Hewlett-Packard isn’t going to just let Dell walk away with 3PAR.
HP outbid Dell today for the thin provisioning storage pioneer. HP offered $24 per share in cash for a total of $1.6 billion, trumping Dell’s bid of $18 per share and $1.15 billion made public last week.
HP’s offer was approved by the board, and it hopes to close the deal by the end of the year. A letter from HP chief strategy and technology officer to 3PAR Dave Scott revealed that HP made a previous offer for 3PAR, which apparently was below Dell’s bid.
“We’ve been working on this deal for some time,” HP storage chief Dave Donatelli said today during a conference call with financial analysts. “It’s been part of an active M&A process.”
Donatelli also said he considered 3PAR’s product portfolio a fit for midrange customers, although 3PAR sold mostly into enterprises. That could mean HP doesn’t necessarily see 3PAR as a replacement for the XP enterprise system that it sells through an OEM deal with Hitachi, and it may end up replacing HP’s EVA line instead.
Dell has not yet responded, but the situation is now similar to the battle between EMC and NetApp for Data Domain last summer. NetApp made the first bid, EMC responded, and NetApp raised its bid slightly before EMC walked off with Data Domain for $2.1 billion. But while EMC is substantially larger than NetApp and was heavily favored in a bidding war, HP and Dell are more evenly matched.
Hitachi Data Systems has quietly picked up the assets of cloud storage startup Parascale, which went under after it failed to gain additional funding earlier this year.
HDS chief strategist for file and content services Miki Sandorfi announced the acquisition in his Thursday blog about Hitachi’s cloud strategy. Sandorfi wrote that HDS acquired Parscale’s IP and hired the core engineering team.
“By complementing our existing product set and leveraging the distinct capabilities of this acquisition, we will continue to bring to market additional Hitachi Cloud Services that leverage best-of-breed technology and are deployed in ‘cloudy’ ways,” Sandorfi wrote.
Parascale already had two generations of its ParaScale Cloud Storage (PCS) clustered NAS product in the market, but it’s unclear if HDS is more interested in Parascale’s existing product or its engineering experties. HDS already has a Private File Tiering cloud service aimed at customers with their own NAS systems who want to archive data off primary storage, and now you can expect them to add clustered NAS to its cloud services in some capaicty.
HDS doesn’t spend much on acquisitions, but the money it has laid out has ended up in the cloud. HDS acquired Archivas in 2007, turning the Archivas object-based storage technology into the Hitachi Content Platform that its cloud services are built on.
In the wake of Dell’s $1.15 billion acquisition of 3PAR, NetApp CEO Tom Georgens said his company is under no pressure to make any significant acquisitions. Ever since EMC outbid NetApp for Data Domain last year, people have been wondering if NetApp would turn to another well established storage company to grow its business.
But during NetApp’s earnings conference call Wednesday night Georgens said the vendor is more likely to go after smaller acquisitions like Bycast than those that cost billions of dollars, such as Data Domain and 3PAR.
“I think that the [Dell-3PAR] transaction probably doesn’t change our thinking in any meaningful way,” Georgens said. “We’re always looking for tuck-ins. Certainly, nothing about this changed our tuck-in belief. As far as larger transactions, I think that if the time is right and the price is right … Our thinking on acquisitions is there has to be something that has some affinity to what we do, has to be something that either our sales force can sell, or something that by virtue of having it in the portfolio, we can move more of our existing product. So I’m not looking for similar assets just to be a holding company, I don’t think that’s worked for anyone in our space.”
Georgens said 3PAR was a less obvious fit for Dell than EqualLogic — the iSCSI SAN vendor that Dell bought in 2008 — because iSCSI plays well with Dell’s server business. But he was quick to point out who he thought was a loser from the Dell-3PAR deal. Like many in the storage world, he said it raises questions about Dell’s relationship with NetApp’s archrival EMC.
“I think we can debate whether it is bad or is it very bad, but suffice it to say it is probably not good for the relationship with EMC,” Georgens said.
NetApp has done a good job of growing without making major acquisitions. Its revenue of $1.14 million last quarter was a 36% increase from the previous year and its product revenue grew 51%.
Dell took another huge step into the storage world today when it said it will buy thin provisioning pioneer 3PAR for $1.15 billion.
The blockbuster deal isn’t Dell’s most expensive storage buy – it paid $1.4 billion for iSCSI vendor EqualLogic in 2008 – but 3PAR becomes another key piece in an expanding storage strategy. The storage industry has been waiting for Dell to make a large acquisition for more than a year, but it concentrated on adding pieces such as Exanet’s clustered NAS technology and Ocarina Networks’ primary data optimization.
3PAR’s InServ storage systems gives Dell a utility-based modular storage system that appeals to larger customers than EqualLogic’s iSCSI SANs. It also brings it into greater competition with its storage partner EMC, which 3PAR considers its largest competitor. Dell resells EMC’s midrange Clariion and Celerra storage systems as well as Data Domain deduplication backup appliances.
According to Dell’s press release: “Dell plans to make 3PAR an integral part of its industry-leading storage portfolio, including PowerVault, EqualLogic and Dell/EMC. With 3PAR, Dell will offer innovative systems and customer choice at every storage tier, from direct-attach to highly-virtualized, clustered SAN.”
Dell also added an object-based storage platform this year, which competes with EMC’s Atmos system. EMC and Dell keep saying their relationship is strong, yet Dell keeps acquiring EMC competitors or developing its own products that compete with EMC.
Dell also paid a large price for 3PAR. The $18 per share cash transaction is an 86% premium on 3PAR’s share price last Friday. “Nonetheless, we think it is a positive for Dell,” Wedbush financial analyst Kaushik Roy wrote of the deal in an email. “Dell needs to move up into the data center and this is what would help Dell get into the data center, Dell is desperate for better margins … and storage is adjacent to what Dell sells – in other words, it is an easy product to sell for Dell.”
We’ll have more on this breaking story later on SearchStorage.com.
You could tell by listening to CommVault’s earnings report call this week that Simpana 9 is just around the corner. Maybe it won’t be available in early October as a report out of New Zealand put it, but it probably won’t be too long after that.
We know that because CommVault CEO Bob Hammer sounded more like a product marketing manager than a CEO discussing his company’s earnings earlier this week.
Hammer gave a quick rundown of CommVault’s earnings – in line with the disappointing preliminary results it gave last month. After assuring financial analysts that things are looking up this quarter, he spent most of the call talking about Simpana 9.
Highlights of that product, which will include source- and target-side data deduplication:
“We’ll enable the customer to dedupe at the source, target, or in between, at a very high scale and with the deduplication volume being fully indexed,” Hammer said. “All those are unique. Nobody has fully indexed dedupe, nobody can dedupe at the source or target, or manage dedupe in the stack across different storage silos.”
When I spoke to Hammer after the call, he expanded on the “dedupe everywhere” concept.
“It’s not just dedupe. Dedupe is a feature but it has to be managed across the stack and it has to be application specific,” he said. “What we’re seeing is to manage your data and data movement, you have to automate the virtualization layer granularly with application-specific information to manage virtual nodes that are moving dynamically. You’re talking about hundreds of thousands of these nodes. And you have to manage them to a storage space across all hardware silos. You don’t just move them with snapshots and replication. They have to be indexed and granular, and you have to be able to move them down the storage stack, across silos and into the cloud.”
Despite his enthusiasm about the new release, Hammer remained disappointed in sales from last quarter. CommVault’s revenue was $66.3, as it forecasted in July. That was more than $5 million below Wall Street expectations. Hammer did say many deals that failed to close by the end of the quarter have since closed. The quarter was the first of CommVault’s fiscal year, and Hammer said he hasn’t lower expectations for the full year.
“We had a big hole [last quarter],” he said. “Now our objective is to catch up.”
Hitachi Data Systems has kept a tight lid on any upgrades to its flagship USP-V enterprise storage platform. Everybody in the storage industry expects an upgrade this year, but the HDS folks won’t even confirm that much. They will talk about other developments, though, while keeping details sparce.
One thing HDS is working on is automated tiering software, which HDS VP of storage platforms Robert Basilio says is a key to driving solid state storage adoption. “SSD adoption will be limited until you have a better way of managing storage,” he said. “And prices are not coming down as fast as anybody would like.”
Basilio says he’s not concerned that archrival EMC already has its FAST tiering software out with version 2 on the way. “We have more know-how than anybody in this area,” he said. “EMC is bringing out FAST, but we think we’ll have faster and fastest.”
HDS, which partners for backup data deduplication, plans to have dedupe for primary storage as well but “there’s nothing I can share now,” Basilio said.
HDS did break out its revenue results from the Hitachi parent company’s earnings report, and while it doesn’t get as specific with its numbers as most of its competitors those numbers do show some interesting trends.
HDS said its revenue for last quarter was $804 million, up 13% from the previous year. This compares to 21% year over year growth by EMC, but Stifel Nicolas financial analyst Aaron Rakers points out EMC’s revenue grew 14% if you exclude the Data Domain platform that EMC acquired after the second quarter of 2009.
Still, EMC said its high-end Symmetrix revenue grew 32% since last year. HDS says its USP-V grew only “high-single digits.”
But HDS is becoming less reliant on USP-V business. Hardware made up 55% of its revenue for last quarter with services contributing 30% and software 15%. And HDS midrange modular storage grew in “strong double-digits.” Basilio says USP-V isn’t losing share to competitors but customers are finding more value in the HDS Adaptable Modular Storage 2000 midrange platform. It is also selling a lot more NAS through its OEM partnership with BlueArc.
“There’s a lot of change in the storage world today,” he said. “The AMS is not our best or fastest system, but it’s the most consistently reliable product in the modular area today.”
Quantum’s strategy for breaking its sales slump is to think small. That means a large steady stream of smaller deals rather than relying on a handful of big deals.
Quantum CEO Rick Belluzzo says the vendor made some large deals with its DXi7500 deduplication systems last quarter but many large deals also got pushed back because of spending issues, resulting in “lumpy” results. The bottom line is that Quantum needs to improve sales for the DXi6500 midrange and DXi4500 SMB platforms instead of relying heavily on larger DXi7500 deals in the enterprise.
“The nature of our business is big-deal oriented, and that makes us more susceptible to when people pull back,” Belluzzo said. “We look at bigger deals that we track, and very few – virtually none – are deals we lost. A lot didn’t close, but hopefully slipped into the next quarter. But our smaller deals can’t offset that because we don’t have enough of that business yet. We need a more diverse strategy.”
Quantum this week reported revenue for last quarter of $163 million, well below the $170 million to $180 million it forecasted for the quarter. The vendor lost $3 million for the quarter. “We clearly did not deliver the growth we expected,” Belluzzo said.
Belluzzo said Quantum struggled mightily in Europe and one geographic area of North America. The vendor made some realignment in its sales force, but will concentrate on pushing its DXi disk backup, StorNext software and tape library products through the channel. Quantum hopes to win partners looking for an alternative to Data Domain’s dedupe line now that EMC owns it and are frustrated with Oracle’s handling of the Sun tape platform.
It now appears unlikely that Quantum will sign any more major deduplication OEMs to replace the deal it lost with EMC after EMC bought Data Domain. Quantum did announce one OEM deal in January (believed to be Fujitsu) but is now more channel focused.
“Don’t expect any imminent changes in what we’re doing today, and that’s mostly driving branded business,” Belluzzo said. “Our disk and software and StorNext platform will have various partners and maybe OEMs associated with them, but we think we have plenty to work with.
“It was a disappointing quarter with the economy, but underlying this we are making progress around the core tenets of our strategy. That’s growing our branded business and taking advantage of channel disruption.”
A longer term goal for Quantum is to expand its data reduction capabilities beyond deduplication for backup. Primary data reduction is a hot topic with storage vendors these days and Quantum has designs on that space.
“We are driving our architecture and technology into a world where deduplication becomes more common in various tiers,” Belluzzo said. “That basically calls for the process to become more about data reduction than deduplication. We can take a stream of data that has lot of influences, and respond accordingly to get bet overall result. There is a lot of thinking and technical work underway to move our architecture into a world that is different than what we see today.”
IBM made its long-rumored acquisition of primary data compression vendor Storwize today. Word first got out more than a month ago that IBM would pay $140 million for the privately held Storwize as storage vendors are moving to put together their primary data reduction strategies.
IBM expects the deal to close by the end of September. It did not disclose financial terms.
The IBM-Storwize acquisition comes less than two weeks after Dell bought Ocarina Networks, which had been seen as Storwize’s main competitor although the vendors use different methods to shrink data.
The Storwize STN-6000 appliance works with NAS systems, including the IBM N series (rebranded NetApp storage) and Scale Out Network Attached Storage (SONAS).
In a letter emailed to “friends of Storwize” today, Storwize CEO Ed Walsh said IBM will continue selling Storwize’s STN-6000 appliance while expanding the platform. Storwize has been working on adding block storage reduction to go with its traditional file compression, and that apparently will continue under IBM.
“Storwize will continue to sell and deploy its STN-6000 series of products and support CIFS and NFS protocols,” Walsh wrote. “Additionally, the Storwize product will continue to evolve to support additional storage systems and additional protocols. … Under IBM we will continue to deliver capacity optimization without compromise to you, across more storage platforms, and to additional new customers.“
IBM’s press release issued today said it found Storwize attractive because it compresses primary data – files, virtualization images, and databases – and lets customers store up to five times more.
IBM already has backup deduplication technology in its ProtectTier virtual tape library (VTL) software and Tivoli Storage Manager (TSM) application.
IBM claimed Storwize has more than 100 customers including Mobileye, Polycom Israel, Shopzilla, and Sumitomo Mitsui Construction.
For more on this story, check out SearchStorage.com.
Druva Software is in the process of moving headquarters from India to the U.S. with designs on conquering the laptop backup world.
Druva last week released its inSync 4.0 backup software, which the vendor claims has application-aware data deduplication designed to work at the logical block or object level. Druva founder and CEO Jaspreet Singh compares it to EMC Avamar, but built specifically for laptops (EMC added laptop support for Avamar last year).
“We’re application aware, so we understand the file format,” Singh said. “We can actually go through APIs from Microsoft to understand the PST format, and dedupe at the message level or attachment level. We can dedupe across applications and at the source.”
inSync 4.0 also has a new embedded storage engine that supports 16 TB of deduped data per server and 200 parallel connections. The product is based on the NoSQL Berkeley Database (BDB) that Druva OEMs from Oracle. BDB uses a small storage library instead of SQL optimizer layer, according to Singh, making it easier to download and install. Its new WAN optimization engine will choose the best packet size to control the amount of bandwidth uses and reduce latency, Singh says.
“There’s a lot of software for backing up servers that was modified to work with PCs, and then modified to work with laptops,” Singh said. “None were made specifically for laptops. But data backup is much more tricky than PCs. A person is either working or has the laptops switched off, so there’s no ideal time to back up a laptop.”
Is there room for another backup software player, even if it does specialize in an underserved market like laptop data protection? Singh says a few large organizations are using inSync, and he’s negotiating OEM deals with two North American partners to achieve wider distribution and product recognition. “The two issues we face are branding and pricing,” he said, an admission that inSync’s price of $55 per laptop license ($65 with support) is not cheap.
Druva recently received $5 million in funding from Sequoia Capital, and Singh said the three-year-old company will work out of the Sequoia Menlo Park, Calif. office until it sets up a U.S. headquarters. “We’re moving management and key sales people to U.S.,” he said. “We will be more-or-less a U.S. company.”
In April, Oracle executives promised their largest Sun StorageTek tape customers enhancements that would help them scale their enterprise libraries to keep up with rapid data growth.
Today they started delivering on those promises with scalability and high availability enhancements. The SL8500 Modular Library System – the largest in the platform — now scales to 100,000 tape slots, up from 70,000. The SL8500 also now supports LTO-5 tape cartridges with 1.5 TB of native capacity. With the improvements, the SL8500 can scale to 1.5 PB of native capacity – more than twice its previous capacity.
Oracle also added redundant hot swappable robotics and library control cards to the SL8500 with automatic failover capabilities.
Oracle product marketing manager Tom Wultich said the focus of the upgrade was helping the largest enterprises that use the SL8500 keep up with data growth.
“Tape drives double in capacity every two years, but data is growing faster than that,” Wultich said. “Our largest customers need to be able to keep up with that growth, so we’re offering nearly three times an improvement in capacity.”