LSI Logic Corp. is in "advanced negotiations" to acquire virtualization appliance maker StoreAge Networking Technologies for a reported $55 million, industry sources have told SearchStorage.com.
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LSI would most likely be looking at StoreAge to add virtualization capabilities to its disk arrays manufactured by its subsidiary Engenio Information Technologies Inc, analysts said. If the deal goes through and heterogeneous virtualization becomes a selling point, it's a move that could bring LSI into competition with a key partner, IBM, which OEMs Engenio's arrays as its DS4000 line.
"The StoreAge product already has heterogeneous storage management capabilities," said Arun Taneja, founder and analyst with the Taneja Group. "So Engenio would have a superset of what it would need to solve problems with its own storage -- but a couple of years down the road, it could arguably present its product as an alternative to IBM's."
As far as challenging a powerful partner, such as IBM, Taneja said, "Look at when Brocade [Communications Systems Inc.] got into the file side [with its acquisition of NuView Inc.]. You think its OEMs were happy? In our industry, if you stay in one little zone, you'll die eventually."
Meanwhile, Taneja said, whether Engenio challenges IBM or not, the acquisition could improve Engenio products regardless of what else it does in the market. In the near term, he said, the biggest benefits of acquiring StoreAge would be the immediate ability to add its software capabilities to its arrays.
"Engenio has a solid midrange product line, but the storage services and applications that are available with it are just OK -- it's not what their forte has been," Taneja said.
And regardless of whether Engenio ventures into the heterogeneous virtualization realm, such a product could have definite benefits within Engenio's own hardware line, Taneja said. The virtualization appliance could also create pools of storage using separate boxes within the same model and migrate data between pools in a tiered storage plan. This is similar to what EMC might eventually do with its Invista virtualization switch, he said.
"Imagine if you could give an application 1.5 terabytes (TB) within a pool without allocating particular volumes or worrying about going over the capacity of one box," Taneja said. "You can't do that [with Engenio's products] today."
Both companies would neither confirm nor deny the rumors -- StoreAge representatives did not return calls seeking comment as of press time, and LSI spokesman Jay Russo wrote in an email that the company "does not comment on rumors and speculation."
Israel-based StoreAge, founded in 1999, markets its product, Storage Virtualization Manager (SVM), as an out-of-band storage area network (SAN) appliance that provides virtual volume management and storage management across all storage within a SAN. StoreAge also makes products that take snapshots, perform replication, data migration and disaster recovery operations on data managed by SVM.
The SVM is a purpose-built appliance that attaches to any Layer 2 switch. The appliance attaches in one port of the switch, where data is sent from the fabric and sends data back out through another port in the same switch, creating an out-of-band "loop" to virtualize data.
LSI would not be the first hardware maker to go after a virtualization company -- Qlogic acquired intelligent switch appliance startup Troika Networks Inc. for $36.5 million a year ago, with the goal of speeding up OEM development of entry-level and midrange virtualization products.
Whatever comes to pass with IBM specifically, OEM relationships, in the industry in general, could get more complex if the acquisition goes through. For example, QLogic has partnered with StoreAge for storage services on the SANbox 8000 appliance and that product is based on IP from the Troika acquisition.
"Much of StoreAge's installed base involves customers who are using LSI/Engenio rebranded products from IBM and others," wrote Greg Schulz, founder and analyst with the StorageIO Group, in an email to SearchStorage. "Whoever acquires StoreAge has some interesting potential dance partners in the storage industry ecosystem given that StoreAge has [also] been partnering with Qlogic and Emulex [Corp.], among many others."
Users of the SANbox 8000 needn't worry about the possible acquisition affecting that product, according to Taneja. "For the first few years after an acquisition, at least, I haven't seen any company purchase another and then cut off its OEMs," he said. "Pragmatically, nobody does that, even if the OEMs are their competitors."
Steve Duplessie, founder and analyst with the Enterprise Strategy Group, said he wasn't so sure about the future of the QLogic/StoreAge relationship. "I'm not sure if LSI would continue to offer the software as a "product" if they acquired the company or not -- my guess is not," Duplessie wrote in an email. "I'm sure they would want those functions to be embedded in LSI branded components."
Furthermore, Duplessie wrote, QLogic might have its own plans for the Troika product. "QLogic released the Troika platform … as their network intelligence platform, with a bunch of [independent software vendor] ISV's that support it, including StoreAge," he said. "[But] they are soon to announce that the Troika-based line will be a fully integrated blade in their upcoming 'director' type products."