Update: EMC to buy virtualization specialist Rainfinity

Acquisition fleshes out EMC's storage virtualization product portfolio

EMC is to acquire Rainfinity, a network file virtualization software vendor, the storage giant announced Wednesday. The move is part of EMC's ongoing strategy to reposition itself as an information infrastructure company as laid out by the company's executives earlier this month at the firm's annual analyst day in New York. The move also fleshes out EMC's storage virtualization product portfolio.

The deal is valued under $100 million and will likely close by the end of this month, according to Jack Garrahan, EMC vice president and general manager of the company's Celerra business. EMC intends to operate Rainfinity as a separate business unit under the leadership of Howard Elias, EMC vice president, corporate marketing and office of technology, Garrahan said.

Privately held Rainfinity is based in San Jose, California, and has 60 employees. The company's RainStorage software virtualizes Windows, Unix, and Linux file systems across heterogenous network attached storage systems and file servers, making the disparate devices appear to be a single unit. The technology both simplifies management and makes it easier for users to carry out data migration.

"Our primary strategic reason to acquire Rainfinity is for RainStorage," Garrahan said, adding that EMC will also continue to invest in Rainfinity's other product, its RainWall high availability security software. He acknowledged that RainWall would likely have a place in EMC's previously announced plans to emphasize security across all its hardware and software offerings through existing products, acquisitions and partnerships. Exactly where that place will be for RainWall has yet to be determined, he said.

EMC plans to keep the RainStorage name for the remainder of 2005, but will re-evaluate the software's branding next year, according to Garrahan.

Rainfinity has over 50 customers, a mix of EMC and non-EMC users, according to the company's President and Chief Executive Officer John Schroeder. They include AT&T, Bank of America, Bayer, and Qantas Airways.

"This was the right thing to do at the right time for the company," Schroeder said. "At this point, our product is very mature," and Rainfinity needed the resources of a much larger company to help it aggressively go after a broader range of customers and win market share from its competitors, he added.

Rainfinity began life as a research project at the California Institute of Technology (Caltech), which worked with NASA's (the U.S. National Aeronautics and Space Administration's) Jet Propulsion Laboratory and the Defense Advanced Research Projects Agency. The original research to identify software building blocks for developing distributed applications was known as RAIN or reliable array of independent nodes. Rainfinity was spun off from Caltech in 1998.

EMC began reselling RainStorage earlier this year. "[While] there's definitely been a huge benefit in EMC reselling our product, you don't get the same level of commitment and resources" as a partner as Rainfinity hopes to realize as it becomes part of EMC, Schroeder said. There should be a new release of RainStorage in the fourth quarter of this year, along with a new application module for the software, which he declined to elaborate on.

EMC already has a product for SAN (storage area network) virtualization, known as Invista, which debuted earlier this year. However, EMC President and Chief Executive Officer Joe Tucci made it clear at the analyst day on Aug. 4 that he doesn't expect the storage virtualization market to take off until late 2006 at the earliest.

The company also confirmed the acquisition of the fixed assets and intellectual property of intelligent switch vendor Maranti Inc., but Garrahan wouldn't comment on what exactly EMC intends to do with the purchased technology. The expectation is that EMC will roll some of the Maranti software into Invista.

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