In 1963, Ted Sorensen, speechwriter for then President Kennedy, purloined the now famous motto of the New England Regional Chamber of Commerce that has, in latter years, been attributed to JFK.
It is only fitting that a New England-based storage company, EMC, has recently announced its own form of economic stimulus by announcing the acquisition of XtremIO for a rumored $430,000,000. What is remarkable about this transaction is not the sum; EMC has spent much more in the past. What is surprising is the apparent divergence of EMC from its well-established acquisition strategy.
Put simply, EMC buys addresses, not streets. In other words, EMC has not historically made technology purchases. Take, for example, the EMC acquisition of Data Domain (DD) for more than $2B. In the year of the purchase, 2009, DD had a great team in place and revenues of about $275M. In EMC’s most recent annual report, the aggregate results for the combination of DD and Avamar were projected to be $2B (Gross). Even with excellent net earnings, EMC has yet to recover its initial investment from the DD acquisition, which most would agree was well bought and well managed.
Now, please don’t interpret this as criticism on my part. I am building my case for EMC’s divergence from its normally conservative investment strategy.
The other reason that EMC is rarely seen acquiring startups is best said by Chad Sakac, VP Technology Alliance at EMC and the Virtual Geek Blogger:
“Some people ask me the reason it’s “non compressible” to build a storage stack. My answer is that the only way to really test is to have lots of customers, with all sorts of workloads, at all sorts of scales. On that second one point –I’ve heard timeframes from 3-5 years for a mature block stack and 5-7 years for a mature NAS stack.Of course, you can take “off the shelf” open-source stuff and start from there, but that also means your differentiation will really be rooted in the UI more than anything – and pursuing ideas with low barriers to entry are a bad idea for a startup.”
In other words, you can’t build anything worth using in less than 5 years and not without real proof points.
So, in light of this established pattern of sound management and good reasoning, does the EMC board of directors now need to be concerned? Do the boys in the white coats need to show up because EMC has just agreed to spend a large sum of the company’s green-backs on a startup that is less than 3 years old, with no patents issued to my knowledge, and ZERO installed systems?
Maybe… Maybe not…
First off, let me say that in spite of the fact that we share one of the same VC partners (Battery Ventures), no one at GreenBytes is privy to anything about XtremIO’s technology.
I have no idea how good it is, so please don’t call me!
What I do know, what I am certain of, is that magnetic storage is going to vanish from the landscape more rapidly than anyone suspects. I also know that managing NAND in a storage array is complex and requires optimizations not relevant to magnetic arrays.
Clearly EMC has recognized that the technology they have built to manage their magnetic arrays is lacking with respect to flash. They must also feel that the transition to solid state is coming sooner, or they would be waiting for the normal maturity cycle to pick a winner. This time it is different. This time they are buying the street.
At GreenBytes, we have spent 5 years on our storage kernel and feel like, as Goldilocks would say, it is “just right.” We also have 100s of hybrid flash/magnetic appliances built, sold and serviced by GreenBytes in the field. We have also begun shipping the Solidarity, 100% flash-based systems. Add to this the fact that we now hold the seminal patent in deduplication for primary storage and we are starting to feel fairly confident.
The solid-state revolution is upon us — EMC knows this and they have fired their first real shot.
So, kudos to XtremIO for helping EMC point the way for the broader market. All of our boats have just been lifted a little higher.
