LSI Sniffs Out StoreAge

As the intelligent switch market shows signs of a pulse, LSI Logic is preparing to add software virtualization to its portfolio by acquiring StoreAge for $55 million.

LSI would not comment on the possibility of picking up StoreAge, but several sources confirmed the sides are in the final stages of completing the deal, which was first reported by the Israeli financial news Website Globes.

Sources expect LSI would use StoreAge technology to help manage storage across its Engenio SAN systems sold through OEM deals with IBM, Sun, and other vendors, as well as incorporate it in LSI's components.

"It looks like it's going to happen, and it's going to happen soon," one industry analyst says. "Look for LSI to use StoreAge both inside its Engenio storage systems and other products."

StoreAge is among a handful of vendors that have developed software to virtualize block storage, either on intelligent switches or appliances. (See Virtualization Buyers Keep Exit Open and A Baby Step for Storage Virtualization.) StoreAge software is available on the QLogic SANBox 8200 intelligent switch, and the company is working to port its software to Cisco MDS switches. StoreAge software also works on out-of-band appliances sold mostly through resellers.The intelligent switch market has been slow to develop despite EMC's Invista launch in mid-2005. Incipient recently rolled out software that works on Cisco MDS intelligent switches. Like EMC and Incipient, StoreAge use a split path architecture, which separates the control and data information and assigns virtualization applications to multiple paths. Others, such as IBM's SAN Volume Controller (SVC) and products from Cloverleaf and FalconStor, run on appliances that sit in the data path.

Analyst Arun Taneja of the Taneja Group says a deal would make sense because StoreAge could fill several needs for Engenio.

"StoreAge would give them two separate layers. The first is virtualization, and the second is all the applications they've done on top of that -- snapshots, mirroring, replication, and all that stuff," he says. "The Engenio guys have a pretty decent hardware platform, but they don't have strong storage applications. They're so hardware-centric that compared to other players in the market, their software side is weaker."

Taneja says while people often think the value of storage virtualization is to work across different vendors' hardware, it could also be used to manage different systems from the same vendor as one large pool. That capability would add value to Engenio's disk systems.

Besides incorporating virtualization with its Engenio systems, LSI is expected to use it to compete with its components rivals, QLogic and Emulex. QLogic's SANBox 8200 came from its $36.5 million acquisition of intelligent switch startup Troika last October. (See QLogic Picks Up Troika). Emulex spent $39 million on virtualization chip startup Aarohi in April. (See Emulex Buys Aarohi and Aarohi Mum on Acquisition Talk)."LSI needs to expand its storage product line," says a Wall Street analyst. "You see QLogic and Emulex getting into virtualization and storage processors, and LSI cannot just sit there and watch."

StoreAge's investors include Cisco and Israeli venture capitalists The Challenge Fund, Genesis Partners, Koonras Technologies, and OphirTech.

Dave Raffo, Senior Editor, Byte and Switch