HP to buy LeftHand Networks for $360 million

Hewlett-Packard will buy LeftHand Networks for US$360 million to fill in its storage virtualization and iSCSI lines with products for medium-size companies and remote offices and branches.

The Boulder, Colorado, company was an early developer of SANs (storage area networks) built around iSCSI (Internet Small Computer System Interface). It sells software that runs on existing storage and industry-standard server platforms. It was founded in 1999. The purchase agreement, announced Wednesday, is expected to close in HP's fiscal 2009 first quarter, which will end in January.

SANs and storage virtualization help enterprises centralize their storage capacity and allocate it as needed, potentially cutting costs and energy consumption. LeftHand will help HP extend its virtualization offerings to the midmarket, the companies said in a news release. Among the features of LeftHand's products are data replication for backup and disaster recovery, and an "intelligent cloning technology" that can reduce the amount of required disk space by as much as 97 percent, the companies said.

LeftHand's products already work with many of HP's, including Proliant servers, BladeSystem platforms, ProCurve networks and Insight Control management software. In addition, the company has an OEM (original equipment manufacturer) deal in which it sells software pre-loaded on HP ProLiant DL320s computing-plus-storage servers, with integration work done at HP's factories, according to Lee Johns, director of marketing for entry storage at HP.

LeftHand has 215 employees, and its products are distributed by more than 500 resellers and distributors around the world. With about 3,000 customers, its products are installed at more than 11,000 sites, the companies said.

In addition to an ideal set of products for midsize enterprises, LeftHand will bring HP software that the company can deploy in a wide range of platforms, including blade servers, Johns said. LeftHand offers more sophisticated capabilities than HP's MSA (Modular Storage Array) midrange systems, especially virtualization, he said.

For example, medium-size enterprises that are just getting involved in storage virtualization can do so without even buying new storage, using LeftHand's software to virtualize existing direct-attached storage. And with LeftHand's intelligent cloning, HP gets a more efficient way to deploy multiple virtual desktops, Johns said. HP will position the MSA line as a lower-end platform for enterprises that don't need the extra capabilities of LeftHand's software, he said. LeftHand's software also includes thin provisioning for allocating storage capacity that doesn't yet exist, he said.

The buyout gives HP a fresh set of products using an important technology, according to analyst Arun Taneja of Taneja Group.

"iSCSI is here, it's proving itself, and every storage company that wants to survive and thrive in the next decade has got to have a good iSCSI product," Taneja said. Among other things, iSCSI allows for quicker deployment and quicker provisioning of storage, he said. Although it's an upstart against the more established Fibre Channel, iSCSI will even make inroads into large enterprise data centers, Taneja predicted.

While EMC and other vendors adapt their Fibre Channel gear to support iSCSI, less-established players such as LeftHand have been able to bring in newer software that's easier for customers to use, and that's a key selling point, he said.

Another thing that sets LeftHand apart is the ability to cluster its platforms so that each additional system increases both the resiliency and the performance of the cluster, Taneja said.

The current gloom on Wall Street may have formed a silver lining for HP, because it probably would have paid much more for LeftHand a year ago, Taneja said. Dell agreed to buy EqualLogic, another iSCSI star, for $1.4 billion last November.