Seagate buys EVault to boost storage services

Posted on December 21, 2006

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By Kevin Komiega

—In an effort to expand its storage services offerings, Seagate Technology today announced that it will buy privately held online backup-and-recovery services company EVault for approximately $185 million in cash. EVault will operate as a wholly owned subsidiary of Seagate and serve as the cornerstone of a new division dubbed Seagate Storage Services.

EVault is Seagate's third recent acquisition in the area of services. In 2005, Seagate purchased Mirra Inc., a specialist in networked digital content protection products for the home and small business markets, as well as Action Front, an in-lab data recovery company.

Until now Seagate's storage services have centered on recovering data from different types of storage media. The company's current Seagate Data Recovery service retrieves corrupted or deleted files from hard drives, servers, tapes, removable media, and consumer electronics devices. The Seagate Data Recovery Critical Response Services team can also come to you for $5,000 per day.

But the acquisition of EVault marks Seagate's entry into the true storage service provider market.

The Seagate Storage Services division now plans to add online backup, archival, and recovery services to its menu. These services are targeted at the small and medium-sized business (SMB) market and will focus on companies with limited IT infrastructure or resources.

Seagate spokesperson Forrest Monroy says his company's services strategy was launched three years ago. "Seagate has been executing a strategy designed to broaden its customer base and increase growth opportunities by expanding beyond its core hard disk drive business into the broader storage solutions market." Monroy adds that the EVault buy will give Seagate immediate market access to remote backup and other related storage services.

EVault has established a foothold in the online storage services market and claims to have more than 8,500 customers.

Steve Duplessie, founder and senior analyst at the Enterprise Strategy Group, is on the fence as to whether buying EVault will benefit Seagate in the long run. It depends, he believes, on Seagate's ultimate strategy.

"[The acquisition] is a possible hedge in the SMB and SOHO space, since [Seagate] already owns the enterprise," says Duplessie. "They can control their fate by delivering storage as a service versus needing OEMs to deliver it as a product. Or they could OEM or channel a service like this."

The EVault acquisition is subject to various standard closing conditions, including applicable regulatory approvals, and is expected to close in the third quarter of Seagate's fiscal year 2007.

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