Pillar Data Storage
Pillar has struggled to achieve any impact in the commodity-based virtualized arrays marketplace, despite $150 million in investments from Larry Ellison through his venture capital firm Tako Ventures and more than $500M in investments overall. Other similar virtualized storage ventures have found homes in or become leading storage vendors:
- Equallogic - acquired by Dell in 2008 for $1.4 billion;
- XIV - acquired by IBM in 2008 for $300 million;
- Lefthand Networks - acquired by HP for $360 million in 2008;
- 3PAR - acquired by HP in 2010 for $2.35 billion;
- Compellent - acquired by Dell in 2011 for $960 million;
- NetApp - grew it's market cap from $5 billion in 2008 to $18 billion in 2011 based a single virtualized WAFL-based array product line.
IBM's SVC and Hitachi's VSP complete the list of virtualized storage technologies that have become mainstream.
Oracle/Sun Storage
When Oracle acquired Sun it also acquired the remnants of the StorageTek's 1994 IP to the industry's first virtual disk array, named Iceberg. This product provided the disk industry with the first implementation of virtualization with log structured files, data compression, RAID 6+ architecture and thin provisioning. However, Iceberg was not built on commodity hardware and is of no value to help improve the functionality of Sun's storage base.
Oracle/Sun storage needs a storage virtualization technology, as it is far easier to add additional technologies when the physical and logical views of storage are separated. All the virtualized storage vendors above were able to introduce new functionality at a blistering rate and have required the few companies such as EMC that do not have a virtualized architecture underpinning to invest much higher development costs and longer development cycles to develop the same functionality.
Oracle now has the runt of the litter, Pillar, which serves about 600 customers across 24 countries, with an estimated revenue just north of $50 million. The good news for Oracle is that the transaction is structured as a 100 percent earn-out with no up-front payment. There are 350 employees, which will be rapidly reduced.
Conclusions
Overall Wikibon believes that this is a potentially a good deal for Oracle/Sun, but will require that the existing Sun storage management understand and acknowledge how far behind they are in functionality compared with the virtualized storage vendors. Given the poor business track record of Pillar, there will be no way they can elevate their executive team to be in charge of Sun's storage portfolio (as HP have done with the 3PAR acquisition). This heralds an extremely difficult integration process with a requirement for new blood.
Action Item: Senior storage executives should conclude that this is potentially a good deal for Sun/Oracle, and may help to improve the functionality of Sun's storage portfolio. However, it will require a highly focused integration plan and new blood to be successful. It is a harbinger of how the investment in Mellanox may turn out, to Oracle's advantage in networking and InfiniBand.
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