Overland Storage today got into the NAS market by acquiring the Snap Server product line, intellectual property and engineering group from Adaptec for $3.6 million (£1.8m).
The purchase price was far below the $100 million (£50m) Adaptec paid for privately held Snap Appliance in July 2004.
Overland CEO Vern LoForti said the Snap brand and product line will remain intact, and Overland will eventually use the IP for its REO disk backup products to try and accelerate its transition from being a tape vendor to an overall data protection provider. Overland executives said they expect a relatively easy path in integrating products because the GuardianOS and Overland's REO Protection OS are both based on the Linux 2.6 kernel.
"The Snap Server acquisition enables us to offer NAS today, and going forward we're looking forward to cross-pollination of the product with our existing products," said Ravi Pendekanti, Overland's vice president of marketing. "And, we'll do that on a pretty aggressive schedule."
Snap NAS systems target small and medium-sized businesses (SMB) and remote offices or departments of small enterprises, and compete primarily with Windows-based NAS systems, such as Dell's PowerVault and Hewlett-Packard's ProLiant.
LoFortti sees a lucrative market for Snap products between the high-end enterprise NAS market dominated by NetApp and EMC, and consumer NAS boxes sold by Buffalo Technology, NetGear, Seagate and others. Overland claims more than 200,000 Snap units have shipped over the years. LoForti is also looking to expand into the emerging video surveillance and video product markets.
Adaptec had little success with Snap products, recording $4.5 million (£2.25m) in revenue last quarter. After selling off Snap, Adaptec will concentrate on its serial RAID controller and iSCSI storage business.
LoForti said the Snap product was held back at Adaptec, which has focused mostly on its components business over the last few years. Adaptec tried to sell Snap off in late 2005 but failed to land a deal.
"We said, 'can we turn this thing around?'" LoForti said. "Every person within Snap feels they have had their hands tied and haven't had as much support as they could or should have."
Overland considered buying Snap in 2004, but the asking price was too high, LoForti said. Former Snap Appliance CEO Eric Kelly joined the Overland board last December and recommended that Overland acquire Snap when Adaptec put it back on the market.
"Eric said I think you guys ought to buy it," LoForti said. "If you don't want it, I'll buy it myself. He's going to help us going forward to make sure we leverage it properly."
So can Overland succeed where Adaptec failed? Enterprise Strategy Group analyst Brian Babineau said Adaptec failed with Snap largely because it is a components vendor rather than a systems vendor. "It's a different business model," Babineau said. "If you don't' invest in your systems business, you're not going to have much luck. Overland sells systems, they know what the investment looks like."
Overland has been trying to reinvent itself since it lost a tape OEM deal with Hewlett-Packard in 2005 that represented most of the company's revenue. Overland's last attempt to get into NAS turned out poorly. It acquired startup Zetta Systems for $9 million (£4.5m) in 2005 but closed its offices and discontinued its product line based on Zetta software a year later.