March 09, 2011, 9:31 PM — NetApp announced today that it has entered into an agreement to purchase Engenio, a maker of external high-performance storage arrays targeted at storing data from high-bandwidth applications such as video processing.
NetApp expects to pay $480 million in an all-cash deal for Engenio, which is a subsidiary of LSI Corp.
NetApp CEO Tom Georgens said in a conference call that Engenio gives NetApp a foothold in emerging and fast-growing market segments such as video, including full-motion video capture and digital video surveillance. It also serves high-performance computing applications, such as genomics sequencing and scientific research.
Emphasizing little overlap with the product portfolio, Georgens said the video processing and high-performance computing markets are ones that NetApp cannot currently serve with its Fabric-Attached Storage line of products and Data ONTAP operating system.
NetApp's current line of storage arrays are focused on capturing and serving up data to traditional enterprise server applications, such as transactional databases, financial and ERP systems, as well as unstructured data such as e-mail.
"We're not looking for an asset to be a holding company. It has to have some relation to our core business. It needs to be something our existing channels can sell or will enable us to sell more of our core products into," Georgens said. "I think this adds new capabilities to our company without duplicating functionality."
Based in Milpitas, Calif., 10-year-old Engenio has about 900 employees. The company sells no-frills modular, high-performance serial SCSI (SAS) and Fibre Channel-attached storage arrays.
Its arrays do not offer deduplication, thin provisioning and some other enterprise-class functionality that NetApp's arrays offer.
Engenio's arrays include solid state drives (SSD), Fibre Channel drives and serial ATA (SATA) drives with transfer speeds as great as 8Gbit/sec via Fibre Channel, or 1Gbit/sec via iSCSI host cards.
The arrays expand from as many as 16 in a 3U (5.25-in high) to as many as 112 using six additional expansion drive enclosures.
Engenio took in about $705 million in revenue last year. The company also has a deep reseller base that includes giants IBM, SGI, StorageTek, Cray and Teradata.
That reseller base was also key to NetApp's purchase of the company, giving it an opportunity to expand into more channels that they otherwise could not have entered into, Georgens said.
Georgens said the digital video surveillance, movie-making and high-performance computing markets will represent a $5 billion incremental market opportunity by 2014.