Overland 'Snaps' Up Some NAS Business

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Overland Storage paid $3.6 million in cash for the Snap Server brand and assets, with $2.1 million to be paid up front in cash and the remainder to be paid in 12 months.

Prior to the acquisition, Overland Storage offered storage appliances including its Ultimas RAID arrays, REO disk-based backup arrays, NEO tape libraries and autoloaders, and data protection software. Snap brings to Overland Storage a line of local and remote NAS appliances and disk-to-disk-to-tape products.

The $3.6 million price tag was quite a deal, considering that Adaptec paid $100 million to acquire Snap Appliance, the company's original name, four years ago this month.

That was the latest in a string of acquisitions Adaptec made in a move to transform itself from a storage component manufacture to a provider of storage systems. It was a strategy that didn't work for Adaptec, said Vern LoForti, Overland Storage president and CEO.

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"Adaptec had a DNA mismatch as it started refocusing on components," LoForti said. "Unfortunately, Adaptec didn't focus on the investment."

But for San Diego-based Overland Storage, it is a very sweet deal, LoForti said. "We realized this opportunity was one we couldn't pass up, especially at this price," he said. "Overland has been trying to replace lost OEM business. We're getting $18 million in Snap revenue for $3.6 million. You don't get many opportunities to pay 20 percent of revenue for a brand-name offering."

Overland Storage and Snap both are channel-only vendors and have an overlap of between 50 percent and 60 percent of their channel partners, said Ravi Pendekanti, vice president of marketing at Overland Storage.

The combination of Overland Storage and Snap is welcomed by solution providers, who say it brings together two channel-focused organizations with complementary product lines.

"We've always liked Overland's technology set," said Greg Knieriemen said, vice president of marketing at Chi Corp., a Cleveland-based solution provider. "But NAS has been a hole for them. This rounds out their product offering. It will be interesting to see if Overland can combine SAN, VTL and NAS technologies."

Knieriemen said he hopes Overland Storage can bring the Snap product line and sales processes to its channel partners quickly.

"I'm not saying I don't like the Snap channel, but Overland has a very good, first-class channel program," he said. "Snap before was stuck with its DMR [direct market reseller] model and built its channel program, but was overdistributed. Overland does business with DMRs like CDW, too. But Overland has structured its channel so there's little conflict. Even though Overland has been lagging a couple of years, their channel has never been an issue."

John Zammett, president of HorizonTek, a Huntington, N.Y.-based solution provider and Overland Storage partner, said he was both surprised and very, very pleased to hear about the acquisition because Overland Storage is a key vendor partner.

Zammett said his company is working with a medical center that already has two Snap Server appliances and may be looking to acquire two more in addition to some Overland Storage products. "So the timing is very good," he said. "We hope to be the first to sell an Overland Snap Server."

HorizonTek also sells the StoreVault line of low-cost NAS appliances from NetApp, which competes with the Snap Server products, but he said he foresees no conflicts between the two.

"We'll choose the Overland product when it's best suited for the customer," he said. "Very often Snap would be the right solution for accounts into which we sell Overland products."

The acquisition is great news because it opens up new opportunities for the Snap line, said Andy Pratt, president of Unique Digital, a Houston-based solution provider that partners with both vendors. Neither Overland nor Snap have stellar stock prices, a fact that does not go unnoticed by larger customers, Pratt said. However, bringing the Snap line into Overland will make a big difference for such customers, he said.

"Overland has worldwide global services for its products," he said. "It's important for Fortune 2000 companies. Before, if you bought Snap, it was what you see is what you get. Now those customers will have global support."

Overland Storage looks to have a good future, especially with the Snap Server line, Pratt said. "We've been telling them they need a better NAS offering to round out their portfolio. This is a necessary thing."

And it helps that, at $3.6 million, Overland basically stole Snap, Pratt said. "It's a meaningful acquisition for Overland," he said. "It didn't break the bank for them."

In addition to complementary product lines and channels, both the Snap and Overland Storage's Reo operating systems are based on the Linux 2.6 kernel, which will allow cross-pollination of technology, Pendekanti said.

"We'll probably talk more about that in a few weeks," he said. "We're looking to go out and strengthen both the REO and Snap lines."

Pendekanti said that while Overland Storage is immediately making the Snap line available to its channel partners he expects all the back-end processes related to the channel program to be transitioned to the Overland Storage system within 30 days.