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New player enters the low-cost SAN game

Six months ago, Applied Micro Circuits was a maker of silicon processors only. But now, two storage acquisitions later, the company is a full-fledged player in the Fibre Channel SAN market.

In an effort to enter the low-cost SAN market, silicon specialist Applied Micro Circuits Corp. (AMCC) has signed a deal to acquire 3Ware Inc., and its line of serial ATA-based RAID products, for about $150 million.

It's a simple equation. San Diego-based AMCC plans to marry 3Ware's serial ATA (SATA) RAID controllers with Fibre Channel host bus adapters (HBAs), which AMCC acquired from JNI Corp. in September. The result: a low-cost, SAN-attached SATA storage array.

"They want to be in the storage business and have acquired products to that end," said Randy Kerns, a senior partner with the Evaluator Group Inc., Greenwood Village, Colo. "The HBA business has been good, and the serial ATA business is looking like a great opportunity with high growth. AMCC is definitely in the storage business now."

AMCC's business was restricted to making silicon processors for wide area networks (WANs) -- until it set its sights on networked storage and acquired JNI.

"Since we acquired JNI, we have been very vocal about our desire to expand our storage networking, or SAN business, in complementary areas," said AMCC chairman and CEO Dave Rickey during a conference call Tuesday. "Our existing business complements our HBA strategy, while [3Ware] extends us into direct-attached and network-attached storage."

3Ware employs about 70 people, the majority of whom work in the company's Sunnyvale, Calif. headquarters. The 3ware team, including president and CEO Faye Pairman, will report to Brent Little, AMCC's senior vice president and SAN general manager, as part of AMCC's global SAN business.

"Combining with AMCC will enable us to accelerate our complementary product road maps and [penetrate] into higher-end storage applications," Pairman said. However, AMCC has some decisions to make about integrating 3Ware's manufacturing operations, Pairman said: "Our manufacturing today is outsourced, and I think, as we merge the two companies, that will be reconsidered, along with the JNI board manufacturing capabilities."

AMCC expects the acquisition to be complete around April 1.


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