IBM snaps up local storage start-up XIV for $300-350m.

IBM: 'We are hoping to create an R&D center bigger than Intel'

ibm biz 88 224 (photo credit: )
ibm biz 88 224
(photo credit: )
In what marks its largest acquisition in Israel, International Business Machines Corp. on Wednesday announced that it has purchased XIV, a local privately-held data storage technology company. IBM said that the acquisition is aimed at enhancing its services to companies generating large amounts of data. "The acquisition of XIV, a tremendous asset in talent and experience in storage systems solutions, will further strengthen the IBM infrastructure portfolio long term and put IBM in the best position to address emerging storage opportunities like Web 2.0 applications, digital archives and digital media," said Dan Powers, VP, Mergers and Acquisitions, IBM Systems and Technology Group at a press conference in Tel Aviv announcing the purchase. "The ability for almost anyone to create digital content at any time is an emerging trend that has accelerated the need for a whole new different way and architecture of storage system solutions to the new world of digital information." The companies would not put a price on the deal, but reports in the Israeli financial press earlier this week valued it at $300 million to $350m. Under the terms of the deal, XIV's 50 employees will remain in their office in Tel Aviv and become part of IBM's system storage business of the IBM Systems and Technology Group. "We are hoping to increase our staff significantly and create jobs for many more people in Israel in an effort to build a large Research & Development center bigger than Intel," said Moshe Yanai, Executive Chairman of XIV, without providing further details. XIV, which was founded in 2002 by a few graduates from the army's elite Talpiot program, spent three years on the development of Nextra, a storage system based on a grid of standard hardware components. Yanai is the main investor of the company, who added that investment into the company did not come from government support or the chief scientist. "Today data is getting more and more complex and its management is getting out of control in endorsing high costs to companies," said Yanai, a former executive of storage solutions company EMC. "We believe the level of technological innovation achieved by our development team is unparalleled in the storage industry. Combining our storage architectural advancements with IBM's world-wide research, sales, service, manufacturing and distribution capabilities will provide us with the ability to have these technologies tackle the emerging Web 2.0 technology needs and reach every corner of the world." To address the new requirements associated with next generation digital content, IBM said it chose XIV and its NEXTRA architecture for its ability to scale dynamically, heal itself in the event of failure and self-tune for optimum performance all while eliminating the significant management burden typically associated with rapid growth environments. The architecture also is designed to automatically optimize resource utilization of all the components within the system, which can allow for easier management and configuration and improved performance and data availability. IBM Israel was first established in 1949 and since then the storage giant's activity in the country has grown from a small R&D center to become the company's largest R&D center outside of the US. IBM Israel employs more than 700 people at IBM Haifa Labs, including the Research Lab in Haifa (HRL), the Haifa Development Lab (HDL) and the Haifa Software Lab (HSL) in Rehovot. An Israeli dream comes true Champagne bottles were not popped at XIV's offices in Tel Aviv on Wednesday to celebrate IBM's acquisition of the start-up, a dream come true of every Israeli start-up. Instead of champagne, the acquisition announcement was toasted with good Israel wine, modesty and the brains of army graduates. "Since I started in the storage data field 35 years ago, my dream has always been to merge with the ones that invented data storage technology and now it is happening," said Moshe Yanai, executive chairman of XIV and a major player in the storage world, who in the 1970s began his career building IBM-compatible mainframe storage based on mini-computer disks. "I am a Zionist and I believe in mergers which keep the local brains and grow the technologies in the country." In Israel, hi-tech companies are often started by young adults fresh out of the army. That is certainly the case at XIV, whose technology promises to address and manage all of a company's storage and business requirements in one system. Ofir Zohar, CEO of XIV, who has been at the company from its inception in 2002, and is a graduate of the army's elite Talpiot program, recalled that the company was founded by five Talpiot graduates and has since recruited a team of 50 employees, including a number of Talpiot graduates and veterans of IBM, EMC and other storage giants. The Talpiot program is a special army training program that puts the best high school graduates through a rigorous curriculum of computer science, physics and math, then places them in key assignments. "This is where the attributes of the Israeli start-up are acquired," Yanai told The Jerusalem Post. "You need 5 to 8 Talpiot graduates, who know how to identify problems in the field and devise solutions with limited time and resources." It comes as no surprise, therefore, that the meaning of the obscure name of the start-up goes back to the founding brains. XIV is the Roman numeral for 14 - all five co-founders graduated from the 14th class of the prestigious Talpiot technology program.