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How that Oracle and Pillar earn-out really works

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Pillar's supposed demise

Plenty of people are ready to write Pillar off. Its competitors are eager to push out their views on the acquisition by Oracle.

Nexenta CEO Evan Powell said: "Pillar's demise is due to a legacy business model that is so wasteful of capital investment that it threatened to put a dent in the enormous fortune of their brilliant primary investor, Larry Ellison. In approximately half the time and with less than one-tenth the capital invested, Nexenta has achieved twice the number of commercial deployments as Pillar ever did. Pillar may be the last of the big bets on do-it-all, vertically integrated, proprietary storage start-ups. The model has been trumped by more open approaches."

Data Robotics CEO Tom Buiocchi said: "The Pillar acquisition reflects the end of the Storage 2.0 era which featured groundbreaking innovations in storage designed for the largest of enterprises in terms of features and price. The next wave of storage innovation will be about bringing similar innovation, but coupled with supreme ease of use and unprecedented affordability, to the small and mid-size market. The Storage 3.0 wave is gathering pace ... We believe that legacy storage systems in particular, the likes of which are often rooted in 25-year-old technology, face a very limited future in the Storage 3.0 wave."

Phil Jones, Shoden Systems' chief technology officer and acting CEO, points out that a restriction in supplier choice results from the acquisition: "For end users and reseller this acquisition will mean less choice, one fewer emerging technology provider and more power concentrated in fewer vendors. Apart from EMC (who have the Joker, VMware), all the acquisitive storage companies are also serious server manufacturers. Will customers be buying stove-pipe single vendor solutions soon, rather than individual best-of-breed technologies?"

Xiotech chief technology officer Steve Sicola said: "I don't believe this comes as a surprise to anyone. In the end, Pillar didn't have much differentiation from Compellent and 3PAR. They could never clearly carve out a space for themselves and their direct competitors did a far better job at executing their go-to-market strategies."

"At the end of the day, this acquisition is about another larger vendor shoring up the legacy system side of their business."

Looking at the way Oracle has managed to make its Sun business profitable then no-one should write Pillar off. Oracle is not closing the business down. Au contraire it's incented Pillar's stock-holding executive management to make a concerted 3-year push to get Axiom flying and use Oracle's resources to do so.

Costs could be cut by using common components with other Oracle storage products. Oracle's channel must be an attractive proposition. The prospects are actually quite bright. The Pillar investors could conceivably make no money at all but, equally, they could become seriously rich if they get the Axiom product feature set right. Then Mike Workman could crack open a bottle from his own Weeners Leap winery and arrange his own celebratory fireworks display. ®

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