Isilon Went Through Some Pain to Get Here

By Chris Preimesberger  |  Posted 2010-11-15 Print this article Print

Like many startups-even in the fast-growing storage sector-Isilon had to go through some financial pain before finally getting into the black this year.

Isilon, which went public in 2007, had reported that its revenue for the third quarter ended Sept. 30 was $53.8 million, up 19 percent sequentially over $45.1 million in Q2 2010. More significantly, revenue was up a whopping 77 percent from $30.5 million in the third quarter of 2009.

Isilon's margins have been excellent at 60 percent and above, but R&D and operating expenses have been high, and the company had trouble getting out of the red for a couple of years.

However, the good news for Isilon in Q3 2010 was that its net income was $4 million, compared with a net loss a year ago of $4.9 million. This undoubtedly was a major factor that led to the eventual acquisition.

Pund-IT storage analyst Charles King told eWEEK he believes there are important synergies between EMC and Isilon.

"There are also obvious synergies between Isilon and EMC's Atmos cloud platform/service. In fact, we expect the company believes the pair will provide the 'glue' for seamlessly binding together customers' private cloud storage assets and those secured by public cloud service providers, and also complement the cloud strategies of EMC partners such as Cisco and VMware," King said.

"Isilon's NAS expertise and innovative technologies should prove to be valuable resources for the development of next-generation EMC NAS solutions, thus allowing the company to compete more effectively against NetApp and other NAS players," he said. 

Overall, King said he considers EMC and Isilon to be an "excellent fit."

"The pair appears well-suited strategically, and both companies' individual products and broader strategies offer multiple leverage points," King said. "EMC's size, experience, resources market penetration and industry leadership will offer the dynamic yet still immature Isilon what it needs to get to the next level."

NetApp, EMC's largest independent storage competitor, had a few things to say about the acquisition.

"NetApp is already capitalizing on the trend towards virtualized environments, cloud services and big data with nearly a decade of investment fueling its continued market share gains," Chris Cummings, NetApp Vice President of Product and Solutions Marketing, wrote in an email to eWEEK.

"Today's multi-billion dollar acquisition of Isilon is further proof that EMC is still searching for ways to catch up to the critical changes shaping the IT industry."

Editor's note: This story was updated at 2:38 p.m. Pacific time to add reaction from an analyst and from NetApp.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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