Last week Network management point-product vendor Solarwinds Inc.(NYSE: SWI) announced that it is acquiring Storage Management vendor Tek-Toolsfor $42M in cash and stock.
I can understand the need for the acquisition and I would say that it is probably a good move by solarwinds to fill a gap in their portfolio. We(ManageEngine) have had storage network management since 2005 (ManageEngine OpStor) and until recently Storage Network management had predominantly been a large enterprise affair. But the current drive towards server consolidation and virtualization is actually propping up the need for Storage networks and Storage management among mid-sized enterprises and Solarwind’s need to include Storage management in it’s portfolio is probably justified.
What is surprising to me is the terms of the deal. Why did Solarwinds pay $42M for a company with revenues of $4M and an operating loss of $3M? Seems that the good old days of dot com valuations are back 🙂 Either Solarwinds is very desparate or Storage Management has suddenly become the killer “must-have” technology in 2010 ! (very unlikely, but even then does not justify the steep valuations)
Solarwinds used to be an engineering company focused on building good products. Maybe the pressure of being a public company is forcing them to show results quickly. They have acquired ipMonitor (for Server and Application management functionality), Kiwi (for log management), Lan Surveyor (for Layer 2 discovery) and now Tek-Tools for Storage management. Acquiring disparate products and integrating them at a GUI level may provide short-term boosts to revenue, but it is exactly this kind of headache that customers hate when dealing with the Big 4. (And Solarwinds would know this better than anyone else 🙂 )
Anyway, customers who don’t like this “Acquire and perform brand level integration” strategy can check out the more complete portfolio of Enteprise IT Management products from ManageEngine here.
For now I would like to wager a bet that Solarwinds is working on a free Desktop Storage management tool that can monitor a tiny unit of storage(like say 1GB) for a minuscule amount of time(60 minutes?) to bait customers similar to this. But we know that customers can use Google to find better deals like this.
You are making tons of assumptions on your own. Just trying to make your company look better when someone else’s revenue far supersedes yours huh.
Use your time to perfect your products instead of constantly badmouthing other competitors. (I’ve seen most of your posts towards other software companies)