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Hitachi GST gets into consumer storage; Hifn bought by Exar

Hitachi will acquire Fabrik Inc., a consumer storage systems manufacturer; chipmaker Exar picks up storage connectivity vendor Hifn.

Hitachi Global Storage Technologies (Hitachi GST) this week revealed its intention to acquire Fabrik Inc., which makes G-Technology external hard drive systems for Macintosh computers and SimpleTech systems for PCs.

Hitachi GST did not disclose financial terms when it announced the Fabrik deal Monday. In another deal Monday, chipmaker Exar Corp. said it would acquire storage connectivity vendor Hifn Inc. in a mixed cash and stock transaction valued at approximately $60 million. Both acquisitions are expected to close in the second quarter.

Hitachi GST makes another run at consumer storage

Hitachi GST tried to develop a consumer storage system business alongside its hard drive manufacturing division in 2007, but the attempt "didn't really take off that well," according to Brendan Collins, vice president of product marketing.

Hard drive competitors Seagate Technology LLC and Western Digital Corp., and other storage players such as EMC Corp., have also taken an acquisition route to building out consumer storage products and channels. Seagate acquired external hard drive maker Maxtor Corp. in 2005. EMC competes in this space with hard drives it bought with Iomega Corp. last year, Retrospect local backup software it acquired with Dantz Development Corp. in 2004, and with Mozy Online Backup it acquired with Berkeley Data Systems Inc. in 2007.

Fabrik rebrands Mozy as Fabrik Ultimate Backup, and sells it as an option with SimpleTech systems. As with the direct Mozy offerings, Fabrik gives users 2 GB free and charges $4.95 per month for unlimited online backups. Fabrik has also partnered with ArcSoft Inc. for local backup software, making it competitive with EMC's Iomega and Retrospect. G-Technology customers have the option of directly dragging and dropping files onto the external devices or using Apple's Mac software. G-Technology drives come formatted for the Mac.

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Hitachi GST will run Fabrik as a standalone business unit, and expects Fabrik's partnerships to continue even if Fabrik partners might compete with Hitachi's external disk storage partners.

Brian Babineau, a senior analyst at Milford, Mass.-based Enterprise Strategy Group, said these types of relationships among storage vendors are growing more commonplace as disk drive makers expand offerings to include some external systems.

"There's a new class of products emerging," he said. "You're starting to see a blend of enterprise functionality, simplified and masked, as well as redundancy built in."

EMC/Iomega has already begun to take this kind of offering upmarket with the release of a 4 TB version of its StorCenter NAS boxes and the announcement of their certification with VMware this month.

"What's interesting about these deals is to see how the simplified consumer solutions can then move upmarket," Babineau said.

Framingham, Mass.-based IDC expects worldwide personal storage device shipments to grow from approximately 52 million in 2008 to 123 million in 2012. "Hitachi is one of the last remaining hard drive manufacturers without its own branded external solution," said Wolfgang Schlichting, IDC's research director for removable storage. "They have to be careful not to upset their traditional client base, but that's also the case with the other hard drive manufacturers."

Exar acquires Hifn for hardware-based deduplication and encryption

As hard drives and consumer storage systems and software begin to converge in one area of the market, Exar CEO Pete Rodriguez said he sees networking, telecom and storage connectivity converging in another. That's why his company wants to gobble up Hifn, which sells boards that enable capabilities such as deduplication and encryption.

Rodriguez said Exar snapped up Hifn for "deduplication, which we expect to be a fast growing storage market and where we plan on providing market leading solutions" and security.

When it comes to security, Rodriguez said it's "an area where [Hifn] had the capability but didn't really have the ability to go to market with it," referring to a NIC Hifn recently announced with built-in compression and encryption. Hifn's approach involved some latency, which Rodriguez said Exar's IP could overcome.

Hifn's major customers include Brocade, Cisco Systems Inc., EMC, Hewlett Packard Co., Huawei Technologies Co. Ltd., NetApp and Quantum Corp. Exar and Hifn also share common customers among large telecoms.

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