IBM in Talks to Buy Storwize for $140 Million

An Israeli start-up in primary de-dupe

By Jean Jacques Maleval | June 14, 2010 at 3:02 pm

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To read this article from the Israeli newspaper Haaretz, click on:
IBM is in talks to acquire Israeli data storage startup Storwize for $140 million.
The deal was expected to close by the end of July, a source involved in the deal told TheMarker.

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IBM was already in de-dupe since its acquisition of Diligent for around $200 million in 2008, but only to compress data for backup.

Storewize is in primary de-dupe with STN-2100 and STN-6000 series appliances providing online storage optimization through real-time data compression. The company said that compression ratio is in the 50%-90% range without changes in performance, storage, applications, networks, or processes. Its technology is based on Random Access Data Compression Engine (RACE) Architecture using Lempel-Zivv data compression, with three main benefits:

Random access/real-time
Deterministic
Lossless

RACE Architecture

Storewize, formerly Storwiz, was launched in 2004 in Israel where is based its R&D team, but the headquarters has been moved to San Jose, CA and then Marlborough, MA.

The first CEO was co-founder Gal Naor, now president, replaced as CEO by a great figure of the storage industry, Ed Walsh. He served as CEO at Avamar Technologies, a de-dupe start-up acquired by EMC in late 2006 for $165 million and then served as VP and GM of EMC's Information Management software group. Before joining Storwize, he was CEO of Virtual Iron, in the server virtualization space. Previous to Avamar, Walsh was senior VP, marketing and alliances for CNT, a company in storage networking directors bought by McData finally acquired by Brocade. Another well-known Storewize's executive is Steve Kenniston, VP of technology strategy who most recently served as key technology consultant to the CTO of EMC's storage software group.

If the deal is confirmed, it will be an useful acquisition for Big Blue that was not involved up to now in this critical primary online data reduction technology. De-dupe is pushing the storage market and consequently there was a lot of acquisitions in this field by big or small companies: Datacenter Technologies by Veritas (now Symantec), Rocksoft by ADIC (now Quantum), Tavata Software by Overland, Hifn by Exar, Avamar and Data Domain by EMC, Diligent by IBM, and Kadena Systems by Arkeia.

IBM and Storewize were already working together. Last February, they hosted a Webcast, NAS Costs with Real-time Data Compression, to discuss the compelling benefits of using real-time data compression to save disk space and reduce storage costs for NAS environments.

Storewize secures a total of $34 million in funding, including $9 million in 2007 and $19 million in 2008. Investors include Sequoia Capital, Bessemer Venture Partners, Tenaya Capital, Tamares Group and Tokyo Electron Device.

Last February, the start-up claimed hundreds of customers. Its technology partners include HDS, IBM, Isilon, Landmark/Halliburton, NetApp, Oracle and VMware.

It could be the third acquisition by IBM of an Israeli company after Diligent and XIV.

Former IBM's acquisitions of storage companies

1996 Tivoli (743 million) in software management
1999 Mylex (240) in RAID
2000 Mercury storage business (23.5) in file sharing software
2002 Trellisoft in storage resource management software
2004 Green Pasture Software in document management software
2004 Business continuity service of Schlumberger in recovery sites
2006 COMS Lab in software to monitor data on servers, storage and network applications
2006 FileNet (1,600) in content management software
2007 Softek (150?) in data migration software
2007 Princeton Softech in archiving and discovery

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