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Xyratex Gobbles nStor

Storage subystem maker Xyratex Ltd. (Nasdaq: XRTX) today announced plans to buy nStor Technologies Inc. (Amex: NSO), which makes controllers and software, for about $21.2 million in cash and stock (see Xyratex Acquires nStor).

Xyratex's CEO, Steve Barber, claims the deal will help his firm build better low-end RAID controllers, while adding new customers. The enthusiasm is echoed by Todd Gresham, CEO of nStor. "We're looking at a significant high-growth opportunity," Gresham says.

The entry-level RAID market, comprising low-end RAID controllers, software, power packaging, and cooling gear that wind up in systems selling for $15,000 or less, is about to explode, Gresham asserts. He says $1.9 billion in worldwide revenue in 2005 will grow to over $6 billion by 2008.

Xyratex and nStor can't let their integration distract from the opportunity. A plan will be in place within the next month, Gresham says. Separately, an nStor spokesperson says Gresham, a longtime storage networking honcho who has worked at EMC Corp. (NYSE: EMC) and sits on the board of GlassHouse Technologies Inc., will likely stay on board. But nothing has been announced. The deal is set to close this fall.

The news amplifies Xyratex's scrappy bid for self-determination, which has taken it down pathways other suppliers might fear to tread. The first turn came in June 2004, when Xyratex became the only storage vendor in two years to go public (see Xyratex Swims in Public Pool). Then earlier this year, the company released its own controller in an effort to doff suppliers who had become competitors (see Xyratex Branches Out).

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