Seagate Technology, which is making a sharp move into providing cloud-storage systems, added some important intellectual property Aug. 18 when it revealed it is acquiring longtime storage software original equipment manufacturer (OEM) player Dot Hill for a net $645 million in cash.
The transaction is expected to close by the end of Q4 2015, Seagate said. The per-share sale price, $9.45, is a whopping 88 percent premium over where Dot Hill’s stock closed on Aug. 18, which was $5.18.
Dot Hill CEO Dana Kammersgard said earlier this month that the company expects to report revenue of between $245 million to $260 million for fiscal 2015.
The acquisition should be considered a good outcome for Dot Hill, which was founded in 1997 and has seen a measure of business success—if not much high visibility doing it—during its tenure as an independent company. While the company was consistently successful in the OEM storage business, its 3-year-old branded product line had some difficulty getting traction.
Highly Regarded Storage Chops
Dot Hill's storage software chops are so highly respected that some of the biggest storage providers in the world—namely Hewlett-Packard, Sun Microsystems and others—white-labeled its storageware inside their storage arrays.
Seagate, engaged in a long-term market-share battle with Western Digital and SanDisk, figures to obtain a significant market advantage by adding Dot Hill's 87 patents, loyal clientele, and longtime industry know-how into its mix.
Dot Hill's external storage array-based systems and software ostensibly will complement and expand Seagate's storage systems lineup and be presented as part of Seagate's Cloud Systems and Electronics Solutions business.
Cupertino, Calif.-based Seagate says it will use Dot Hill's storage technology IP portfolio and software capabilities "to drive innovation" and provide incremental value to their combined OEM customer base.
While it was one of the world's top OEM storage providers, Dot Hill, based in Longmont, Colo., also has had its own brand since 2012. Dot Hill patents encompass all aspects of storage, including the cloud, virtual machines and data tiering.
Getting More Specific in Workloads
In recent months, Dot Hill has been becoming a lot more granular with the workloads. For example, Dot Hill and 3D engineering and video software maker Autodesk joined forces for new-generation media and entertainment hardware-software packages back on June 15.
Dot Hill's high-end Ultra56 4004 AssuredSAN array was added to Autodesk's list of storage options for media and entertainment applications. Autodesk apps handle such heavy-duty tasks as video post-production workflows, video editing and composition, and video layering. Dot Hill's arrays, which can handle up to 15 streams of video in a single workflow, were required for these heavy-duty workloads.
Dot Hill's team will join Seagate in its entirety, said Phil Brace, President of Cloud Systems and Electronics Solutions at Seagate.