EMC buy inspired by Intel's Israel operations

Shmulik Shelach

In acquiring XtremIO, EMC seeks to establish a strategic foothold in Israel, just as Intel has done.

Severe price competition caused EMC Corporation (NYSE: EMC) to acquire XtremIO Ltd. sooner than planned and for more than expected. On top of that, "Globes" broke the story of the acquisition, and although this did not jeopardize the deal, it forced EMC's hand about how and when to reveal it.

As a result, there has been almost total silence by the parties involved, save for a brief formal press release from EMC, in contrast to the usual hoopla about deals of this size. It was not even possible to obtain a picture of XtremIO's staff.

When all is said and done, EMC is about to set up in Israel a top global center for flash-memory storage solutions. These systems are designed for huge server farms - cloud computing - and are based on smart software and state-of-the-art components.

EMC president and COO Information Infrastructure Products Pat Gelsinger has said in the past that he wanted to establish a strategic foothold in Israel, just as Intel Corporation (Nasdaq: INTC) has done.

Israel has no Google or Facebook, wails the local venture capital community. In practical terms, this means that investors cannot rely on huge deals that will make a fund a success, which sometimes works in Silicon Valley. But it turns out that Israel has very respectable returns on investment if one enters the right places. In most cases, these are start-ups that target basic infrastructures. As always, it is necessary to know where to go and when to leave.

The tactical movements in the computer infrastructure space in recent years, brings IT back into the center of investors' sights. Israel does not lack for opportunities in the field. None of them will probably grow into a giant company, but the accumulated know-how in Israel in this space will make it possible to find more XtremIO's over the next couple of years.

It is impossible not to write a few words about the previous Israeli flash memory deal - Anobit, which was acquired by Apple Inc. (Nasdaq: AAPL). At the time, we wrote that despite the respectable premium, the deal was far from sure to fulfill its potential. Memory technology for enterprise SSD requires much higher capabilities, and offers much higher compensation than installations for the consumer market. It is doubtful whether Anobit really has the capability, but if it has - as the company claims - then EMC's check for XtremIO was a big miss.

Published by Globes [online], Israel business news - www.globes-online.com - on May 10, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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