NetApp Inc. has acquired NAS acceleration vendor CacheIQ Inc. with an eye toward integrating the startup's technology...
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into its FAS unified storage arrays. NetApp disclosed the deal -- but not the price -- in its quarterly earnings release Wednesday.
CacheIQ came out of stealth a year ago with a RapidCache appliance that puts active files into dynamic RAM (DRAM) or flash memory to speed performance. It competes with network-attached storage (NAS) caching devices from Avere Systems Inc. and Alacritech.
Many customers of NAS acceleration devices use them to speed NetApp arrays, but NetApp CEO Tom Georgens said NetApp will not sell the RapidCache product. He said that NetApp bought CacheIQ for its intellectual property and engineering.
"You should think about CacheIQ as more of a technology tuck-in," Georgens said during the earnings call. "We've got a talented, proven engineering team, and we have some interesting technology that we want to integrate. As far as a stand-alone product, our primary focus is integration to our broader IP set."
Georgens said he expects more tuck-in acquisitions from NetApp, and fewer large deals for products it can add to its portfolio. "As we get bigger, you'll continue to see us do technology-tuck-in-type acquisitions and things to … integrate with our core technology," he said. "I think those will slightly increase, simply because of our size."
Of larger deals, Georgens said, "I would expect those to be opportunistic, and they could happen or not happen. And I wouldn't put any frequency number on it, nor would I assume that our strategy has changed if we don't do one once in a while."
NetApp hit expectations last quarter with its revenue of $1.54 billion, unlike rival EMC Corp., which came in below expectations last quarter. But NetApp's growth wasn't much better than EMC's. NetApp revenue was up 2% year-over-year and 7% from the previous quarter, compared to EMC's storage product increase of 3% year-over-year and a 1% decrease from the previous quarter.
NetApp's product revenue declined 2% from last year, and its OEM revenue (mostly from its E-Series product line) dropped 9%. However, sales of its FlexPod reference architecture with partner Cisco Systems Inc. remained strong. Georgens said NetApp has more than 1,500 FlexPod customers -- four times as many as a year ago. FlexPod consists of FAS arrays with Cisco servers and networking and other partners' software.
Georgens said he expects the NetApp-Cisco relationship to strengthen at a time when EMC's relationship with Cisco is being tested following EMC-owned VMware Inc.'s acquisition of Cisco rival Nicira Networks Inc. EMC CEO Joe Tucci and Cisco CEO John Chambers have described the EMC-Cisco relationship as "strained," although both emphasize they still consider their partnership important. Chambers did say during Cisco's earnings call this week that NetApp is a company Cisco expects to get closer to.
NetApp has no competitive issues with Cisco to hinder the partnership, Georgens said. "Cisco and NetApp are more aligned on technology around storage than some of the other players," he said. "I think we clearly see Ethernet-based storage as one of our core competencies. The same with Cisco. I think our focus and domain is not overlapping with Cisco's strategic intent, so I think the likelihood of conflict is lower. Therefore, I think there's more sustainability in the relationship."