Was Merger of Exablox and StorageCraft Surprising?

A few days ago, StorageCraft and Exablox have announced their merger.

It was a surprise as nobody really anticipated this convergence between these two players even if they play in the same SMB market segment. But if you analyze carefully this move, there is a real synergy and a market confirmation. 

The first cooperation was initiated in October when the two companies announced a distribution agreement to combine both products.

Exablox – Object Storage for the masses
Exablox was founded in 2010 by Tad Hunt and Frank Barrus and has received $52.47 million in four rounds from five investors. Among these investors, Dell Ventures participated to the Series C in 2015. The company CEO is Douglas Brockett since May 2011, coming from SonicWALL where he was VP and GM between 2002 and 2010. 

The company has developed a scalable NAS appliance based on a new distributed file system named SmashFS – POSIX compliant – designed on top on an object storage service not exposed outside. The expertise is clearly in software but the go to market chosen was an appliance model for the SMB market for primary and secondary usages. Among several features, Exablox offers inline de-duple, compression, three copies replication and remote replication for DR, snapshot and clone via a CDP-like mechanism but not yet erasure coding, a must when you consider large scale data environment.

This market didn’t finally evolve and Exablox was stuck in SMB even if the technology they have developed is an enterprise class one, other players in that ‘object’ space rely on same concept and ideas but apply to solve enterprise challenges. Was it a mistake for the company?

Even if the product works perfectly for primary storage, it seems that the spot was and is secondary storage. It was even strange that Exablox announced in August 2016 a full flash version as the target use case was secondary storage. 

Tad Hunt, CTO of Exablox, left at the end of 2015 and joined Google. Did that move anticipate some difficulties or at least some strategy divergence, we don’t know.

StorageCraft – Data Protection for SMB
Founded in 2003 in Utah, StorageCraft Technology stayed pretty confidential for a long time, growing carefully and addressing end-users challenges with incremental solutions. But in January 2016, TA Associates took a majority stake with $187 million injection and bring a new CEO and chairman Matt Medeiros. Interestingly, he was CEO of SonicWALL between 2003 and 2012, connection made, checked.

The vision is to build a new leader in data management.

The first phase to iterate on this vision, StorageCraft has decided to acquire the backup business from Gillware Data Services named Gillware Online Backup they partner with for a long time. Gillware Data Recovery continues to exist as an independent company.

The second phase was to acquire a storage platform and the choice of Exablox was obvious for both companies.

Globally it means now a strategy with three axes:

• Data Protect with StorageCraft software
• Data Storage fueled by Exablox appliance and object storage software
• Data Analytics based on Gillware

Secondary Storage opportunity
As stated several years ago, object storage solutions are obviously suited for secondary storage with services such backup, archive, tiering, HSM. Exablox fits perfectly in that space.

StorageCraft’s strategy confirms again a new market trend validating secondary storage as a huge business opportunity. The cloud storage market by itself has represented $24 billion in 2016 and should reach $75 billion in 2021 with 26% CAGR according to MarketsandMarkets. Object storage is still less than a billion dollars but globally secondary storage is a $8 billion market segment, pretty large in fact.

We identify two phases:

• Phase 1 is a classic approach with data management software connected to a secondary storage entity. We see a lot of players developing, promoting and validating ecosystems, partnerships and joint solutions. Nothing really new, this approach exists for decades, it works, the only difference resides in the nature of the secondary storage evolving from tape to disk to more recently object storage such Cloudian, Cleversafe now IBM Cloud Object Storage or NEC HYDRAstor to name a few. Some software players are ASG, Data Dynamics, Grau Data, Komprise, Moonwalk, Oracle, QStar, Seven10, SGI DMF, Point Software and Systems or Versity.
• Phase 2 is a more recent trend, changing the landscape, by offering a comprehensive data management platform with embedded data services. Instead of coupling product from vendors like in phase 1, solutions offer storage plus data services. Players in that category are for instance Cohesity with DataPlatform, Rubrik, Avere with C2N, DDN with WOS ArchiveDirector, Quantum with StorNext and Artico, Caringo with FileFly and StorageCraft as a newcomer. Some of them belong as well to phase 1, no conflict at all. This is a strong trend on the market promoting consolidation of usages, masking complexity, and working for both on-premise or public clouds. 

StorageCraft and Exablox demonstrate a synergy in thre points: human with the Medeiros – Brockett connection, product with ShadowProtect coupled with OneBlox and market as secondary storage is a huge business opportunity.

It will be interesting to see the impact of this merger in 2017.