NetApp Scoops Up Decru in $272 Million Deal

In a bid to strengthen its data protection portfolio, network storage solutions provider Network Appliance (Nasdaq: NTAP) announced yesterday that it has entered into a definitive agreement to acquire a private storage security firm.

Network Appliance will purchase Redwood City, Calif.-based Decru for approximately US$272 million in cash and stock. Decru's storage security solutions include data protection, regulatory compliance, privacy, secure consolidation, and outsourcing solutions aimed at enterprises and governments.

Protecting the Core

Decru's flagship product, DataFort, is designed to protect the core of the storage network by inserting a layer of strong encryption, authentication, access controls and compartmentalization.

"In an era where data is a precious asset and security threats to that data are accelerating, encryption is a key element of any data infrastructure," said Dan Warmenhoven, CEO of Network Appliance. "Recent, highly public mishaps point to the need for companies and governments to more effectively protect sensitive business, employee, partner, customer and intelligence data."

Adding Cryptic Piece

The Decru deal augments Network Appliance's lineup of data protection solutions. The company said the acquisition also complements its recent purchase of Alacritus while expanding its ability to deliver advanced data protection solutions for hard disk storage as well as tape and virtual tape environments.

Finally, with Decru, NetApp continues to expand its ability to "front end" multivendor (or heterogeneous) storage systems from various third-party vendors in the storage arena. Just as the newly-enhanced NetApp V-Series systems virtualize a myriad of storage systems, the company said NetApp and Decru solutions are also capable of protecting data stored on third-party disk and tape systems.

Diane MacAdam, partner and senior analyst at Data Mobility Group, told TechNewsWorld that Decru is an attractive acquisition for NetApp since it has done well in the government sector with its encryption products. In addition, she said, NetApp could possibly use that intellectual property in its commercial products.

"Storage vendors are very interested in encryption right now," MacAdam said. "NetApp was smart to go out and acquire the technology. It's easier to acquire it than to build it yourself."

Consolidating Storage

NetApp isn't the only storage company gobbling up smaller players. Sun recently announced its intent to purchase STK. McData is acquiring CNT. Symantec (Nasdaq: SYMC) is buying Veritas. STK previously bought Storability. And EMC (NYSE: EMC) is on a buying spree of its own.

"Smaller companies bring out technology, prove it works, and get the attention of larger vendors who want to purchase the technology and bring it in house," MacAdam said. "I'm not sure we are at the end of the storage industry consolidation yet. It's only June. Between now and the end of the year, we are probably going to see more deals announced."

The Decru acquisition is expected to close by October, 2005, subject to receipt of required regulatory approvals and other customary closing conditions. Decru will form a new business unit within NetApp.