is file based.

Garrahan says EMC evaluated all the competition before deciding to buy Rainfinity -- including NuView, which is also resold by EMC. Among RainStorage's selling points, he says, was its ability to be used as either an in-band (in the data path) or out-of-band solution, in contrast with the rigid requirements of other products. "With Rainfinity, customers can go both in-band for changes as needed or out-of-band for namespace," says Garrahan.Overall, the deal is a mean swipe against NetApp. Up to now, neither NAS vendor has offered its own file virtualization. NetApp licenses NuView, and EMC started selling RainStorage as part of its EMC Select reseller program in March 2005 ((see Rainfinity Supports EMC).

The acquisition follows news this week that EMC has acquired the intellectual property of Maranti Networks for about $5 million, a move that had been rumored for weeks (see Surf, Sand & Storage).

Analysts appear pleased with the deal. "As expected, EMC continues to build out its software arsenal -- a move we continue to view positively... we view this as yet another step in EMC's competitive positioning against NetApp, and its focus on building on its Invista solutions," writes Aaron C. Rakers of A.G. Edwards in a note today.

This morning, EMC shares were trading at $13.35, up $0.14 (1.06%).

Mary Jander, Site Editor, Byte and Switch0