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5/23/2006
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Cisco Invests In File Virtualization Vendor

NeoPath's products decouple the file system from physical storage devices to allow data to be migrated to lower-cost or higher-performance devices without shutting down the storage devices.

Cisco has invested in a small developer of software for virtualizing file storage, but that developer is discounting -- for now -- the possibility of an outright acquisition even though two of its competitors have been acquired recently.

The developer, Mountain View, Calif.-based NeoPath Networks, provides file storage virtualization solutions, which CEO Alan Baratz said decouples the file system from physical storage devices to allow data to be migrated to lower-cost or higher-performance devices without impacting user productivity.

Cisco participated in NeoPAth's third round of funding, which totaled $11 million, bringing the total venture funding in the company since 2003 to $29 million.

Baratz said that Cisco was "one of the largest investors in this round," but did not disclose how much came from Cisco. Cisco is NeoPath's first strategic investor, he said. "But neither Cisco nor anyone else has made an offer to acquire NeoPath," he said.

NeoPath is one of only a handful of companies that has developed file virtualization software.

One of those, Rainfinity, was acquired by EMC in August in a deal worth less than $100 million. In January, EMC unveiled its new EMC Rainfinity Global File Virtualization technology, which virtualizes the management of global namespace to allow customers to move data between heterogeneous NAS appliances in a non-disruptive fashion to increase utilization.

Another competitor, NuView, was acquired by San Jose, Calif.-based Brocade, for $60 million. Brocade, a leading developer of Fibre Channel switches and related equipment, expects to integrate the NuView technology into its Tapestry Wide Area File Services (WAFS) solution, which Brocade introduced in June.

The fourth vendor, and the only one other than NeoPath that has not been acquired, according to Baratz, is Lowell, Mass.-based Acopia Networks.

File system virtualization is becoming important as companies continue to store more and more unstructured data, which includes data generated by non-database applications such as Microsoft Exchange and PowerPoint.

"New storage technologies become available, maybe with better prices or performance, and customers want to move their data to the new devices in a way that's transparent to the user," Baratz said. "Today, they can't do it. They need to come in at night, stop all the files, move them, reconfigure them, all manually. It's a very long, disruptive process."

The NeoPath technology is software that is currently sold through the channel integrated on a Dell server to act as an appliance. Baratz said that the software has already been ported to HP and Sun servers.

The interest from Cisco comes in part from the fact that the software eventually could be ported to almost any hardware, including a blade in a Fibre Channel switch, said Baratz. "I'm not saying we've done this," he said. "I'm saying it could be done."

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