According to an article in today’s Wall Street Journal, Oracle Corporation will have “an exciting new systems announcement” later this month at Oracle OpenWorld. Could this be the acquisition of Pillar Data Systems by Oracle?
The storage space is on fire right now with lots of chatter going on about more M&A activity in the space. Now that HP has agreed to acquire 3PAR for $2.35 billion, beating out Dell, Pillar Data Systems could be the next acquisition target.
Pillar Data Systems is a privately held leading storage provider that was founded in 2001. Pillar’s initial venture funding was reportedly $150 million – nearly all of which came from Larry Ellison (founder of Oracle) via Tako Ventures, his venture capital firm.
As with HP and Dell, Oracle looked at 3PAR but never submitted a bid. Clearly, however, Oracle would benefit from having a new storage platform, and to expand beyond its core business. This would help Oracle become more of a one-stop shop for storage and will help nudge out IBM.
In January Oracle closed on their $7.4 billion purchase of Sun Microsystems, which plays in the data storage space but does not have any industry leading products. However, they have a great name and simply need the right products to put under the Sun umbrella.
Pillar is still a small company with limited distribution, and they are playing in a very competitive space, with much larger companies, such as EMC, Hitachi, 3PAR, Compellent Technologies and Isilon Systems. If Oracle buys Pillar they should put the high-margin Pillar technology under the Sun brand and up-sell this technology to their current customers. This would provide much broader, and immediate, markets for the products.
Another factor of why Oracle should acquire Pillar Data Systems is the fact that Mark Hurd is now at Oracle (unless HP sues to stop him). As the recent CEO of HP, Hurd was obviously involved in the due diligence of HP’s 3PAR deal, so he is very familiar with the space and key technologies. With his extensive technology experience, Mr. Hurd would be the perfect executive to run this new business.
Oracle OpenWorld is being held September 19-23rd. Let’s watch and see what develops…
Hang Loose
If Pillar belongs to Larry Ellison and Larry Ellison is the CEO of Oracle, isn’t there a conflict of interest (with a potential shareholder lawsuit) in having Oracle buy Pillar?
Very interesting but it may not be as simple as 1, 2, 3. Here’s an article which eludes to some more twists in this searing storage market.
http://www.bloomberg.com/news/2010-09-04/dell-likely-to-seek-new-data-storage-targets-after-3par-loss.html
j.
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