September 07, 2011

HDS Acquires Network Storage Player BlueArc

This morning, Hitachi Data Systems, a subsidiary of Japan's Hitachi Global, announced the acquisition of network storage provider BlueArc, one of the last independent storage startups that survived the economic turndown of the previous decade. The deal, an all cash transaction, closes a chapter in my own work history, for as many of you know, I spent 8 1/2 years at the startup on the marketing side, from our initial first customer shipments back in early 2001, through being a key part of the team that readied the company for its first attempt to enter the public markets, back in 2007. We eventually withdrew in 2008, before the new team, after I had left in 2009, filed again earlier this summer.

For those who watch the storage networking market closely, with the most popular term being "Big Data" these days, BlueArc's relationship with HDS seemed like it had a high chance to become a marriage for a number of years. After signing a reseller contract that made BlueArc's high end network storage products available to HDS' sales people, rumors about a potential acquisition were printed as far back as 2006. So it took a little while, but appears the two companies were able to work something out - a year after some of the biggest deals in the space were consummated, as EMC purchased Isilon for $2.25 billion in November of 2010 and HP acquired 3Par for $2.35 billion in September of 2010. In December of 2010, Dell purchased Compellent for just under a billion dollars, three years after buying Equallogic for $1.4 billion. All solid proofpoints for why I wrote in August of last year that there are big dollars in big data.

That said, BlueArc's road to this exit has been a long one. The company launched with its differentiation being marked by speed and scale, the source being its hardware-centric model, when competitors focused on software-based solutions or turned to clustering to achieve scale and power. Hardware generations were launched every 18 months or so, with software updates in between.

BlueArc's modular network storage system, Titan, announced in 2004.

I joined BlueArc in January of 2001 at an interesting point in the dot com boom and bust. Revenue-light dot coms and Web services were falling apart, and a flight to hardware seemed more stable. BlueArc had an incredible roster of respected industry players, and promised technology that was well above competition. Sitting as part of the marketing team as the initial waves of press lauded our innovation was exciting, and people were flocking to know more. It was the very definition of a hype cycle, as product maturation had yet to occur, and it took a few product generations and tweaks of customer messaging to really get the formula predictable. As you can imagine, through 8+ years at a single startup in the Valley, we had our fair share of bumps and turnover, mixed with good news. Crunchbase shows an accurate listing of our funding rounds and while the process was difficult at times, and other companies had seemingly simpler routes to success, many more failed during the time I was there. Simply holding firm, I saw former colleagues update their LinkedIn 2, 3, or 4 times.

The partnership with HDS, signed in late 2006, signaled a change in strategy for the company that made BlueArc's products available for resale, and gave the company multiple paths to revenue - including a much deeper sales force. In a world where IT managers were typically conservative, and often looked as much at a company's viability as to the products themselves, having HDS on board, or even leading the sales march, helped ease some of those fears, especially at the largest named customers. Meanwhile, I focused on improving our messaging for new markets and announcing our direct wins and customer highlights.

Having left the company two years ago myself, I've been removed to some of the most-recent progress, and saw many former colleagues follow suit while others stayed. The company didn't ever go public, though they filed twice, but they were a storage survivor.

Disclosures: I am a common stock shareholder at BlueArc, due to my years employment there.

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