Microsoft Acquires Avere Systems

It’s not a surprise but a confirmation as we anticipated this move for quite some time listing Avere Systems as one of the file storage gem in the industry and perfect target for M&A.

The surprise resides in the fact that the company is acquired by Microsoft and not by Google who was an investor Avere. The amount of the transaction was not published. It’s not always the case, but generally it’s above the total amount of financial fundings.

History and milestones
Avere Systems was founded in 2008 by Ronald Bianchini, Michael Kazar and Dan Nydick, and raised $97 million in five rounds from Google, Menlo Ventures, Norwest Venture Partners, Lightspeed Venture Partners, Tenaya Capital and Western Digital Capital.

This adventure came after an exceptional story with Spinnaker Networks founded in 1999 by the same Bianchini and sold to NetApp in 2003 for $300 million in less than 4 years of life, representing a 75x multiple from the $4 million of revenue and a 6x multiple from the $50 million raised.

On the story side, Avere was launched during the network file virtualization (NFV) wave as a NAS optimization/acceleration and remember companies such Acopia (acquired by F5 Networks in 2007 for $210 million), Attune Systems (IP acquired by F5 Networks in 2009), AutoVirt (bankruptcy in 2012), Neopath Networks (acquired by Cisco in 2007), Nuview (acquired by Brocade in 2006 for $60 million) and Rainfinity (acquired by EMC in 2005 for $100 million).

Avere has understood very early that the NFV / Network File Management won’t grow. The second wave was the storage gateway game with Panzura, Nasuni, StorSimple (acquired by Microsoft in 2012 for $310 million), and TwinStrata (acquired by EMC in 2014). Avere, Panzura and Nasuni have continued to develop their own journey towards the hybrid cloud and Avere has even integrated the cloud in a way that the solution can run entirely in the cloud as a pure software instance. Avere can of course run on-prem with secondary storage also on–prem as file storage or object storage or in the cloud via a S3 connection.

Bianchini confirmed the cloud shift recently in the interview with StorageNewsletter.com in October 2017: “Our cloud business is growing in the high double digits and is set to eclipse revenue from NAS Optimization this year”.

In their respective  company’s blogs, Bianchini comments: “Avere and Microsoft both recognize that there are many ways for enterprises to leverage data center resources and the cloud. Our shared vision is to continue our focus on all of Avere’s use cases – in the datacenter, in the cloud and in hybrid cloud storage and cloud bursting environments. Tighter integration with Azure will result in a much more seamless experience for our customers.” And Jason Zander, corporate Vice VP, Microsoft Azure, on his side: “By bringing together Avere’s storage expertise with the power of Microsoft’s cloud, customers will benefit from industry-leading innovations that enable the largest, most complex high-performance workloads to run in Microsoft Azure.“

Microsoft motivations
Microsoft continues to aggressively target enterprise applications and recognizes the role of NFS in such environments. Having NFS running in Azure will facilitate transition and migration for on-prem applications towards Microsoft cloud.

Thus Microsoft has signed a recent partnership with NetApp to offer an enterprise NFS file service. It was announced during the NetApp Insight conference last October.

This is also an illustration of the superiority of file storage against object storage as the vast majority of applications speak file protocols.

Avere’s IP is one of the best in its category especially as they are recognized as NFS experts.

It confirms the Azure trajectory we saw in 2017 with plenty of partnerships and services announcements.

And finally to support this strategy who else could have been chosen by Microsoft? Nobody.

Competition and future reactions
How competition such AWS, GCP or other players far behind like IBM, Oracle or Alibaba Cloud will react to this move. A few other file storage companies such Elastifile, Qumulo or WekaIO have to be followed in the coming months.

Read also:
Avere FXT Edge Filer 5850 With Double Performance, Capacity and Network Bandwidth
$211,500, including complete set of software functionality
2017.12.20 | Press Release
Exclusive Interview With Ronald Bianchini, CEO and Co-Founder, Avere Systems
“Our cloud business is growing in high double digits and set to eclipse revenue from NAS Optimization this year”
by Philippe Nicolas | 2017.10.10 | News