Overland Snaps up Adaptec NAS Snap Appliance Business for Only $3.6 Million
Adaptec affirms that it will keep its iSCSI products.
This is a Press Release edited by StorageNewsletter.com on July 1, 2008 at 5:03 pmThe press release of Adaptec
Adaptec Sells Snap Server NAS Business to Overland Storage
Adaptec to Retain iSCSI Hardware and Software Products and Technology as Part of Long-Term Strategy
Adaptec Inc. announced that it has sold its Snap Server NAS business, including the brand and all assets related to Snap Server networked and desktop storage appliances, to Overland Storage Inc. for a net consideration of $3.6 million. Under the terms of the agreement, Adaptec will retain ownership of all iSCSI-based hardware and software products and assets, which will be rebranded and managed by Adaptec.
“The sale of the Snap Server business allows us to focus on strengthening our leadership position in the Unified Serial RAID controller business, leverage our iSCSI assets and continue to streamline the company’s operations,” said S. “Sundi” Sundaresh, president and chief executive officer, Adaptec Inc.
“With the acquisition of the Snap Server storage appliances, Overland is well positioned to extend our end-to-end data protection offerings while also meeting our customers’ and partners’ growing needs for best-of-class, distributed NAS appliances,” said Vern LoForti, president and chief executive officer, Overland Storage. “The award-winning Snap Server family complements our existing robust portfolio of disk-, tape- and SAN-based products to reinforce Overland’s strength as a global leader in the growing data protection market. At the same time we are thrilled at the creative talent pool that will be joining our existing team in strengthening a truly world class organization.”
Overland Storage will take over control of all existing Snap Server networked and desktop storage appliance assets including licenses, patents, existing product inventory and fixed assets and assume customer support obligations. Approximately 50 Adaptec employees will receive offers to join Overland Storage effective June 30, 2008. These employees will remain in the same facility in Milpitas, California which Overland is subleasing from Adaptec.
The press release of Overland Storage
Overland Acquires Adaptec’s Snap Server NAS Business To Further Extend the Reach of its End-to-End Data Protection Offerings
Top-Selling NAS Servers Will Enhance Overland’s Growth as the Premier Provider of Data Protection Solutions
Overland Storage, Inc. announced that it has acquired the Snap Server NAS business from Adaptec Inc., including the brand and all assets related to Snap Server networked and desktop storage appliances. The acquisition extends Overland’s vision, reach and strategy for delivering end-to-end data protection to its customers and partners with the addition of best-in-class NAS and replication solutions. The net purchase price was $3.6 million, with $2.1 million paid in cash upon closing of the transaction, and the remainder to be paid in 12 months.
The Snap Server product line broadens Overland’s capabilities by adding distributed NAS while also strengthening central and remote office data protection. Snap Server leads the NAS market with more than 200,000 units shipped. The acquisition will enable Overland to address the $1.2 billion SMB NAS market, which according to IDC continues to grow by at least 15 percent annually. The features and functions of the Snap Server product line position it well to target the three fastest growing market segments: distributed NAS, centralized data protection for remote sites and backup to disk.
This acquisition enables Overland to provide its customers and partners with much-needed NAS functionality that complements the company’s well established REO disk-based backup VTL, NEO and ARCvault tape automation products along with ULTAMUS RAID general-purpose SAN storage. The addition of the Snap Server business is important to Overland in a number of ways. First, it adds a best-in-class distributed NAS offering to the company’s product portfolio, helping Overland achieve its goal of providing ‘end-to-end data protection solutions’ to SMB customers and distributed enterprises. Second, the acquisition immediately adds approximately $18 million in annual revenue to the company’s run rate, which should provide Overland with the ability to leverage its existing sales force, marketing resources and infrastructure. Finally, the acquisition contributes a significant amount of proprietary intellectual property (IP), which should strengthen the company’s intrinsic value, along with a strong and cohesive development team to promote further growth of the Snap Server product line.
“We believe that the cross-pollination of existing Overland IP with the Snap Server IP will yield innovative features and products that will strengthen all our product offerings individually, as well as improve their interoperability,” said Vern LoForti, president and CEO of Overland Storage. “Snap Servers are pervasive in the marketplace and we intend to leverage this position to continue the Snap tradition of simple, reliable, easy-to-use appliances. We also plan to extend the Snap reach by exploring emerging market segments such as the ever-increasing demands for high-performance, cost-effective, scalable file-based storage to accommodate the rapid rise of video surveillance and video archiving applications. Although the acquisition initially will negatively impact our P&L, our goal is to make the Snap business cash-flow positive by the third quarter of our fiscal year ending June 30, 2009.”
“The sale of the Snap Server business allows us to focus on strengthening our leadership position in the Unified Serial RAID controller business, leverage our iSCSI assets and continue to streamline the company’s operations,” said S. “Sundi” Sandaresh, president and chief executive officer, Adaptec Inc. “We are extremely pleased to sell the Snap Server NAS business to Overland; its management team shares Adaptec’s commitment to product quality, technology development and customer service.”
Snap Servers featuring NAS functionality—specifically, Snap Server 650, Snap Server 520, Snap Server 410, Snap Server 210 and Snap Server 110—provide expandable capacity from 1TB to 88TBs with a combination of SATA and SAS drives. In addition to these products, Overland also acquired the proprietary Snap Server GuardianOS operating system and all licenses, patents, inventories and fixed assets relating to the Snap business. Overland will assume all Snap customer support obligations. Also, the Milpitas, Calif.-based Snap Server team of approximately 50 people will be joining Overland, including sales, marketing, engineering and support. All existing Snap Server customers will continue to receive full service and support.
Comments
Generally, when a company buys another one or the business unit of another one, there is one and only one common press release. Why two this time? Adaptec apparently wanted to let know that it is remaining in storage subsystem, selling its NAS line, but keeping its iSCSI products, as the two product lines have the same Snap brand name.
Overland acquired the worldwide number one NAS line, but the precision is important: in term of units shipped, 200,000. This good ranking can be explained by the fact that the Snap was historically one of the first NAS on the market, just ten years ago. In revenue, EMC and NetApp are now much bigger. Even in the SMB and CE markets, not including Dell or HP, we suspect that some Taiwanese companies are currently selling more products than Adaptec. This latter estimates that its biggest competitors are Buffalo, Iomega and LaCie at the low end, Dell, HP and NetApp in the mid range.
On its side, Overland hopes to add only $18 million in annual revenue with its acquisition.
For Adaptec, this Snap line was not profitable. Commenting on its FY08 financial results ending last March, the company wrote:" Net revenues from our SSG segment decreased by $5.9 million in fiscal 2007 as compared to fiscal 2006 primarily as a result of our reduced sales and marketing activities while the Snap Server portion of our systems business was available for sale, combined with customer concerns over the future of this product line."
But Overland hopes make it cash-flow positive by the end of June 2009.
Concerning the price to be paid by Overland, $3.6 million including $1.5 million to be paid 12 months after the completed transaction, it’s a bargain for a $18 million business, even if it is not profitable. Behind the Snap, there is a lot of technology and IP including the GuardianOS.
The first Snap was designed by a company called Meridian Data that was acquired by Quantum for $85 million in 1999. Quantum spins off its Snap NAS division in 2002 to sell it to a new company, Snap Appliance, for $12.7 million, in a deal managed by Eric Kelly, from Broadband Storage and former president of Maxtor network system group, who became CEO of Snap Appliance.
Eric L. Kelly, the guy behing Snap
In 2004, Adaptec snaps up Snap Appliance for $100 million, and Kelly became Adaptec's VP and GM of storage systems solutions. But, one year later, offers to sell it before deciding to keep it, apparently finding no acquirers. Until the arrival of Overland and few bucks…
For Overland, it’s finally a good way to add a file storage solution to its block-based SANs for its channel. But up to now, the old tape company was not really successful in disk business.
We know that Overland is working very hard to launch its own de-duplication technology based on the IP of a start-up named Tavata Software, acquired at the end of 2007 for $1.25 million, to replace the Diligent software currently used. We think that Tavata de-dup has more chance to save Overland than Snap. We already know a potential integrator, not the smallest one, French Bull, ready to handle the product, supposed to be called ‘Data Mover’, based on a 160-bit hashing algorithm (compared to 60 for Data Domain).
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