EMC to buy Isilon for $2.25B

EMC Corp. announced Monday it is buying NAS (network-attachedstorage) vendor Isilon Systems for roughly US$2.25 billion. Both companies’boards have approved the deal, which is expected to be finalized later thisyear.

Isilon’s NAS systems will be aligned with EMC’s Atmos objectstorage products to provide a low-cost, scalable platform for managing largeamounts of “Big Data,” an industry term referring to the growingflood of information generated by utilities, online media companies and otherverticals, according to a statement.

“This acquisition is all about accelerating growth andrapidly capitalizing on a growing opportunity,” EMC CEO Joe Tucci saidduring a conference call. It will leave EMC “well positioned at theintersection of cloud computing and Big Data,” he added.

The pending deal follows previous reports that EMC planned tobuy Isilon but couldn’t agree on a price. It ties into a generally hot marketof late for storage technology. Earlier this year, Dell and Hewlett-Packardengaged in a bidding war over storage vendor 3Par that ran the ultimatepurchase price up to $2.4 billion, with HP the winner. Dell had originallyoffered $1.15 billion for the company.

Isilon’s technology is also complementary to the analyticdatabase technology EMC gained with its recent acquisition of Greenplum, saidPat Gelsinger, president of EMC information infrastructure products.

The Seattlecompany has about 1,500 customers and 500 employees. It makes sense for Isilonto be acquired by EMC because “the market opportunity for scale-out[storage] is much larger than our particular reach,” said CEO Sujal Patel.

EMC is paying a significant premium for Isilon, whichreported $53.8 million in revenue for its third quarter ended Sept. 30, a 77percent jump over the same period in 2009.

The healthy bid raises the possibility other bidders were inplay for Isilon. Tucci declined to say whether this was the case.

The acquisition “makes a ton of sense” for EMC,according to Forrester Research analyst Andrew Reichman. “Their NASproducts haven’t competed well with NetApp and they really don’t have ascale-out option,” he said.

Isilon competes with companies like BlueArc and DataDirect Networks,which could also be acquisition targets, Reichman said.

The question is what vendor would be the buyer, he added.Oracle already has a variety of storage technologies from its purchase of SunMicrosystems, Reichman said. A more likely candidate could be Cisco, he said. 

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