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Western Digital did not disclose the purchase price but said it was a stock transaction.
Arkeia will become part of Western Digital's branded products division, which includes its Sentinel DX4000 SMB storage server network-attached storage (NAS) box. Western Digital also sells hard drives for enterprise and consumer systems.
Tom Gallivan, vice president of marketing for Western Digital's small and medium-sized businesses group, said Arkeia's server backup and progressive deduplication is a good fit for Western Digital's SMB storage devices.
Arkeia acquired its deduplication technology from Kadena Systems in 2009, and incorporated it into its software the following year. "We believe network backup is a critical element for SMBs," Gallivan said. "Arkeia's IP around progressive deduplication is compelling, and having that is important to our being a provider in the storage market. It's clearly something we needed for our core product portfolio."
Arkeia has three backup products: Arkeia Network Backup software, vmOneStep Appliances and vmOneStep Virtual Appliances. VmOneStep Appliances perform agentless backups of VMware vSphere hypervisors on an integrated appliance, and vmOneStep Virtual Appliances install on a hypervisor to protect virtual machines without requiring agents.
The vmOneStep Appliance comes in six models, ranging from 2 TB to 24 TB of raw capacity. Gallivan said Western Digital will eventually combine its hardware with Arkeia Network Backup software on an integrated appliance.
"Arkeia delivered its first backup appliance in 2007," Gallivan said. "It has a lot of expertise and knowledge in that market. Arkeia has a strong technology and development team and a loyal customer base. Adding Western Digital's financial strength, brand name and resources provides the missing pieces."
Arkeia CEO Bill Evans said Western Digital will provide his engineering and sales teams with funding that the small vendor could not generate on its own. "We've always been engineering-centric," he said. "We now have the ability to leverage Western Digital's access to the market. Western Digital has a strong brand and expertise for delivering appliances. We can move down to the SMB market where we could not go in the past with our cost structure."
Evans and the rest of Arkeia's 29 employees will join Western Digital's 96,000 employees. Western Digital reported $4 billion in revenue and $519 million in net income in its most recent earnings report. It is due to report last quarter's earnings on Jan. 24. As a private company, Arkeia does not disclose revenue and earnings, but claims more than 10,000 customers in 100 countries.
Arkeia's products are aimed at the midrange rather than at SMBs, but Evans said the software can be tailored for SMBs. He cited the simplified installation and configuration process for Network Backup 10 that became generally available today as one step toward making the software better suited for SMBs.
Network Backup 10 also enables hybrid cloud backup, allowing customers to dedupe and replicate large backup sets off-site before the first full backup is received, instead of moving the first backup off-site on physical media. Arkeia still supports using physical media for off-site data if the backup set is too large to replicate over the WAN.
Arun Taneja, consulting analyst at the Taneja Group, said the acquisition will let Western Digital combine primary and backup storage on its servers. "We're seeing a blurring of the lines between primary and secondary storage," he said. "Data comes in and sits on primary storage, and at the end of the day, all I care about is that it's protected and I can get it back if something goes wrong. In the past, I had no choice but to deal with tape. Today, I have all new disk-based technologies and ways of tiering within one box. I'm watching for seepage of Arkeia technology into Western Digital boxes."
Western Digital's hard drive competitor Seagate Technology acquired backup services provider EVault for $185 million in 2006, but Seagate runs EVault as a separate services company rather than integrating the backup software with its hardware.