Legato Acquires OTG Software

Legato Systems Inc. will buy OTG Software Inc. in an all-stock deal worth $403 million.

With the deal, Legato will gain OTG's virtualization software, which lets PCs and servers pull data from anywhere on the network. When that software is combined with Legato's Networker backup and recovery software, users should need less storage and save time and money with faster backup and recovery processes.

The deal also brings more flexibility to Legato. Since OTG can work with multiple types of information, including files, databases, and messages, Legato can expand its reach beyond standard backup and recovery architectures such as servers and tape libraries.

Yankee Group industry analyst Jamie Gruener says Legato had to do something like this to find a new role in storage management and compete against Veritas Software Corp. and Computer Associates, which had been gaining market share. He believes Legato customers will gain access to app-specific virtualization technology, but they will still have some questions. "Will the OTG software be an additional product?" Gruener asks. "Or will the customer relationship change as the virtualization software morphs into Networker?"