STEC Inc., a leader1 in solid state storage devices for the enterprise market, announced yesterday that it has a acquired KQ Infotech, a Pune based software services company.
Regular readers of PuneTech will remember KQ Infotech as the company that runs the Mentor India internship program for students interested in systems programming, and also as the company that ported Sun ZFS to Linux. KQ Infotech was started 3 years ago by ex-Veritas (Symantec) people (Anurag Agarwal and Anand Mitra).
STEC is a company that makes customized storage solutions based on flash (solid state) memory, and DRAM for various OEM customers like EMC, Fujitsu, HP, IBM, LSI, etc. STEC has revenues of around $300 million, and has development centers largely in Malaysia and US. This acquisition establishes STEC’s first development center in India.
Reading from the STEC-KQ Infotech press release, and from the backgrounds of the two companies, we can make the following guesses:
- STEC is mostly a hardware company. In order to improve the “solutions” offerings around it’s hardware, it needs some good software, and this acquisition attempts to accelerate the process of building a software team
- Few software companies can afford to not be in India; and given the current hiring climate, it is rather difficult to build a new team from scratch in India. STEC is acquiring KQ Infotech and 30 of its employees – this gives them an “established presence” in India, and they can build on top of this.
- One would expect KQ Infotech to go on a hiring spree in the area of storage system software.
- KQ Infotech did not have any significant products of its own, and STEC is unlikely to be interested in KQ Infotech’s existing customers, so this is essentially an acquisition of the expertise and talent.
- It is very likely that KQ Infotech, which is really a fairly small and new company (started just 3 years ago), was first noticed by STEC because of KQ Infotech’s ZFS port. Herein lies a lesson for other startups – porting ZFS had no direct monetary benefits to KQ Infotech, but it was a bold and “world-class” move that gave them immediate visibility all over the world (e.g. they got two mentions on slashdot‘s front page), and gave them a lot of credibility. In the words of co-founder Anand Mitra, “ZFS made an big difference in our credibility with customer. Before ZFS, our customers would ask, ‘How do you know your team is capable of this kind of work,’ but after we did ZFS, the conversation would go, ‘Clearly, you are capable, let’s talk about what we need'”
1: Unlike other companies which always claim to be a leader, or “leading provider of”, but are usually not, STEC actually appears to be the biggest company building solid state drives as hard disk drive replacements for the enterprise market.