Netgear

In a move that highlights momentum in consumer and SMB data storage, Netgear will pay $60 million in cash to buy Infrant, a six-year-old supplier of consumer NAS devices, sometime this quarter. (See Netgear to Acquire Infrant.)

Netgear will pay out $20 million more to Infrant shareholders over a three-year period if specific revenue targets are reached.

Netgear, based in Santa Clara, Calif., will take on all of Infrant's 34 full-time employees, who work in Fremont, Calif. The CEO of Infrant, Paul Tien, will become VP and GM of storage products at Netgear.

Netgear plans to add Infrant's products as is to its Storage Central series, which includes small, proprietary IP SANs OEM'd from Zetera that can be used on Ethernet or wireless LANs. (See SMBs Get Their Backup, Top 10 Startups to Watch, and Storage for the Consumer.) Netgear also has an EVA8000 Digital Entertainer HD unit that streams multimedia data from PCs, NAS boxes, and other devices to a TV.

"We've had no NAS up to now. We have our own small SAN, and we have a tremendous channel to the SMB," says Netgear CEO Patrick Lo. Presently, storage accounts for a small percentage of Netgear's roughly $600 million annual sales; Lo would like to see that grow to at least $50 million.Infrant's ReadyNAS supports up to 3 Tbytes and comes in SMB standalone units and a 1U rackmount device. Each unit comes with Infrant's own RAID controllers called X-RAID. (See Review: Low-Cost NAS, Adaptec Launches Servers, and Isilon Moves Down, Adaptec Moves Up.)

Both vendors compete in an increasingly volatile niche that spans gear for consumers, SOHOs, and SMBs. A growing list of competitors includes Aberdeen, Adaptec, Buffalo Technologies, HP, NetApp, Prime Array Systems, and Dell, to name just a few. (See A Consumer's Eye on the Enterprise.) At least one analyst sees it as an emerging force.

"It's not gigantic, but it's very interesting... When you think what share of the total IT budget is storage related, that's just 8 to 10 percent, but when you think that's part of a $120 billion market in small- to mid-sized companies, and $60 billion in small businesses alone, that's very interesting," says analyst Ray Boggs of IDC. Further, he says annual 6 percent to 8 percent growth of SMB IT wares is leading enterprise IT growth by at least two points.

None of this is lost on Netgear, which plans to expand its storage offerings as a result of the deal. "As people continue to invest in creating, sharing and securely saving digital content, we expect the demand for network attached storage will continue to grow," said Lo in a prepared statement.

"Netgear could say to customers, 'Now we've got you networked, here's what you'll need to store data,' " Boggs says. He envisions Infrant expanding its channels worldwide via Netgear to reach more VARs and even retailers capable of packaging the storage kit for consumer and SOHO use.For the quarter ended April 1, 2007, Netgear reported revenues of $173.6 million, up 36 percent year-on-year and 6 percent sequentially. GAAP net income was $14 million, or 40 cents per diluted share, up 41 percent year-on-year and 4 percent sequentially. Twenty-one percent of sales were to service providers in the quarter; 53 percent of sales were in Europe, Middle East, and Africa, while 9 percent were in the Asia-Pacific region and 28 percent in North America.

"Service providers have been very interested," Lo says. "They can sell our products for home networking or provision users for content management."

At press time, shares of Netgear were trading at $34.98, up .25 (.72%).

Mary Jander, Site Editor, Byte and Switch