Barrall said about five to 10 of Maxiscale’s engineers will join Overland, which acquired the Snap portfolio from Adaptec in 2008 for $3.6 million in an attempt to become a storage systems vendor instead of only selling tape. The Snap line is a key piece of Overland’s turnaround plan under CEO Eric Kelley, who was Snap’s CEO when Adaptec bought it in 2004.

MaxiScale’s Flex software was developed to run with commodity hardware. Barrall said he’s hoping to release Snap clustered NAS systems by mid-2011. Overland has already brought out Snap iSCSI SAN and unified storage products.

“Adding scale-out feature to SnapServer line was definitely on the list of things we wanted to achieve,” he said. “This is a great opportunity for us.”

Overland did not disclose the purchase price, but MaxiScale had $25 million in venture funding and no paying customers. MaxiScale launched its first product in Sept. 2009 and was preparing to bring out a second-generation product when it ran out of money.

Barrall said Overland would not market MaxiScale’s existing or planned products, which were targeted at customers such as cloud providers and web companies with large amounts of small files and millions of concurrent users. He said he Overland will tailor MaxiScale’s technology intended for high-end products to the lower-end and midrange NAS markets that Snap addresses.

“They were targeting large server clusters,” he said of MaxiScale. “Their technology scales well. You really don’t have this technology in products in the price range we sell into.”

He didn’t rule out using the technology for a new product platform down the road, though. “A file system comes with the client that you can access through the NAS,” he said. “You can install the client on a server for direct access to the cluster. You can bring Exchange and SQL databases onto the NAS. There’s definitely interesting things we can do there.”

But the first priority is to make MaxiScale’s technology fit with Snap products. “Our goal is to make the technology straightforward to use,” Barrall said. “We want to make it easy for customers to scale and keep all their data in one area.”

Barrall said there were connections between the companies because several Maxiscale executives were former Snap employees before Overland bought Snap. There is another connection – Barrall and Maxiscale CEO Gianlucca Rattazzi were founders of NAS vendor BlueArc.

MaxiScale raised just under $8 million in a B funding round over the last year, but it wasn’t enough to keep it going.

“MaxiScale had a great story, but needed execution,” Server and StorageIO analyst Greg Schulz said. “In some ways it was a company with IP focused for a market that had not evolved enough to be commercially viable. In the end, great stories and strategies need execution, time, money and patience – at least two of which investors often are not comfortable with.”