REDWOOD CITY, Calif. -- Twenty-four hours after Oracle made the acquisition of struggling new-generation storage provider Pillar Data Systems, it called customers and partners together here at its headquarters campus on the shores of San Francisco Bay to explain why.
After all, Oracle is still ingesting Sun Microsystems' extensive enterprise disk and tape storage businesses and has been running them for a year and a half. These aren't trivial business units.
So why buy a small, 10-year-old storage company with good product
reviews but with only marginal success in a marketplace full of large
sharks named EMC, HP, Dell and IBM?
We can think of at least three good reasons.
Company Line: Pillar Fills a Need
The company line, as put forth June 30 by co-President Mark Hurd and
Senior Vice President John Fowler, is that Pillar Data brings new
storage IP options to the company's overall product set. No argument
there; nothing in the former Sun catalog has the software agility and
ease of use that Pillar owns. Customers, especially those in the
mid-range and SMB markets without a lot of on-site IT help, tend to
like "easy" and "quickly deployable."
Reason No. 2 Oracle did this transaction is that CEO and co-founder
Larry Ellison -- who owns Pillar Data through his equity firm, Tako
Ventures -- just can. He made the deal with a flick of his pen and the
blessing of his legal folks, not even needing a down payment. After
all, he was buying the company from himself.
Thirdly, Ellison couldn't have been too excited about possibly seeing
another of his ventures continue to flounder and perhaps go under.
Remember his TV set-top box maker Liberate and the Oracle Network
Computer? Say there's no hint of ego involved here and you'll hear
laughs from those in the know.
All that aside, the fact remains that Pillar Data's IP is well worth continuing to develop, and Oracle as a company knows it.
Pillar Data, based in San Jose, Calif., has attracted about 600
customers in its 10-year lifespan and has them spread across 24
countries. It was originally backed in 2001 by a $150 million investment by Ellison. The company launched its first product, Pillar Axiom, in July 2005.
The main idea behind Pillar's hardware and software product portfolio
is to provide highly scalable SAN Block I/O storage systems that can
unify and manage SAN (storage area network) and NAS (network attached
storage) environments together or separately on a single platform.
Versatility, ease of use and deployment, and scalability are its key
attributes -- and those are important attributes.
At the time Pillar Data came into the market, no other company was
doing this. This is still unique in many ways and can fit well into
almost any legacy IT system. It's designed in a modular fashion and has
been described by a number of users as "one of the easiest storage
systems to get up and running" they've ever deployed.
Deal Keeps the IP Alive
So Ellison and Oracle have found a way to keep this IP alive, in house,
and in development. It takes a burden off Ellison's equity firm, which
can now look for new investments. Plus, Pillar was saved from
regulatory scrutiny by not being sold to another investor or IT company
-- even though it would have been a plum pickup.
And now Ellison can focus on sponsoring the 2013 America's Cup, being held on the Bay right outside his office window.
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