EMC and IBM Storage Additions

EMC Corp. finally succeeds in its bid to acquire Iomega Corp. Meanwhile IBM Corp., announced it signed an agreement to purchase FilesX, Inc., a storage software company specializing in continuous data protection and near instant recovery of applications and data.

Focal Points:

• EMC revealed it had reached a definitive agreement to acquire Iomega in a cash tender offer of $213 million. The deal is projected to close in the second quarter and is expected to have no material impact upon EMC's full year 2008 financial results. Iomega was founded in 1980 and has approximately 230 employees worldwide. Its 2007 fiscal year revenue was $336.6 million, with year-over-year growth of 47 percent. Its direct attached storage line expanded 86 percent in 2007 while its network attached storage (NAS) product line increased 35 percent in the same period. 70 percent of its revenues come from its EMEA operations.
• The addition of Iomega’s products, brand name, route to market and industry expertise will enhance EMC’s reach and focus in the rapidly-growing consumer and small business markets, according to company officials. Iomega is a global leader of reliable data storage in the consumer and small business markets, areas EMC is focused on penetrating. EMC will retain the Iomega brand and will build its Consumer/Small Business Products Division around the company. Currently the company has three major product lines: basic hard drives; StorCenter Pro NAS storage offerings; and Iomega Rev, its backup line for the SMB market. Since 2004, Iomega has been packaging and selling EMC Retrospect backup software with all its external disk drives and earlier this year announced that it would be embedding EMC LifeLine software into its multi-drive network storage products.
• IBM stated it acquired FilesX, a privately held storage software company based in Newton, MA. Terms were not made public. The company has 44 employees with a development lab in Haifa, Israel. The company was an existing IBM business partner. FilesX has four software offerings: Xpress Restore, Xpress Restore DR, Xchange Restore 2007, and Xpress Bare Metal Restore. These products eliminate the need for a backup window, improve the recovery time objective (RTO) and recovery point objective of critical applications, reduce the risk of data loss, and provide near instant recovery, according to the company. Initially FilesX products will remain available, with an IBM release planned for 3Q08. The entity will become part of Tivoli Software, a unit of the IBM Software Group.

Experton Group believes consolidation in the storage market will continue, forcing executives to think more holistically about storage solutions rather than considering point solutions.  EMC and IBM, as well as the other major players, will strive to be one-stop storage management provider with offerings that address requirements ranging from the complex high-end to the volume commodity solutions. While IBM's move was a technology one, EMC seeks to use the acquisition as a foundation for rapid growth in markets that are not currently its strength. IT executives should understand the road maps and strategies of their storage providers and factor those initiatives into their data center, departmental and desktop storage architectures and plans.