Overland Grabs Adaptec's Snap Server Biz

Backup vendor jumps into the low-end NAS space to solve its channel problems

July 1, 2008

3 Min Read
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Backup specialist Overland has bought Adaptecs Snap Server business in an attempt to gain a foothold in the SMB NAS market.

The Snap Server deal, which is valued at just $3.6 million, is Overland’s latest effort to beef up its traction with smaller enterprises following its de-dupe deal with Diligent, which was announced late last year.

”One of the fastest growing markets is NAS, and we did not have a solution to offer,” explains Vern LoForti, the Overland CEO. “A lot of times when we talked to our customers and partners, they asked us about that.”

The vendor will now flesh out its VTL, tape automation, and SAN product line with the Snap Server devices, and is already planning to bundle the different technologies together. “It’s a whole product portfolio for folks to look at,” says LoForti.

The San Diego-based vendor is clearly looking to boost its revenues after flagging OEM sales hit its second quarter results, following a tough spell for the company after it was dumped by OEM partners HP and Dell. In a statement released this morning, Overland estimated that the acquisition will add approximately $18 million in annual revenues.“It certainly gives our channel business a shot in the arm,” says LoForti. “There’s not a lot of opportunities out there where you can get a brand name with the strength of this, and buy it for 20 percent of revenue.”

Adaptec, of course, has been struggling with its own execution issues recently, and, like Overland, implemented a major restructuring plan last year in an attempt to jump-start its revenues.

In a statement released this morning, Adaptec, which competed with Buffalo Technology and Netgear in low-end NAS, explained that it will now focus attention on other parts of its operation.

“The sale of the Snap Server business allows us to focus on strengthening our leadership position in the Unified Serial RAID controller business, leverage our iSCSI assets, and continue to streamline the company’s operations,” said S. Sundaresh, the Adaptec CEO.

In addition to the Snap Server NAS family, Overland also bought the devices’ GuardianOS operating system and all other assets associated with Adaptec’s Snap business, not to mention a sizable customer base.Some 200,000 Snap Servers have already been deployed by users, which include retail giants Costco and Albertson’s, creating a potentially lucrative revenue stream for Overland.

”Existing service and support contracts will be honored,” says Ravi Pendekanti, Overland’s vice president of worldwide marketing. “There will be no hiccup of any kind.”

Overland expects to make the Snap business cash-flow positive by the third quarter of its fiscal year ending June 30, 2009, according to execs.

Adaptec’s 50-strong Snap Server team will also be joining Overland, although LoForti says that they will not be expected to move from their base in Silicon Valley. “We will keep them in Milpitas,” he says. “They already have a separate facility [from the rest of Adaptec] up there, so we will just sub-lease that facility.”

The Snap Server acquisition closed late on Friday, although Overland says that additional details will be released in a form 8-K to be filed with the Securities & Exchange Commission (SEC).Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.

  • Adaptec Inc. (Nasdaq: ADPT)

  • Buffalo Technology (USA) Inc.

  • Dell Inc. (Nasdaq: DELL)

  • Hewlett-Packard Co. (NYSE: HPQ)

  • Netgear Inc. (Nasdaq: NTGR)

  • Overland Storage Inc.

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