StorageIO industry trends cloud, virtualization and big data


Last week Imation,  the company that is known for making CDs, DVDs, magnetic tape and in the past floppy disk (diskettes)  bought Nexsan, a company known for the  SATA and SAS storage products.


Imation is also (or should be) owns the TDK and Memorex names  (remember is it real or is it Memorex? If not Google it). They also have had for  several years removable hard disk  drive (RHDD) products  including the Odyssey (I am in the process of retiring mine), as well as partnership with the former  ProStor for RDX and having acquired some of the assets of ProStor namely their  RDX based InifiVault storage appliance. Imation has also been involved in some  other things including USB and other forms of flash-based solid state devices (SSD), as well as a couple of years (2007) they launched cloud  backup with DataGuard before cloud backup had become a popular buzzword  topic.


Imation has also divested parts of its business over past several years  including some medical related (X-ray stuff) to Kodak who occupies part of the  headquarter building in Oakdale MN, or at least last time I looked when driving  by there on way from the airport. They also divested their SAN lab with some of  the staff going to Glasshouse and other pieces going to Lion bridge (an  independent test lab company). Beyond traditional of data protection, backup/restore and  archiving media or mediums from consumer to large-scale enterprise, Imation has  also been involved in other areas involving recording. Imation also has done  some other recent acquisitions around dedupe (Nine Technologies).


For its part,  Nexsan has extended their portfolio from SATA and SAS products, AutoMaid Intelligent  Power Management (IPM) which gives benefits of variable power and  performance without the penalties of first generation MAID type products. Read  more about IPM and related themes here, here and here. Nexsan also supports NAS and  iSCSI solutions in addition to their archive and content or object storage  focused Assureon product they bought a few years ago.


This is a good acquisition for both companies as it gives  Imation a new set of products to sell into their existing accounts and channels.  It also can leverage Nexsan's channel and solution selling skills giving them (Nexsan)  a bigger brand and large parent for credibility (not that they did not have  that in the past).


Here  are is a link to a piece done by Dave  Raffo that includes some comments and perspectives from me. To say that the  synergy here is about archiving or selling SSD or storage would be too easy and  miss a bigger potential. That potential is Imation has been in the business of  selling consumable accessories for protecting and preserving data. Notice I  said consumable accessories which in the past has meant manufacturing  consumable media (e.g. Floppy disks or discs, CD, DVDs, magnetic tapes) as well  as partnering around flash and HDDs.


In many environments from small to large to super-sized  cloud and service providers, some types of storage systems including some of  those that Nexsan sells can be considered a consumable media or medium taking  over the role that tape, CDs or DVDs have been used in the pat. Instead of  using tape or CDs or DVDs to protect the HDDs and SSDs based data, HDD based  solutions are being used for disk-to-disk (D2D) protection (part of modernizing data protection).  D2D is being done as appliances, or in conjunction with cloud and object storage system  software stacks such as OpenStack swift, Basho Riak CS, CloudStack, Cleversafe, Ceph, Caringo and a list of  others, in addition to appliances such as EMC ATMOS among others than can  support 3rd party storage device as consumable mediums. Keep in mind  that there  is no such thing as a data or information recession, and people and data are living longer and  getting larger, both for big  data and little data.


The big if in this acquisition which IMHO is a fair price  for both parties based on realistic valuations is if they can collective  execute on it. This means that Imation and Nexsan need to leverage each other’s  strengths, address any weakness, close gaps and expand into each other’s  markets, channels and sell the entire portfolio as opposed to becoming singular  focused on a particular area tool or technology. If Imation can execute on this  and Nexsan leverages their new parent, the result should be moving from the  roughly $85M USD sales to $100M+ then $125M then $150M and so forth over the  next couple of years.


Even if Imation keeps maintains revenues or a slight increase,  which would also be a good deal for them, granted the industry pundits may not  agree, so let us see where this is in a few years. However if Imation can grow  the Nexsan business, then it would become a very good deal. Thus, IMHO the  price valuation for the deal has the risk built into, something like when NetApp bought the Engenio business  unit from LSI back in 2011 for about $480M USD. At that time, Engenio was  doing about $705M USD in revenue and seen by many industry pundits as being on  the decline, thus a lower valuation. For its part, NetApp, has been executing  maintaining the revenue of that business unit with some expansion, thus their  execution so far is being rewarding for taking the risk.


Let us see if Imation can do the same thing.


Now, does that mean that Nexsan was the last of the independent  storage vendors left?


Hardly, after all there is still Xiotech, excuse me, Xio  as they changed their name as part of a repackaging, relaunch and downsizing.  There is DotHill who supplies partners such HP, or Dothills former partner  supplier InfoTrend. If you are an Apple fan then you might know about Promise,  if not, you should. Lets not forget Starboard formerly known as RelData, about Data Direct Networks (DDN) that is  still independent and at around $200M (give or take several million) in revenue,  are very much still around.


How about Xyratex, sure they make the enclosures and  appliances that many others use in their solutions, however they also have a  storage solutions business focused on scale out, clustered and grid NAS based  on Lustre. There are some others that I am drawing a blank on now (if you  read this and are one of them, chime in) in addition to all the new or  current generation of startups (you can chime in as well to let people know who  you are to be bought).


There is still consolidation taking place, both of  smaller vendors by mid-sized vendors, mid-sized vendors by big vendors, big  vendors by mega vendors, and startups by established.


Again congratulations to both Imation and Nexsan, let us  see who or what is next on the 2013 mergers and acquisition list, as well as who will  join the where are they now club.


Disclosure: Nexsan has been  a StorageIO client in the past; however, Imation has not been a client,  although they have bought me lunch before here in the Stillwater, MN area.


With Imation having their own brand name and identity,  not to mention TDK and Memorex, now I have to wonder will Nexsan be real or  Memorex or something else?


Ok,  nuff said.

Cheers gs