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EMC To Buy Xtremio?

 April 23, 2012 02:30 PM

(By Mani) EMC Corp. (NYSE:EMC) is in talks to acquire privately-held storage solution provider XtremIO for $400 million to $450 million, according to Israeli press. The press reports that senior executives of EMC have been in Israel holding advanced acquisition talks with the company.

XtremIO is an all-SSD array vendor and its target markets initially include database applications that require high-performance and low-latency and virtualization. Its arrays boast a number of features designed for SSD-media such as in-line de-duplication without any performance penalty and high read/write operations even when workloads are small-block random Input/Output.

Why the potential deal matters to EMC?

[Related -International Business Machines Corp. (IBM): Hardware Woes Weigh On IBM Results]

While nascent, the all-SSD storage array market has been heating up as SSD costs have come down while enterprise performance needs have increased.

"We believe XtremIO is one of the leaders from a technology perspective, and thus the acquisition would position EMC ahead of its traditional competitors in an increasingly important market," Oppenheimer analyst Ittai Kidron wrote in a note to clients.

Kidron noted that the potential acquisition, the first notable acquisition in the market, validates the all-SSD array space, and thus expect others such as NetApp (NASDAQ:NTAP), HP (NYSE:HPQ) and IBM (NYSE:IBM) to follow EMC into the space. Privately-held players in this area include WhipTail, Violin, Kaminario, Nutanix and Pure Storage.

[Related -Fusion-IO, Inc. (FIO): Can Fusion-IO Q2 Results Cheer Street?]

The potential acquisition reinforces that EMC will do what it takes to address technology shifts and stay ahead of competitors.

"While we believe near-term impact is negligible, it positions EMC well in a growing market and removes questions about its ability to address this technology shift," Kidron said.

EMC is a leading provider of information storage systems, security, software, servicesĀ and virtualization solutions to enterprises worldwide. In 2011, EMC generated $20 billion, up from $17 billion last year. Storage revenues rose 16 percent to $14.71 billion and accounted for about 74 percent of EMC's 2011 revenues.

XtremIO, if acquired, would be EMC's its first acquisition in the storage segment since it bought Isilon Systems in December 2010.

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