Pancetera Deal Extends Quantum Virtualization Opportunities

Backup, recovery and archive specialist Quantum is shelling out $12 million--$8.4 million in cash and $3.6 million in Quantum common stock--to buy Pancetera Software, which protects data in virtual server environments. Quantum says the acquisition will add assets that will "dramatically" enhance data management in virtual environments. Its DXi disk backup and deduplication products are compatible with Pancetera technology, and Quantum will further integrate the technology into its longer-term roadmaps for both DXi and its StorNext file sharing and archive offerings.

Quantum reported its fiscal 2011 and fourth quarter results just last month, with annual revenue down 1%, to $672, and quarterly revenue up slightly, to $165 million. Of potential significance to the Pancetera deal, DXi revenue nearly tripled over the prior year. The company ended the fiscal fourth quarter with $78 million in total cash and cash equivalents and $239 million in total debt.

The opportunity/problem, says Quantum, is that virtualization creates challenges in data storage, across both primary storage and backup. According to its survey last year, four out of five IT managers reported difficulties in backing up virtualized environments. Perhaps the biggest challenge is duplicated or redundant data in both virtual machines (VMs) and most backup applications that store this data many times over, consuming storage and server resources, extending backup windows and consuming network bandwidth.

Finding the time and resources to do backup and recovery in virtual server environments, which tend to be 24-by-7 operations, is an additional challenge, says Quantum. Throw in protecting remote sites and delivering disaster recovery across locations, and IT departments are struggling, Quantum adds.

The solution, says Quantum, is the combination of its DXi appliances with Pancetera’s technology.

Charles King, principal analyst at Pund-IT, says this deal looks like a no-brainer for both companies, especially given their history together. “On one hand, it points to the growing importance and common use of VM management and backup, along with related tasks like dedupe. Owning, supporting and developing those technologies in-house should allow Quantum to add measurable value to its product portfolio and provide long-term benefits to company customers.”He adds that the stock-only part of the deal (some $3.6 million) should make it easier on Quantum’s pocketbook, and is probably also a testimony to the goodwill between the companies.

“Quantum is putting together a complete package for data protection and recovery with the acquisition of Pancetera, who focuses on virtual machine I/O and performance in virtual environments,” says Deni Connor, founding analyst, Storage Strategies NOW. “Pancetera Unite [a software virtual appliance] lets customers combine backup, replication and migration software with VMware infrastructures.”

Lauren Whitehouse, senior analyst, Enterprise Strategy Group, says the Pancetera virtual appliance that optimized I/O and bandwidth for backup and replication for virtual server environments had been positioned with backup vendors sending stuff to a cloud repository (i365, for example) or helping backup vendors that hadn’t yet taken advantage of some features in VMware’s hypervisor to optimize the capture and movement of virtual disk files across the LAN or WAN. “There’s an opportunity to integrate this technology with Quantum’s StorNext solution [a high-speed file sharing and cost-efficient archiving solution], as well as more tightly integrate it with DXi. DXi and StorNext are the higher-growth products for Quantum. Quantum also got the Pancetera team of developers, which will enhance the company’s ability to further innovate.”

The company is adding virtually the entire Pancetera team, including co-founders Mitch Haile (CTO and VP, product management) and Greg Wade (VP, engineering), as well as CEO Henrik Rosendahl.

See more on this topic by subscribing to Network Computing Pro Reports Research: 2011 Backup Survey (subscription required).