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Storage giant EMC buys software company

The top seller of high-end data storage systems has acquired CrosStor Software in a deal valued at about $300 million.

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Stephen Shankland
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EMC, the top seller of high-end data storage systems, has acquired CrosStor Software in a deal valued at about $300 million.

CrosStor's software augments EMC's push to have stand-alone storage systems accessible over corporate networks, a philosophy that is gradually winning a place over the dominant practice of direct attachment of storage to a particular server.

The deal, the latest of several software acquisitions by EMC, ties in with EMC's ambitions to earn 20 percent of its revenue from software. It also meshes with the growing industry realization that software is one of the key features that separates a million-dollar EMC Symmetrix storage system from a few dozen $500 hard disks.

In a recent interview, EMC chief executive Mike Ruettgers said software is one of the ways EMC fends off increasing competition from IBM, Sun Microsystems and the alliance of Hewlett-Packard and Hitachi Data Systems.

"If you look at the value customers get from us, much of the value is in the software and the services that we provide. I don't see any pressure there," Ruettgers said.

The CrosStor acquisition, though, appears to be aimed chiefly at the network-attached storage (NAS) market, where EMC plays second fiddle to Network Appliance.

CrosStor's software is used in several NAS devices, which make storage space accessible over ordinary networks, but the company has been expanding its software so these devices fit into special purpose networks just for storage, called storage area networks (SANs).

Other NAS efforts are under way at EMC, which despite sales of its high-end Celerra product is primarily a SAN company. Robertson Stephens analyst Dane Lewis said in a research note that EMC is expected to announce a mid-range NAS product, code-named Chameleon, in coming weeks.

"While the introduction of Chameleon would not change our confidence in NTAP's NAS market leadership, we believe it could be a sign of things to come," Lewis said.

The CrosStor acquisition was a pooling-of-interests transaction in which EMC issued about $300 million in stock for all of CrosStor's outstanding capital stock, EMC said.