Scale-Out NAS Vendor Isilon Preps VARs Before Acquisition By EMC

Scale-out NAS vendor Isilon Systems is preparing its solution providers for working with EMC once EMC's acquisition of Isilon closes. In turn, those solution providers are taking a wait-and-see attitude to the deal and its impact on the channel.

Meanwhile, NetApp and its channel say they are ready for the new competition posed by the acquisition.

EMC on November 15 said it plans to acquire Isilon for about $2.25 billion, with the deal expected to close sometime before the end of this year.

Isilon is a developer of scale-out NAS technology, and its acquisition is expected to help EMC close a NAS storage technology gap in relation to such competitors as NetApp.

Isilon's OneFS operating system allows customers to add storage nodes without disrupting storage operations up to a maximum of 10.4 petabytes in a single file system. Performance of the company's storage architecture also scales with the addition of storage nodes to up to 45 GBs per second.

Isilon has already been meeting with its solution providers to discuss some of the potential impacts the company's channel partner base can expect once the acquisition closes, said Leonard Iventosch, vice president of global channel partners for Isilon.

However, the main message for now is to continue with business as usual, Iventosch said.

"EMC is a competitor of ours, and so we need to keep competing," he said.

Some Isilon solution providers have already reported being approached by EMC sales reps to work with that company, Iventosch said. "We tell them, if they want an EMC relationship down the road, do it," he said. "But for now, stay focused on competing.

Once the acquisition closes, Isilon partners should not expect a wave of EMC solution providers immediately gaining access to the Isilon product line, Iventosch said.

"EMC is committed to helping Isilon increase its sales," he said. "We will look for opportunities to tie into the EMC sales network, but that's our decision."

That's possible because Isilon, under EMC, is expected to be run as an independent division, with the primary change post-acquisition expected to be the transfer of EMC's Atmos cloud storage product line to Isilon, said George Bennett, senior vice president of global field operations for Isilon.

Next: Keeping Isilon Independent

Isilon's CEO Sujal Patel will run the new division and report to Pat Gelsinger, president and CEO for information infrastructure products at EMC, Bennett said. "But beneath Sujal, nothing will change in our organization," he said.

It will be up to Isilon to not make its products available to thousands of EMC resellers, Iventosch said. "But there may be EMC partners in some geographies where we have not been doing well," he said. "We may look to resellers in such geographies to grow our business. But we still plan to maintain our limited distribution model."

Bennett said solution providers can look to EMC's 2008 acquisition of Data Domain as a possible model of how the acquisition of Isilon might impact them.

"If there ever was an acquisition that EMC could incorporate into its business, (Data Domain) was it," he said. "But EMC said it would run Data Domain autonomously, and it did."

EMC's acquisition of Isilon can be good news for Isilon partners because it validates the company's technology and channel strategy, said Dave Cerniglia, president of Consiliant Technologies, an Irvine, Calif.-based solution provider and partner of both Isilon and Hitachi Data Systems, a major EMC rival in the storage market.

"I'm interested in seeing EMC's long-term strategy for Isilon," Cerniglia said. "The word from Isilon is, EMC will keep it separate. But EMC also talks about combining it with Atmos. So it's not clear what will happen.

For Isilon partners who have had issues with EMC before, or have been competing with EMC, the acquisition could offer them new opportunities, Iventosch said.

"Our products are different from EMC," he said. "Our partners may now find EMC sales reps opening new opportunities than they had before. And in some cases, EMC will make it easier to compete with NetApp."

Iventosch also said the acquisition does not mean Isilon partners will automatically become part of the EMC channel program. Instead, they will have to go through EMC to join that company's program.

"But who knows?" he said. "Two years down the road, things may change."

The acquisition will definitely mean more competition for NetApp, Bennett said. "NetApp will probably view Isilon as a much bigger threat," he said. "We will become global overnight."

Next: NetApp Not Worried About Isilon

The acquisition does not necessarily mean new angst for NetApp, said Tom Georgens, president and CEO of NetApp, during NetApp's fiscal second quarter 2011 financial conference on November 17.

When asked about EMC's proposed acquisition of Isilon, which would combine two of NetApp's primary rivals into a single company, Georgens compared the proposed deal to HP's acquisition this summer of 3PAR.

NetApp is currently enjoying organic growth of over 30 percent, while its primary competitors are either facing negative or very small positive organic growth, Georgens said at the time. "So this (acquisition) is as much about the acquirer as it is about the target," he said.

Isilon has some product overlap with NetApp, and in the hands of EMC will probably have some more overlap with NetApp, Georgens said. "But we'll continue to compete," he said.

For Rolf Strasheim, director of client solutions at Peak UpTime, a Tulsa, Okla.-based solution provider who works with both Isilon and with NetApp, which is EMC's primary storage competitor, the acquisition is good news.

"I'm excited for NetApp," Strasheim said. "Every time EMC does things like this, it's an acknowledgement that it has a gap with NetApp. NetApp organically solves problems."

Strasheim said EMC's acquisition of Data Domain, which was a pioneer in deduplication technology, is not necessarily a good model on which to rely for insight into the future of Isilon because of the fact that deduplication is now common among vendors, including NetApp.

"Dedupe is no longer a product," he said. "It should be a feature."

Furthermore, Strasheim said, unlike NetApp, which has a common interface across its product lines, EMC still looks like a group of multiple companies.

"EMC has Isilon, Avamar, Data Domain, DMX, Clariion, and Celerra, but I don't see a common interface," he said.