8 Storage Companies Cisco Should Buy (And 1 It Shouldn't)

Where's Cisco's Storage Play?

Does Cisco need a storage acquisition after the closure of its Invicta storage business last year? Cisco partners, analysts and even competitors say a better storage play is needed from the San Jose, Calif.-based networking giant in order to win the converged infrastructure market and compete effectively against the likes of a Dell-EMC.

Hewlett Packard Enterprise Senior Vice President and General Manager Manish Goel recently said Cisco is not a full-stack vendor and lacks the storage component in the full-stack converged infrastructure era. "When you don't own the critical part of the stack, you simply cannot drive the innovation agenda," he said, referring to Cisco.

CEO Chuck Robbins said Cisco's storage strategy is through technology partnerships, such as with NetApp, but is open to change in the future. "At any point in the future, if the customer feedback is that we need to do something differently [in storage], then we'll take that assessment and look at it," said Robbins in an interview with CRN.

Here are eight companies that analysts said are a good storage fit for Cisco -- as well as one vendor they say the network leader shouldn't be eyeing.

NetApp/SolidFire

CEO: George Kurian

Market Cap: $7.28 billion

"The big earth-shattering move to really stay relevant and make sure customers know and remember Cisco as more than just networking -- especially in the shadows of the Dell-EMCs, the HPEs, the Oracles -- is NetApp," said Greg Schulz, senior analyst at StorageIO, a Stillwater, Minn.-based research firm.

Although the possible acquisition of Sunnyvale, Calif.-based NetApp has been discussed for years, Schulz said, now is the right time for Cisco to pounce. "Why now?" he said. "In the past, NetApp was flying a lot higher than they are today, hence their valuation, the premium, what they're worth, what they want -- a lot of those dimensions have changed."

For its most recent quarterly earnings, NetApp reported a 10 percent drop in revenues year over year. NetApp also closed its acquisition of flash storage startup SolidFire this year for $870 million.

"SolidFire is used by many cloud providers, so the technology works in large environments," said Zeus Kerravala, principal analyst at Westminster, Mass.-based ZK Research. "They also have some automation capabilities, so would fit into Cisco's ACI [Application Centric Infrastructure] framework."

Nimble Storage

CEO: Suresh Vasudevan

Market Cap: $754 million

San Jose, Calif.-based flash storage specialist Nimble Storage is another vendor with close ties to Cisco through a strategic partnership. Analysts say Nimble's Internet Small Computer Systems Interface (iSCSI) technology -- an IP-based storage networking standard for linking data storage facilitates -- would fit into Cisco's needs.

"Nimble plays well in the iSCSI space, which is where Cisco has a lot of focus," said Schulz. "They're also seen as one of the new, upcoming players -- hence it might be very attractive to Cisco right now."

Reduxio Systems

CEO: Mark Weiner

Market Cap: Private

Based in both Israel and San Francisco, the storage startup Reduxio Systems could be the next NetApp, analysts say.

"They are coming in like NetApp -- trying to change the world in a new way of doing snapshots, copies, protection in a more efficient way and in a hybrid way," said Schulz. "They might be seen as a bit of a project for Cisco, but historically, if you look at some of [Cisco's] acquisitions, they tend to go that route."

About 90 percent of the networking giant's $63.5 billion in total cash, cash equivalents and investments is overseas.

Springpath

CEO: Terry Cunningham

Market Cap: Private

Cisco is using Springpath's software-defined storage technology for its new hyper-convergence infrastructure product line -- HyperFlex Systems. The Sunnyvale, Calf.-based startup, founded by former VMware storage engineers, has already received investment funding from Cisco. Sources told CRN that Cisco also has the option of acquiring Springpath based on revenue results.

"If Cisco is confident that they've tested the waters enough with Springpath, then they might not need to do [an acquisition] of a NetApp or Nimble," said Schulz.

In a recent interview with CRN, Cisco CEO Robbins said: "We are happy with our Springpath relationship. … The early feedback that I'm getting from the field teams is positive."

Nimbus Data

CEO: Thomas Isakovich

Market Cap: Private

Nimbus Data provides all-flash arrays purpose-built for cloud infrastructure, databases, server and desktop virtualization. Although the Aliso Viejo, Calif.-based company has been quiet for the past two years, analysts said Cisco could get a steal.

"Nimbus fits into Cisco's profile," said Kerravala. "They have good technology, but need a bigger channel and sales force. So it's a good match for Cisco."

Tegile Systems

CEO: Rohit Kshetrapal

Market Cap: Private

Analysts say a win-win acquisition would be all-flash storage array vendor Tegile Systems. The Newark, Calif.-based company recently expanded its product line card with an array containing both a performance-focused flash tier and a lower-cost, capacity-focused flash tier.

"They have great technology and a strong management tool," said Kerravala. "They really only do business in the U.S. and parts of Europe, so Cisco could expand their addressable market."

Tegile's hyper-scale flash storage platform, InteliFlash, was named one of CRN's 10 Coolest Flash Storage And SSD Products of 2015. The vendor also recently closed a new C series round of financing of $32.5 million.

Enmotus

CEO: Andy Mills

Market Cap: Private

Enmotus is a developer of software-defined storage acceleration solutions. Its flagship product, FuzeDrive, enables companies to build vendor-agnostic hybrid storage pooled solutions with a standard block storage device. Analysts said its MicroTiering technology would also be a great fit for Cisco.

"Cisco has the servers. Cisco wants to do more with the growing flash market, but also tying that back into the legacy environment," said Schulz. "[Enmotus would allow] Cisco to tie the piers to the customers who aren't going all solid-state and need a hybrid-type environment."

Qumulo

CEO: Peter Godman

Market Cap: Private

Seattle-based Qumulo launched out of stealth mode in 2015 with a solution for data-aware, scale-out, network-attached storage (NAS). The vendor's file system has an integrated database that provides the ability to answer questions about what is stored without needing to scan the data for metadata that must be separately stored and managed.

"They're a re-creation of Isilon that EMC bought [in 2010] and has some common people. ... They're trying to bottle lightning twice," said Schulz. "It plays in a scale-out and a part of the market where Cisco has a strong footing, which is around the network."

The startup also closed $40 million in a Series B funding round last year and was named one of CRN's 10 Coolest Storage Startups of 2015.

Pure Storage (Not A Viable Option)

CEO: Scott Dietzen

Market Cap: $2.24 billion

A leading startup in the all-flash storage market is Mountain View, Calif.-based Pure Storage, which completed its IPO last year.

"Pure Storage is the most obvious name that comes up, but Cisco doesn't need to acquire someone that big," said Kerravala. "While Pure Storage does have a big customer base, Cisco does too -- so the premium they would pay for Pure wouldn't make sense."

Schulz agreed that Cisco would have to pay a steep price for the startup. "Plus, it's a one-trick pony -- it's all flash, only flash -- which is a growing market, but more importantly, Cisco shut down their all flash play in Invicta," he said.