EMC Buys Startup ScaleIO for Flash Storage Software Portfolio

EMC (EMC) plans to acquire ScaleIO, a privately held Israeli startup specializing in server-based storage software. EMC said the acquisition underscores its strategy to offer flash technology across the entire server and storage infrastructure.

Neither party disclosed terms of the transaction other than to say it is an all-cash deal that EMC does not expect will have a material impact on its earnings for the full 2013 fiscal year. ZDNet reported that Calcalist, an Israeli business website, estimated the deal could be valued at upwards of $300 million. In May, 2012, EMC paid $430 million for flash storage maker XtremeIO, another Israeli-based startup.

EMC said the acquisition will flesh out its flash portfolio by combining ScaleIO's scalable server software with PCIe Flash cards, such as EMC XtremSF, in enterprise private cloud and service provider environments. ScaleIO's software-only framework creates a virtual pool of server-based storage by connecting and combining resources from solid-state drives, PCIe flash cards and traditional hard drives.

ScaleIO will be folded into EMC’s flash product division and its Elastic Converged Storage (ECS) software will become an integral part of the EMC XtremSW, a suite EMC rolled out earlier this year to help customers capitalize on and manage server-based PCIe flash storage.

“ScaleIO is a natural extension to our best-of-breed portfolio,” said David Goulden, EMC president and chief operating officer. “It strengthens our product capabilities in the area of server-side storage and brings a world-class team that will undoubtedly enable us to innovate more quickly in the future.”

ScaleIO was founded by Boaz Palgi, Erez Webman, Lior Bahat, Eran Borovik and Erez Ungar, who have worked together in the data storage industry for about 15 years and whose backgrounds include stints at IBM (IBM), LSI (LSI), NetApp (NTAP), Topio and XtremeIO. Palgi, who serves as the company’s chief executive, and Webman, who is its chief technology officer, are its only two board members.

EMC didn’t specify what roles the ScaleIO execs will play within its flash product division.

In an open letter to ScaleIO’s customers and partners, Palgi wrote, “Working together with the professionals at EMC, and leveraging EMC’s best-of-breed technology, will enable us to deliver customers reliable, elastic, high-performance server-based storage solutions, today.”

ScaleIO emerged from stealth mode last December with details about its elastic converged storage software (ECS) and its funding. The company said it was backed by $12 million in funding from Greylock, Norwest Venture and private investors, and that its customer lineup included SAP (SAP), Checkpoint Software (CHKP) and Aer Lingus.