Computing giant Hewlett-Packard said today it would spend $360 million in cash to buy LeftHand Networks, a storage company that straddles two hot trends right now — allocating storage for virtualized servers and the using Ethernet for storage networks. LeftHand’s software essentially allows a user to create a storage “cloud” connected via iSCSI, an Ethernet standard rather than the proprietary Fibre Channel networking that dominates the storage industry. The software could run on IBM and HP servers.
Storage is gaining in prominence among customers of the big computing vendors as the amount of data stored on corporate desktops rises. Additionally, more of the stored data is unstructured, rather than stored in a database, making it hard to access and analyze with a computer. Unstructured data includes things like video files and the texts of emails and chats. Earlier this month IBM launched 30 new storage products built in part from some $2 billion in acquisitions it had made within the last few years.
The LeftHand buy mirrors a similar deal made by Dell last year when it paid $1.4 billion for EqualLogic, which also made iSCSI-based storage software for mid-sized companies. LeftHand had trailed EqualLogic in sales, but I wonder if the comparatively low price is a reflection of the grim exit market’s depressing valuations. Back in 2007, EqualLogic was planning an IPO, which may have prompted Dell to pay more (about 25 times revenue) to make its offer more compelling. LeftHand had no such threat to boost its price.