EMC Acquiring ScaleIO In Software-Defined Storage Play: Reports

EMC has either acquired or is in the final stages of acquiring storage software startup ScaleIO, a move that could help further define EMC's software-defined storage strategy and help disrupt the way businesses purchase storage.

As first reported Wednesday by the Israel-based Geektime blog, EMC has already acquired Israel-based ScaleIO for between $200 million and $300 million.

However, the Israel-based online publication Globes reported that the deal has yet to be finalized. Globes has broken news about several acquisitions involving Israeli startups including EMC's acquisition of flash storage startup XtremIO and Dell's acquisition of clustered NAS developer Exanet.

[Related: Software-Defined Storage: Separating The Reality From The Hype ]

ScaleIO in December came out of stealth mode with its Elastic Converged Storage (ECS) technology it said eliminates the need for a SAN by tying together the storage capacity of multiple servers.

The storage startup at that time also disclosed an initial round of investment in the company of $12 million from a number of institutional and private investors, including funding from Frank Slootman, CEO of ServiceNow and the former CEO of Data Domain, now a part of EMC.

ScaleIO's ECS technology builds a scalable file system from thousands of existing and newly purchased servers. This allows a company to have a scalable storage architecture without the need for specialized storage administrators and without adding to the workload of existing server administrators, the company claims.

ScaleIO's technology is actually part of the nascent software-defined storage industry where much of the functionality of storage arrays are packaged in software that can either run on industry-standard servers or overlay existing storage gear.

EMC in March outlined its software-defined storage strategy, and in May followed up with the introduction of its ViPR software-defined storage platform.

An acquisition of ScaleIO by EMC, which is most likely in the works, is a big software-defined storage play for EMC, said Jamie Shepard, regional vice president at Lumenate, a Dallas-based solution provider and EMC partner.

ScaleIO, like a few other startups, is about software-defined storage and the idea of scaling storage with no SAN, Shepard said.

"Buy off-the-shelf servers, add Fusion-io or other flash, and add the software," he said. "They allow customers to easily add more capacity while getting more compute power. There's no more need for a SAN. This is the future of storage."

NEXT: No Surprise EMC Might Acquire ScaleIO

Lumenate's Shepard said he would not be surprised to see EMC pick up a storage startup like ScaleIO given that EMC has acquired a number of Israeli startups, some of which were founded by companies previously acquired by EMC.

For instance, Shepard said, Erez Webman, founder and CTO of ScaleIO, was previously the chief architect at XtremIO. One of the investors in ScaleIO, Frank Slootman, was president and CEO of Data Domain, which EMC acquired in 2009. And Shuki Bruck, co-founder and chairman of XtremIO, also served as co-founder and chairman of Rainfinity, which EMC acquired in 2005.

Shepard also said he would not be surprised if EMC takes its time announcing the ScaleIO acquisition.

"Unlike other vendors, EMC won't come out and just say, 'We bought ScaleIO,'" he said. "Customers will wonder what's going on. It could disrupt existing sales. EMC plans these things out before hitting the market. They're real good about talking about where an acquisition fits, what it means to the customer."

EMC so far is declining to talk about whether it has acquired ScaleIO, with an EMC spokesperson citing a standing company policy to decline commenting on "rumor and speculation."

ScaleIO did not respond to requests for further information publication time.

Aaron Rakers, an analyst with Stifel Nicolaus Equity Research, wrote in a Thursday research note that an acquisition of ScaleIO by EMC could have a widespread impact on that company's strategies.

"We believe this acquisition leaves investors left to further gauge EMC's software-defined strategy and thus another move to position itself against the evolution toward open source solutions, public cloud providers and other software vendors push into software-defined storage," Rakers wrote.

PUBLISHED JUNE 20, 2013