Pivot3 To Acquire NexGen Storage, Bring Storage QoS To Hyper-Converged Infrastructure

Hyper-converged infrastructure technology developer Pivot3 is acquiring storage vendor NexGen Storage in a move that could be the first to bring dynamic quality-of-service capabilities to the hyper-converged infrastructure market.

Austin, Texas-based Pivot3 on Wednesday said it has signed a definitive agreement to acquire Boulder, Colo.-based NexGen for an unspecified amount. The deal is expected to close in February.

It is a match that will work on many levels, said Pivot3 CEO Ron Nash.

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The two companies' technologies are complementary, with no overlap, and they have almost no overlap in terms of their customer and channel bases, Nash told CRN.

"Pivot3 has hyper-converged infrastructure technology, but NexGen has high-performance storage with PCIe cards," he said. "Before the combination, our technology was good for about two-thirds of customer workloads. With NexGen's high-performance storage, that rises to maybe 90 percent. So this expands our market."

One key part of NexGen's technology is the fact that it does dynamic tiering and performance adjustments, providing a quality-of-service capability that one would have to otherwise go to very high-end storage solution to get, Nash said.

"This makes sure the right data is in the right place at the right time," he said. "For example, in a hospital, if there's data important to saving a life, you want it in the high-performance storage tier. But accounting data doesn't need that performance. We see adding this capability to our on-premises and cloud storage a no-brainer."

NexGen CEO John Spiers told CRN that NexGen offers all-flash array, hybrid flash array and all-flash storage capabilities that address the three fastest-growing parts of the storage industry. "We address quality of service across all these markets," he said.

Storage quality of service is important to NexGen customers, and will be to Pivot3 customers going forward, said Stewart Sonneland, principal and CEO of Strategic Hardware, a Spokane, Wash.-based solution provider and NexGen's first channel partner.

"No one else has that kind of QoS capability unless you go to the very high end, like Hitachi Data Systems," Sonneland told CRN.

Sonneland said that while his company may have done a one-off deal with Pivot3 for a customer, the vendor is still a relative unknown to him.

"Today's our first real exposure to Pivot3," he said. "I've been trying to read up on it, and I like what I read."

Bringing NexGen's storage technology to Pivot3 will mean a big boost to both companies' sales, as together they offer a combination that will reach more customers than most vendors can touch, Sonneland said.

"Pivot3 and NexGen will have an attractive offering across the storage spectrum," he said. "Hyper-converged infrastructure, hybrid storage, all-flash arrays. Few companies can do that. If I go in with Pure Storage, I can sell all-flash arrays, but if the customer needs hybrid flash storage, Pure will try to sell all-flash. I completely understand the rationale of this merger. I'm feeling positive about it."

The acquisition by Pivot3 marks the latest in the lifespan of NexGen, which has seen multiple owners in the past few years.

Before its 2013 acquisition by Fusion-io, NexGen was a stand-alone developer of tiered storage solutions combining PCIe flash and spinning disk technologies. Fusion-io, in turn, was last year acquired by SanDisk.

In January 2015, NexGen was spun out from SanDisk to form an independent storage vendor.

Pivot3 and NexGen came together as a result of conversations with S3 Ventures, an investment firm with an investment in Pivot3, Nash said.

"S3 Ventures was looking at investing in NexGen, and had already invested in Pivot3," he said. "They thought it makes sense for us to join together. So John [Spiers] and I got together, and saw how our technology and culture fit together. We decided that, together, we were better."

Sonneland said that NexGen early Wednesday did a WebEx presentation for its strategic partners. "Our takeaway was, we thought the best course for NexGen would have been to secure another round of VC funding," he said. "But it's tough, as some storage vendors have not done well since their IPOs."

Together, Pivot3 and NexGen have about 200 channel partners, with almost no overlap between them, Nash said.

While NexGen does not have any OEM relationships, Pivot3 works with Lenovo on the latter company's Hyper-Converged One line of appliances. Those appliances are available only in Europe as part of a pilot program, but are expected to be available in North America, he said. He declined to say when. "That's Lenovo's choice," he said.

NexGen is still in its growth phase, and planned to be cash-flow positive within the next couple of years, Spiers said.

Before the NexGen acquisition, Nash said, Pivot3 had been funded to profitability. With additional funding that will come to help with the NexGen acquisition, the combined company is still funded to profitability, he said.

While the acquisition has yet to close, the two have already started working together, Nash said.

"The integration started today," he said. "One NexGen sales rep will be making a sales call in 10 minutes, and we have already trained him on Pivot3. Another NexGen sales rep is going to Korea next week and will present the Pivot3 solution."

That's the kind of speed that companies in most acquisitions cannot match, Spiers said. "It's nice when both of us are startups," he said.