At Sun Microsystems' national sales conference early this month, the buzz among Sun solution providers focused as much on a rumor that one of that community would be acquired as it was on Sun's sales plans.
The rumor proved true, as Incentra Solutions on Monday expanded the channel reach of its managed storage service offerings with the acquisition of Santa Clara, Calif.-based Helio Solutions, one of Sun's largest West Coast solution providers.
The acquisition strengthens Incentra's reach into the traditional Sun hardware channel while bringing Helio's Sun partners much-needed storage services offerings, said Thomas Sweeney, chairman and CEO of Incentra, Boulder, Colo.
Incentra will offer $5 million in cash, 6 million in restricted Incentra common shares, and a three-year convertible note worth $770,000 at the close of the deal, as well as additional cash and stock over the next three years, based on conditional earnings, Sweeney said.
Incentra, one of the few survivors of the storage service provider (SSP) part of the dot-com era, currently manages over 1,500 Tbytes worldwide. That capacity is in place in data centers around the world, and managed from the company's own network operating center in Boulder.
A CRN report late last year found an acceleration of solution provider acquisitions this year as vendors, service providers, and other VARs look to beef up their channel expertise.
Helio was established about six or seven years ago, and has a strong management team and a large, well-established West Coast customer base, Sweeney said.
Dave Condensa, president and CEO of Helio, is one of two co-chairpersons of Sun's partner council.
However, Sweeney said, Helio focused mainly on hardware and software. "To date, it has not had a significant amount of services revenue," he said. "We want to take the relationship with Dave's customers and extend them with a complete services solution."
That solution includes professional services, first-call services, and managed services.
For instance, Incentra offers first-call tech support for a range of vendors, including Sun, Hewlett-Packard, Network Appliance, Symantec, and others. That support is on top of maintenance contracts for such vendors, Sweeney said.
Incentra also offers a wide range of managed services, including data backups, network asset management, tape management, and more, he said.
As a former SSP that several years ago was spun out from StorageTek, a storage vendor later acquired by Sun, Incentra is best known for its managed storage services.
Sweeney said he believes mid-tier enterprise clients are underserved in terms of solution providers who can offer customers a full range of products and services, including monitoring and monitoring their operations, leaving it up to companies like his to fill in the void.
"It's outsourcing," he said. "That's been the best practice in the top tier of the market for 10 years. We believe the managed services we offer are stronger than what Sun can offer."
Dave Condensa, his brother and Executive Vice President of Sales Bert Condensa, and three other co-founders, along with other employees, will stay with Incentra after the acquisition, Sweeney said. "Their titles will not change," he said. "And they will still focus on the West Coast."
Helios is only the latest in a string of acquisitions by Incentra as part of a push to bring its services capabilities to a wider part of the channel.
Last September, Incentra acquired Tactix, a Portland, Ore.-based storage, networking, and security solution provider, for $3.6 million in cash.
In April of last year, the company acquired Lombard, Ill.-based NST, a $25 million, 300-customer VAR in the Chicago area, for $25 million, for $5.5 million in cash, $1.5 million in unsecured debt and 1 million shares of Incentra's common stock.
In 2005, Incentra acquired Star Solutions, a San Diego-based solution provider, which Incentra officials said nearly doubled Incentra's revenue, and Kirkland, Wash.-based PWI Technologies.