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Pivot3 buys NexGen, combines hyper-converged with all-flash storage

Hyper-converged vendor Pivot3 today acquired hybrid flash vendor NexGen Storage, combining small private companies that play in two hot technology areas.

NexGen CEO and founder John Spiers said the deal “came about serendipitously” at the suggestion of a venture capitalist firm. While working on a funding round, NexGen talked to one of Pivot3’s investors who suggested the two explore a merger. Spiers met with Pivot3 CEO Ron Nash and the two agreed they would be better as a larger company. The vendors’ investors decided how to allot the shares in the new company.

 “It’s really a stock swap, there’s no real purchase price,” Nash said.

Nash will be CEO of the new Pivot3. Spiers will become Pivot3’s executive vice president and Chief Strategy Officer and fellow NexGen founder Kelly Long will be a CTO in the company. Nash said all NexGen’s employees will join Pivot3.

 Pivot3 sells its VMware-based vStac OS on all-flash and hybrid hyper-converged systems combining storage and compute. It also sells a system optimized for video surveillance and high-density blades that fit in a rack to support up to 9,000 virtual machines.

NexGen sells all-flash and hybrid arrays that use PCIe server-based flash, solid-state drives and hard disk drives. Its policy-based quality of service manages data based on its value.

“We saw in NexGen a unique opportunity to expand upon what we have been doing in hyper-convergence,” Nash said. “We saw that we can be boarder in terms of the range of performance we can offer to IT shops. And they have a lot of storage functionality that makes us deeper.

“NexGen gets to combine with us, we have more international reach and additional products. It’s a great combination all around.”

 Nash said NexGen’s 86 employees will join Pivot3’s 130 to expand the headcount to more than 200. He said Pivot3 has more than 1,600 customers and NexGen has around 400, giving the combined company more than 2,000 customers. Austin, Texas-based Pivot3 will keep NexGen’s Boulder, Colorado, office.

Nash said Pivot3 will continue to sell both companies’ current products, and they will port software features to the others’ platforms. The NexGen brand will continue for now, but there will be new products combining both vendors’ technologies.

Among NexGen’s software features, Nash said Pivot3 is most interested in quality of service and dynamic provisioning.

 “There is a new wave of technology breaking out,” Nash said. “In a software-defined data center, you will have some hyper-converged, some storage-only and some cloud products – all based on a commodity x86 processor with software on top of it.”

This is the second time NexGen has been acquired. PCIe flash vendor Fusion-io bought NexGen in 2013 for $119 million. After SanDisk subsequently acquired Fusion-io, SanDisk spun off NexGen in January, 2015, putting it back in control of original founders Spiers and Long.

“We weren’t a good it for SanDisk’s business strategy because we competed with their OEMs,” Spiers said. “Our growth plans [for 2016] were to triple the size of our sales force, hire key marking positions and add key people in Europe and Asia. Pivot3 brings all that to the table.”

“We think this new wave of technology is going to knock out several incumbent IT companies,” Nash said. “We think we have a chance to be one company that pops up to replace them.”