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The Acquisition Square Dance Continues

This week’s acquisition of high-end NAS vendor and long-time OEM supplier BlueArc has me thinking about how various tech companies do acquisitions and how those acquisitions affect the products we put in our data centers. As my linear algebra professor used to say, it should be obvious to even the most casual observer that companies handle acquisitions differently.

While we’ve seen a flurry of acquisitions during the past few years, I think BlueArc will represent the last big-buzz acquisition for a while. To some extent, the storage acquisition frenzy has to slow down because the list of companies selling enough kit to be worth buying, but not so big as to cause indigestion when acquired, has shrunk significantly. With 3Par, Compellent and Pillar out of the picture, I don’t think the remaining players are terribly attractive to any company that can afford them.

The only storage systems vendors I can think of that are big enough to matter to a buyer like IBM, HP or Oracle are XIO (it dropped the "tech," if you didn’t notice), DDN, Dot Hill and Nexsan. XIO’s ICE and HyperICE are way-cool, but they’re too unconventional to replace the Engenio arrays IBM and others now buy from NetApp and no one needs multiple lines of Fibre Channel arrays. DDN is self-funded, so it doesn't have VCs on the board looking to cash out, and Nexsan and Dot Hill are too small to make a big splash.

The HDS/BlueArc acquisition is a classic case of a vendor acquiring a company to fill a hole in its product line. HDS has already been selling a big chunk of BlueArc’s high-end NAS systems, and it fits the big data trend reasonably well. If pNFS ever makes it to the market and gets support from OS vendors, especially VMware, HDS is going to need a system that takes advantage of pNFS’ combination of NAS ease of administration and block storage performance.

Other examples of acquisitions that fill a hole in the product line include EMC’s acquisition of Data Domain and Data General for Clariion; HP’s purchases of Lefthand and iBrix; and HDS’ own acquisition of Archivas and its object storage system that became the Hitachi Content Platform. In most cases, the acquiring company continues to develop the product but doesn’t really integrate it into its product line for years, if ever. One could reasonably assume that if Data General had survived, it would have developed later generations of Clariions that looked a lot like the CX, CX3 and CX4 lines developed by EMC.

More interesting are acquisitions where the acquiring company is buying technology it plans to integrate into its product line more than just as products to sell. Examples of this include NetApp’s acquisition of Spinnaker, even though that integration took several years. Cisco has mastered this technique, starting with its entry into the switching market by buying Kalpana.

Dell’s acquisitions of Ocarina and Exanet also follow this model. When Dell bought those companies, it shut down the sales operation, annoying the few existing companies, and sent the technology into the Dell storage skunkworks. We’re now seeing the first fruit of this venture in the recently announced marriage of Exanet’s clustered NAS and Equallogic arrays with management of the clustered file system through extensions to the Equallogic management console and are promising similar integration of Ocarina’s data reduction and Compellent systems.

It will be interesting to see how the best-laid plans of acquiring companies play out. While the acquisitions may slow for a while, I don’t expect the storage business to get boring.

Disclosure: Of the companies mentioned in this post, Dell, EMC, NetApp and HP are or have been clients of