NetApp Buys LSI Storage Division for $480M
SANTA CLARA, Calif. - Just as there is a trend toward convergence of functionality in data center systems these days, there is an equal amount of convergence among entire companies in the data-storage sector.
NetApp on March 9 joined the ranks of companies adding "big data" storage capabilities when it announced the acquisition of LSI Corp.'s Engenio storage systems business in a $480 million, all-cash transaction.
The deal follows by two days Western Digital's $4.3 billion acquisition of Hitachi Global Storage Technologies. Other recent storage-related deals include Dell's $980 million annexation of Compellent in December, Hewlett-Packard's $2.3 billion buy of 3PAR last August and EMC's $2.5 billion pickup of Isilon last November.
All of those acquired companies produce large-scale, cluster-type storage systems that can handle petabyte-level workloads and server-attached and embedded storage. Engenio, based in Milpitas, Calif., fills this void for NetApp.
"This move opens up a whole new set of workloads for us," NetApp CEO Tom Georgens, who served as LSI president and CEO several years ago, told analysts and media members on a conference call.
"LSI brings a whole new market that we couldn't have moved into otherwise. This is a strategic storage platform that will allow us to capitalize on new, high-growth opportunities that we don't currently reach with our FAS [fabric-attached storage] platform."
Georgens said he expects the Engenio acquisition to bring NetApp about $5 billion in total available market "over the next few years," specifically by 2014.
New Doors Will Open for NetApp
Engenio will indeed open new market doors for NetApp. The LSI division has built up about 300,000 installations globally.
The Engenio systems are aimed at fast-growing market segments that are topped by video, which includes full-motion video capture, high-definition, 3D and simple digital video surveillance. Another growing market NetApp will now reach is high-performance computing, such as genomics sequencing and scientific research.
NetApp's channel and customers that will-or soon will-require high-performance and big-bandwidth capabilities now will have a viable option with Engenio's storage platform.
Although Georgens said that NetApp and LSI didn't have a particularly tight relationship outside of its supplier-buyer OEM deal, the NetApp chief executive certainly knows all about the Engenio product line.
Georgens spent nine years at Engenio, including the last two years as CEO, before moving to NetApp in 2005. Georgens also served in various other positions at LSI, including president of storage systems and executive vice president of LSI Logic Storage Systems.
The deal is expected to close in approximately 60 days, NetApp said.