Mergers and Acquisitions: Isilon eaten by EMC

Yes, its old news now … announced Tuesday morning, and this is Saturday. Isilon, a maker of scale out NAS units (which hadn’t been spectactularly profitable … they had some issues in the recent past) has growing business in Bio-IT and other areas. They are a player in HPC storage for clusters.
EMC hasn’t really been a player in HPC for a while. In the past, some groups have tried to use EMC as the storage provider for HPC, but the economics and performance aren’t a good fit for most of their product line. Not specific to EMC, but you can always tell when an IT shop designs an HPC solution, versus and HPC expertise shop. The storage and computing platforms look very different between the two cases.
Now EMC went ahead and bought Isilon. So they are now in HPC.

In general I expect more M&A … much more M&A … going forward. Smaller companies with real businesses, real customers, real value, will likely be snapped up by larger companies. Not all of them though. Companies whom are on their 8th or 9th tranche of VC funding are in for a world of hurt.
If EMC next goes after a server builder, and then a switch builder, I’d expect to start hearing about “unified computing” from them (they are currently in Cisco’s orbit). Acquiring Isilion allows EMC to realign its core business in the direction the business is moving anyway (large data, big scale out NAS, …) without completely cratering its block RAID business.
EMC owns the premier virtualization company (VMware), and now Isilon. Whats next? With a few more acquisitions of moderate size, they could be a strong unified computing force in HPC and cloud among others. Arista Networks? Maybe SuperMicro? Who knows.
Dell’s been trying to get a storage and networking company for a while. Their 3par bid was derailed by HP (though this may be naive, as I suspect that 3par wanted HP to bid higher, and found another suitor, then played the game well). Isilon could have been a good fit. Panasas and Bluearc wouldn’t be good directions for them. Terascala makes GUIs, not storage, and its not applicable beyond a very narrow bound.
I do see Arista and a few others likely to be grabbed next. Solarflare maybe? Chelsio? Voltaire? Storage side would be harder, there aren’t too many left to be worth grabbing. Maybe some flash vendors? Fusion-IO?
We are seem to be living in exciting times … M&A wise, and I think we will be seeing more.

3 thoughts on “Mergers and Acquisitions: Isilon eaten by EMC”

  1. Joe,
    Where do Panasas and BlueArc fit and why wouldn’t they be a good fit for Dell?

  2. @Jeff
    Both companies are serving narrow niches, and doing so far less efficiently from a cost perspective than Dell usually needs. BlueArc is extremely expensive kit. Panasas just got 10GbE, but its pricing model is out of line with where the market is heading.
    Here’s my free advice on it (feel free to pass it along to Tim and others if you think it makes sense)
    DDN would be a good fit. They use the same LSI hardware that most everyone else uses in this space. They have utility in the medium-large space, less so in the smaller space. They are in use by the majors for a number of markets, and can open up new revenue paths for Dell. Likewise, Dell could pull DDN in to places where it isn’t now. Would be quite complementary. Neither Panasas nor BlueArc can really do this for Dell.
    If I were advising Dell, it would be to snag a storage cluster player or two, so you can scale down, up, sideways. This still isn’t Panasas (unless you can get em for a few $M at most).

  3. Joe,
    Thanks for the comments! I haven’t really thought about either company too much (or any others – too busy to step back 🙂 ).

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