IBM Corp., Armonk, N.Y., has cashed in its RAID controller chips by selling off its Mylex business unit to storage systems maker LSI Logic Corp.
Milpitas, Calif.-based LSI announced the acquisition Tuesday, and described the deal as a catalyst for its plans in the entry-level storage systems space and the PCI-RAID market.
The cash transaction will add Mylex business unit's RAID (Redundant Array of Independent Disks) controllers, subsystems, hardware and software technologies to LSI's respective Storage Systems and Storage Components Groups.
Evaluator Group Inc., senior analyst Randy Kerns said the deal bodes well for LSI.
"There's no product overlap so [LSI gets] complementary products that serve the workgroup and departmental level," he said. "They can now offer broader market coverage to their customers."
Kerns said Mylex never found its niche in the IBM culture.
"Mylex didn't really fit well within IBM because [original equipment manufacturing] wasn't IBM's business model. IBM has gotten rid of something non-strategic to them," said Kerns.
In addition to the talent pool and technology, LSI is salivating over access to Mylex sales channels and a customer base that includes IBM, NEC, Fujitsu-Siemens, Xyratex and Eurologic.
Flavio Santoni, vice president of sales and marketing for LSI Logic said the personnel outweigh the product line in this acquisition. He said LSI plans to use the resources of the Mylex engineering team, which numbers more than 100, to develop its entry-level product line.
"We have a number of entry level initiatives we are looking at," said Santoni. "Also, we wanted to accelerate some of our internal technology development programs. Our focus was really not on the product. Our focus was on the talent."
Santoni said that LSI will examine its products and its personnel once the deal is complete in order to streamline its overall operation.
Santoni said the financial terms of the acquisition could be announced as early as the end of the third quarter of this year.
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