SaaS data loss: The problem you didn’t know you had

Here's a fascinating bit of history: NetApp tried to buy the Snap network-attached storage (NAS) business back in 2004, according to people with knowledge of the events.

In November 2003 NetApp announced it was buying Spinnaker Networks and the acquisition completed in February 2004 at a cost of $300m to $330m. Then Snap was put up for sale. Snap sold low-end filers through the channel, products for a market that NetApp's more-expensive products couldn't address.

Apparently NetApp was too slow going through the acquisition process and Snap's then-CEO, Eric Kelly, took the Adaptec dollars instead, $100m of them in July, 2004. In 21 months an $11.3m investment had turned into $100m ($91m cash and $9m stock), which was a nice outcome for Quantum - whose 20 per cent of Snap would have been worth $20m - Mellon Ventures, Moore Capital Management and the Snap shareholders.

NetApp subsequently launched its StoreVault division selling low-end NAS through the channel and the S500 StoreVault product was announced in June 2006.

It turned out to be a lousy deal for Adaptec, who offloaded Snap to Overland Storage for just $3.6m four years later, when they got out of the systems business. Eric Kelly was by than a board member at Overland, with Vern LoForti as the CEO, and Kelly persuaded the company, recovering from mismanagement by a previous executive team, that Snap would fit well into its product portfolio. Shortly afterwards Kelly assumed the CEO role at Overland and is now back running a business which includes Snap servers. What goes around comes around you might say.

NetApp's StoreVault business was folded back into NetApp in February this year. That was preceded by NetApp's then channels boss, Leonard Iventosch, leaving and joining Isilon, the maker of clustered NAS filers, where he is busy re-vamping the channel programme. Meanwhile, NetApp is set to launch ONTAP 8 later this year and finally fully incorporate the Spinnaker technology from 2004 into its product line, which will become more clusterable as a result. What goes around, etc.

There's a historical parallel between this failed attempt to buy Snap and the failed attempt to buy Data Domain. Both involved successful and market-leading businesses that overlapped NetApp's existing products functionally but had market success outside NetApp's customer base. Neither were technology acquisitions per se and neither were successful.

NetApp has had some problems integrating and benefitting from acquisitions, witness the lengthy Spinnaker digestion period and the retiring of the Topio any-to-any replication technology. It has also had problems making acquisitions with ones like Snap and Data Domain getting away. Organic growth seems natural to NetApp whereas it appears less-skilled at acquisition-led growth.

NetApp has not responded to enquiries about the attempt to buy Snap, but then it has been rather busy with the Data Domain affair. ®

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