Rumor Confirmed: WD Acquires Arkeia

Getting backup software and appliances for SMBs

This is a Press Release edited by StorageNewsletter.com on January 22, 2013 at 2:54 pm

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WD, a Western Digital company, announced an expansion of its product portfolio addressing SMBs with the addition of network backup software and appliances from Arkeia Software, Inc., a privately-held data protection company based in Carlsbad, CA, recently acquired by WD.

WD also announced that the Arkeia Network Backup version 10.0 software, for which a release candidate was delivered in Dec. 2012, becomes generally available today.

"Arkeia’s products expand WD’s growing product portfolio of solutions for small- and medium-sized businesses," said Jim Welsh, EVP and GM of WD’s Branded and CE products. "SMB organizations are managing ever-growing volumes of critical business data, which need to be stored, shared and secured. Our easy-to-manage small storage server, WD Sentinel DX4000, provides backup and storage centralization capabilities for small businesses and workgroups, while Arkeia’s network backup software provides a more feature-rich data-protection solution for larger SMB customers."

Arkeia’s software, appliances and virtual appliances backup data to disk, tape and cloud storage. The company’s patented Progressive Deduplication technology speeds hybrid-cloud backup by reducing the bandwidth necessary to replicate backup sets over wide area networks. Arkeia sells its products worldwide through resellers and managed service providers.

The acquisition was completed through a merger transaction, encompassing all of the employees, technology and products of Arkeia. Arkeia will be integrated into WD’s Branded Products SMB unit and the products initially will retain the Arkeia name. WD will support all Arkeia customers on current maintenance and plans to retain both Arkeia’s software and appliance product lines. Financial terms of the transaction were not disclosed.

"Joining WD gives the Arkeia team a great opportunity to accelerate adoption of Arkeia’s innovative technologies and products," said Bill Evans, senior director of WW software marketing at WD and former CEO of Arkeia. "The Arkeia team is delighted to be a part of WD. WD has chosen an ideal moment to invest in this critical product category as backup-to-disk solutions accelerate their displacement of backup-to-tape. WD’s financial strength, engineering excellence and organizational discipline will take Arkeia’s products and customers to the next level."

Arkeia Network Backup v10.0 General Availability
It enables hybrid cloud backups by allowing administrators to combine physical media and Internet transport to replicate backup sets to or from remote cloud storage. Leveraging Arkeia’s advanced Progressive Deduplication technology, Arkeia Network Backup v10.0 permits SMB organizations to protect large data volumes in the cloud without incurring high monthly bandwidth charges. By allowing large backup sets to be moved on physical media and small backup sets to be sent over the wire, Arkeia makes it practical to replicate backup sets from a LAN to remote cloud storage for an inexpensive, tape-free alternative to off-site backup and recovery.

Comments

For the first time, WD will sell independently storage software following this acquisition of Arkeia recently rumored.

It's the third deal of WD in software after ViaNetix in 1987 (see below) and MioNet in 2007.

WD has already a software team for its external storage products but with software embedded with hardware, not sold separately. In the basket, WD also get a key technology it was missing, de-dupe, that Arkeia got with the acquisition of Kadena Systems in 2009.

What's going to do WD with Arkeia's backup software and appliances for SMBs. The two companies were in contact since last summer to offer a solution based on WD Sentinel 400 NAS. Finally the HDD maker preferred to buy Arkeia rather than licensing its software with already an agent available for this NAS. Their relationship is not recent: about all HDDs used into Arkeia's appliances came from WD.

This move can be compared with the acquisition by WD's rival Seagate of Evault in 2006 for $186 million, more in cloud backup but also with an appliance. But the price for all the outstanding shares of Arkeia with its existing cash was much lower - less than $100 million - and will not affect WD's financial results.

Arkeia was at the origin a French software developer to backup Linux platforms, with a commercial version but also a free one continuing to be available and downloaded by "hundreds millions" of people, according to Arkeia's GM Frédéric Renard becoming EMEA senior director of software marketing at WD in its branded SMB business unit, headed by VP and GM Tom Gallivan. Arkeia CEO Bill Evans will now report to Gallivan as well as the 27 to 29 people of Arkeia with HQs in Carlsbad, CA, and offices in Los Gatos, CA and Paris, not far from WD's locations. The disk manufacturer will continue to use the branded name Arkeia for the backup software, currently sold directly and through a network of distributors, VARs and system integrators.

Renard said that Arkeia was profitable last year with a two-figure growth, with around 50% of its revenue in USA, the biggest markets being France (30%) and Germany, increasing more than 100%. Main competitors are Symantec (Backup Exec), Atempo and Synerway. Add also Acronis and Barracuda Networks in USA. It doesn't include a bunch of other backup software and appliances' firms in the world.

Sheppard Mullin Richter & Hampton LLP acted as outside legal counsel to WD, Farallon Law Group LLP to Arkeia. AGC Partners served as financial advisor to Arkeia.

We found a total of $10 million in two financial funding rounds in 2004 and 2007 for Arkeia.

We follow this French-born company since many years. Arkeia was created in 1996 and put on the market in 1999 one of the first Linux backup and recovery software, a remarkable product. Its first CEO, Phil (in U.S.) or Philippe (in France) Roussel, co-founded Newlog and started Knox Software in 1990 that became Arkeia Software. He understood that he was obliged to enter into the U.S. market to succeed, opening an office in Carlsbad, CA, but was ejected from the company in 2005 and replaced by Alain Pechon who was a beginner in the storage industry. Most serious and current CEO Bill Evans arrived in 2008, coming from storage start-up Parascale (IP acquired by HDS in 2010).

wd_arkeia_soft

Latest version of Arkeia Network Backup v10.0 is a software with cloud "seeding and feeding," and the capability to return multiple backup sets to a customer, all using de-duped data. This release and the opportunity to participate in the upcoming beta program were announced on June 12, 2012 and the release is generally available since January 21, 2013. It is designed for organizations that want to replicate backup sets off-site (e.g. at a remote office), or that want to provide cloud backup services (e.g. MSPs, VARs, etc.)

All WD's Acquisitions

Year	Acquired Company	Price*	Activity
1986	Adaptive Data Systems	NA	SCSI devices
1986	Paradise Systems	NA	Video graphic cards
1987	ViaNetix	NA	LAN system software
1987	Faraday Electronics	NA	Core logic products
1988	Tandon (assets)	NA	HDD manufacturing
1988	Verticom	NA	High-resolution video graphics monitors
1994	Moduline Solutions	NA	FC products
2003	Read-Rite	180	Disk head manufacturing
2007	Mionet	NA	Software for remote access and file sharing for CE products
2007	Komag	984	Rigid disk media for HDDs
2008	ST Microelectronics (part of)	NA	HDD controllers
2009	SiliconSystems	65	SSDs for embedded systems
2010	Hoya Magnetic Media Operations	233	Magnetic media sputtering operations
2011	Hitachi GST	4,800	HDD manufacturer; deal closed in March 2012
2013	Arkeia Software	NA	Network backup software for SMBs

* in $ million