EMC, the world’s largest storage technology vendor, today announced its intention to acquire Isilon Systems, a supplier of so-called ‘scale-out’ storage systems for $2.25 billion.
The acquisition will boost EMC’s network-attached storage (NAS) technology suite. NAS is an increasingly popular approach to shared storage that links the storage media directly to the network, accelerating read and write times.
Isilon’s technology is designed to make NAS systems more scalable and therefore more amenable to virtualised IT infrastructure.
Analysts see the acquisition as a bid by EMC to close the NAS technology gap with rival NetApp. Earlier this year, Gartner placed Isilon just ahead of EMC in terms of ‘completeness of vision’ in its magic quadrant for “Midrange and high-end NAS solutions”. Both companies trailed NetApp in ‘completeness of vision’ and ‘ability to execute’.
Isilon’s market capitalisation before the deal was announced was around $1.75 billion, so EMC’s offer represents a 30% premium. In 2009, the company’s revenues were $123.9 million, up from $114.4 million the year before, but it has lost money for the last three years.
The deal continues the rapid consolidation underway in the storage sector. Besides the fact that many IT companies have put themselves up for sale in the wake of the recession, there are two main reasons for this consolidation. Firstly, data volumes are always increasing, driving demand for storage media. Secondly, the adoption of server virtualisation makes managing storage resources more complicated, driving demand for new storage management technologies.
Earlier this year, HP and Dell entered into a bidding war for 3PAR, another company whose storage technology is suitable for use with virtual or cloud infrastructure. HP eventually won with its $2.4 billion bid – a 160% premium