Storage Shopping Spree

Three storage-related acquisitions went down today, each reflecting a growing trend in the overall data center environment.

CA's acquisition of business continuity software vendor XOsoft underscores the need for more sophisticated disk-backup technologies in data protection. (See CA Buys XOsoft.) Data center automation firm Opsware scooped up SRM vendor CreekPath, accelerating a move toward integrating network, server, and storage management into one platform. (See Opsware Gains CreekPath.) And Iomega picked up services outfit CSCI in another marriage of storage and security. (See Iomega Buys CSCI.)

Here's a closer look at the deals:

CA-XOsoft

XOsoft likely brought the biggest pricetag of today's acquisitions. CA did not disclose the terms, but a report out of Israel put the price at $100 million. XOsoft CEO Leonid Shtilman says his company was growing revenue at 25 percent per year and was profitable with around 1,600 customers. XOsoft garnered nearly $30 million in funding since 1999, with its last round more than two years ago. (See XOsoft Raises $9 Million.)Bob Davis, GM of CA's storage management business unit, says CA needed XOsoft technologies to complete its backup offerings. "You have to provide CDP, replication, failover, and provide those in an integrated manner to give customers a full choice," Davis says.

According to Davis, CA will keep XOsoft's entire product line, which includes:

These XOsoft products will be moved into CA's BrightStor platform and probably rebranded over time. Most of XOsoft's 100 employees will join CA. Shtilman will become SVP of storage management software and report to Davis.

On the downside, CA's recent financial troubles are no secret, and this will likely make XOsoft's customers nervous. (See CA Files Form 8-K and The CA Wildcard.) But XOsoft customers say they're most worried about the close relationship they have with XOsoft getting lost in a large company.

Ben Weinberger, director of IT for law firm Ruden McClosky, uses WANSyncHA to replicate data between his firm's Fort Lauderdale, Fla. office and a Chicago DR site. (See Laws of Data Recovery.) Weinberger says he's had bad experiences with support from larger companies, and his major concern is that support will wane under CA."If CA is not going to mess with the structure of things, if they don't break anything, I can live with it," Weinberbger says. "If the support stays the same, I'll be a happy camper. I put a lot of faith in WANSync doing what it's meant to do."

Another WANSync customer, Shawn Aruch of electronic documnent-filing service firm Vintage Filings LLC, has similar reservations.

"I really need to see how the relationship pans out," says Aruch, Vintage's VP of IT. "I am quite happy with my XOsoft relationship and do not look forward to changing it, especially if those changes bring additional levels of bureaucracy. Looking at it from the other side, I'm sure CA will bring additional resources that could provide additional features to new revisions of WANSync."

Analyst Stephanie Balaouras of Forrester Research agrees that CA acquired good technology, but the success of the deal turns on how it handles the integration. "They bought an up-and-coming player, and this will put them on the map for DR capabilities," Balaouras says. "But integration will be the key. There's not a huge number of people to absorb. We'll see if they can keep up XOsoft's momentum."

XOsoft was CA's third storage-related buy in nine ninths. CA acquired email archiver iLumin Software for $48 million in October and records-management firm MDY Group International last month. (See CA Buys Archiver and Suppliers Snap Up Services.)Next Page: Opsware-CreekPath and Iomega-CSCI

Opsware-CreekPath

Opsware CEO Ben Horowitz says his firm acquired CreekPath solely for its technology. Opsware will retain CreekPath's engineering team but not CEO Mark Davis or other management. (See CreekPath Tries New Path.) It will not sell or support CreekPath's Acuity suite of storage management software, but it will repackage it into a storage automation piece of its IT automation suite that includes network, server, and software management applications.

Horowitz hopes to release the storage product in the first half of 2007.

Opsware will pay no more than $15 million for CreekPath, which raised $70 million in funding since 2000 and was considered a hot acquisition or IPO candidate two years ago. (See CreekPath Seeks New CEO.) The purchase price includes a $10 million payout now with another possible $5 million if the storage management product meets certain sales goals."We think the standalone SRM market isn't terribly interesting," Horowitz says. "None of those companies have done much revenue unless sold by a storage vendor."

Symantec is the only major SRM vendor that does not also sell storage systems. Hewlett-Packard picked up the most successful SRM startup last year when it bought AppIQ. (See HP Chomps AppIQ & Peregrine.)

Horowitz says Opsware is interested in storage management only as a component to provide integrated IT management. "To provision a database cluster with volume management underneath, you need visibility to the SAN," he says. "You have to be able to control both server and storage environment. We think we'll be first to deliver a product in that area."

Opsware certainly isn't the first to adopt the strategy. HP is integrating AppIQ technology with its server management application, EMC has picked up application discovery vendor nLayers and network management startup Smarts, and IBM is moving to integrate server, network, and storage management applications in its Tivoli platform. (See EMC Gets Smarts and EMC Nets nLayers, Scopes Security.)

According to Horowitz, the CreekPath technology saved Opsware around three years of development work.StorageIO Group analyst Greg Schulz says the Opsware-CreekPath deal was the most intriguing of today's trifecta.

"Opsware has done well in data center type management," Schulz says. "I find it interesting that they're beefing up their storage presence. People always wanted that single GUI that could manage all storage. Let's go up a level -- a single GUI that can manager storage, servers, and network... Look at what EMC's doing with Smarts. IBM is trying that -- and I think they can do more -- with Tivoli."

Iomega-CSCI

Iomega acquired privately held SMB managed-services specialist CSCI for $11.5 million to boost its security story.

CSCI's flagship service is OfficeScreen, a family of managed Virtual Private Networks (VPNs) built on Juniper hardware. OfficeScreen combines a firewall/VPN with Secure Sockets Layer (SSL) and IP Security (IPSec) to provide a secure WAN linking offices and remote workers.Iomega already offers a number of products for the SMB space, and, like other vendors, has launched a renewed assault on the low-end market over recent months. (See Iomega Releases Storage Products, Iomega Touts StorCenter, Iomega Expands Desktop REV, and Vendors Set Sights on SMB Windfall.)

CSCI offers Iomega a foot in the door to sell additional products to the growing SMB market, according to Iomega COO Tom Kampfer. "Once we have that monitoring capability, we can bring storage, managed storage, business continuity, and disaster recovery services," he says.

Iomega now plans to grow CSCI's U.S. business by selling the service through telecom firms, hosting companies, resellers, and systems integrators. Iomega is also looking to expand the managed service to international markets by the end of this year.

Both companies are based in San Diego, and Kampfer says he expects the deal to close within 30 days. Kempfer also expects CEO Rich Tear and CSCI's other 20 employees to join Iomega staff on the completion of the deal.

Dave Raffo, News Editor, and James Rogers, Senior Editor Byte and Switch