Adaptec Sells Snap Server to Overland

Storage controller maker Adaptec, which bought the Snap Server storage system franchise from Snap Appliance four years ago in a $100 million deal but didn't develop the line as well as it should have, revealed June 30 that it has sold the NAS (network-attached storage) line to Overland Storage for $3.6 million.

As part of the agreement, Adaptec will retain ownership of its iSCSI-based hardware and software assets and will rebrand them under the Adaptec name.

The Snap Server line, in turn, gives Overland—whose landlord, ironically, is Adaptec—a breath of life. The company, which hired a new CEO last year, missed sales targets and was forced to layoff a number of employees.

"They [Overland] essentially bought $15 million to $20 million in revenue for just over $3 million," said Brian Babineau, storage analyst for Enterprise Strategy Group. "When Adaptec bought it, they needed to invest in it, and they didn't."

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"There won't be any significant integration costs, because Snap was run as a separate business and was already carved out of Adaptec. From Overland's standpoint, their biggest strengths are brand and channel loyalty; Snap has a great brand and shares a similar channel."

Principal analyst Stephanie Balaouras of Forrester told eWEEK that she had to look twice when she heard of the deal.

"When I first saw the announcement, I thought they [Overland] were getting into primary storage, shifting away from their data protection focus," Balaouras said. "But I think they want to use the NAS appliances as back up targets. SMBs/SMEs [small and medium enterprises] don't really need a back up target with a tape emulation."

"A NAS disk target does make sense, but it needs deduplication capabilities in order to compete with ExaGrid, Data Domain and even HP's [Hewlett-Packard's] introduced D2D appliances," Balaouras said.

Overland does not have the deduplication expertise in-house and will have to look to a third-party provider for it. Basically, a storage company with no deduplication options of some kind to offer will be left in the dust in this tough, competitive market.

The Snap Server storage appliances are powered by Advanced Micro Devices' Opteron processors and can be scaled up by simply adding more disk shelves. They are a popular brand of server for the midrange market, especially for small, young companies that do not have IT employees.

Snap Servers, which generally sell for under $10,000, can be installed and deployed by computer-savvy business people, hence the name "Snap Server."

"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 Sundi Sundaresh, president and CEO of Adaptec.

Overland Storage will take control over of all existing Snap Server networked and desktop storage appliance assets, including licenses, patents, existing product inventory and fixed assets and assume customer support obligations.

About 50 Adaptec employees will receive offers to join Overland Storage. These employees will remain in the same facility in Milpitas, Calif. which Overland is subleasing from Adaptec.

Adaptec, which OEMs its controllers to virtually all the major storage systems aggregators, will focus on its Unified Serial Architecture that allows VARs, OEMs and IT organizations to create storage systems with high-capacity SATA (Serial ATA) disk drives, high-performance serial-attached SCSI (SAS) drives, or both, in a single-storage system.

In addition, Adaptec will continue to focus on "iSCSI market opportunities," the company said.