Seagate Looking to Make Cloud Storage Acquisitions?

Seagate Technology (NASDAQ: STX) appears to be in the market for potential cloud storage-related acquisitions or deals that further strengthen EVault. Indeed, EVault is a cloud-based online backup service, and a wholly owned subsidiary of Seagate. The long-term Seagate plan for EVault apparently includes organic growth, potential acquisitions and perhaps even an IPO (initial public offering). Here’s why.

The EVault strategy emerged yesterday in New York, where EVault President Terry Cunningham met with VARs and channel partners to describe how the cloud-enabled storage service would grow its partner program. During a separate interview with Talkin’ Cloud, Cunningham mentioned a commitment to organic growth and potential acquisitions — though no potential targets were mentioned by name.

Later in the day at the partner meeting, Cunningham mentioned that there are now 1,600 or so online backup and cloud storage companies. One hundred of those companies are EVault’s channel partners — including cloud-connected service providers. Cunningham made it clear to attendees that parent Seagate — a $20 billion company — was serious about growing far faster than the overall cloud backup market (though he didn’t mention specific growth figures).

History Repeats Itself?

In many ways, Seagate is trying to repeat its previous success in the storage software market. From 1996 to 1999, Seagate owned and built the Backup Exec storage software business during the industry transition from mainframes to client-server storage.

Backup Exec became widely popular but it was mostly a tape-driven business that didn’t bolster Seagate’s core disk drive business. Seagate sold the Backup Exec business to Veritas in 1999 for a healthy profit. (Symantec went on to buy Veritas in 2004.)

From Client-Server to Cloud

Cunningham recounted the Backup Exec story to channel partners yesterday, stating that Seagate was in the right place at the right time as customers pursued ways to safeguard client-server data. Fast forward to the present, and Seagate once again claims to be in the right place and right time with EVault — this time riding the cloud computing wave.

Ironically, Seagate and EVault are seeking to upend the Backup Exec business that they once built, though Symantec has certainly introduced cloud-enabled versions of Backup Exec as well.

Next Moves

So what are EVault’s next moves? Cunningham certainly didn’t mention any near-term acquisition targets, but it sounds like he is watching the market for M&A deals that would bolster EVault. Also, Cunningham sees the opportunity for Seagate to build cloud-oriented intelligence into its disk drives, helping Seagate’s hardware to work more effectively with the EVault cloud system. That cloud system includes EVault on-premise appliances tied to either partners’ data centers and/or EVault’s data centers.

At the same time, EVault is looking to accelerate its channel partner program. Cunningham said EVault has had some direct sales in order to generate customer awareness for EVault. But over time, Cunningham expects virtually all of EVault’s sales to transition to a channel partner model. Moreover, Cunningham expects to work closely with channel partners to push EVault into at least three vertical markets, he told channel partners in New York.