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Summary:

IBM is reportedly close to buying Israeli-American storage startup Storwize for about $140 million. Such an acquisition could indicate the start of consolidation in the cloud storage sector, as predicted by industry insiders and venture capitalists.

As I was preparing for our upcoming Structure 2010 conference earlier this month, I had various conversations with venture capitalists who have invested in cloud and web infrastructure companies in which the topic of cloud-based storage came up. The consensus was that the cloud storage market was overcrowded and as such it was only a matter of time before there would be thinning of the herd, with many companies getting gobbled up by larger players.

And now it appears that such consolidation has started. Israel’s The Marker reports that IBM Corp. is in talks to buy Storwize, an online data compression software company, for about $140 million. The 6-year-old Storwize, which was initially based near Tel Aviv and is now headquartered in Marlboro, Mass., has raised $40 million from Sequoia Capital, Bessemer Ventures Partners and others.

Storwize is one of the many startups that have been funded in order to solve three major problems universal to the web and to the enterprise: how to access data faster, and how to store it more compactly and more cheaply. Given that underlying these problems is the digitization of everything, they’ll only be compounded as the current data explosion continues. The big question now is, which company will get snapped up next, and by whom? Go ahead and share your wisdom in the comments.

We’ll be discussing big data, the new storage paradigm and the future of cloud and web infrastructure at Structure 2010 on June 23 & 24 in San Francisco.

By Om Malik

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  1. When Storage becomes a commodity , how do you differentiate.

    Look at what google is doing. its Prediction API and Big Query API will depend on Google Storage. Storage will be the payment leg- but its crowd puller will be its APIS’

    http://googlecode.blogspot.com/2010/05/bigquery-and-prediction-api-get-more.html

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  2. I think it has begun on a couple of levels. On one hand, we have acquisitions like this and NetApp buying Bycast. On the other, we have former VC darling ParaScale struggling to keep the lights on. Unless it recovers, there will be one less vendor.

    There was quite a bit of cloud-storage funding over the past few years, so I think it’s safe to assume there will be more acquisitions and/or bankruptcies (not necessarily in that order) to come.

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  3. [...] NetApp continued a trend of scale-out acquisitions by purchasing Bycast. In the past few months, IBM bought Storwize and Overland Storage bought MaxiScale. Lately, talk has been of Isilon Systems marketing itself [...]

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