Open Source Leader Red Hat to Acquire Gluster

Red Hat (RHT), provider of enterprise open source solutions, announced it will pay $136 million in cash to acquire Gluster, Inc., a privately-held provider of scale-out, open source storage solutions for standardizing the management of unstructured data.

Founded six years ago, Gluster simplified storage using open source software and commodity hardware. Clients such as Pandora, Box.net and Samsung use Gluster to manage large volumes of data in storage. Gluster's main product is GlusterFS, a software-only, scale-out storage system. It allows enterprises to combine large numbers of commodity storage and compute resources into a high-performance, centrally-managed and globally-accessible storage pool without compromising on cost, performance and manageability.

Enterprise Big Data Management

The acquisition positions Red Hat to help its enterprise customers manage the growth of huge datasets, either on-premise or in the public cloud. "The explosion of big data and the new paradigm of cloud computing are converging, forcing IT to re-think storage investments that are cost-effective, manageable and scale for the future," said Brian Stevens, CTO and vice president, Worldwide Engineering at Red Hat. "Our customers are looking for software-based storage solutions that manage their file-based data on-premise, in the cloud and bridging between the two. With unstructured data growth (such as log files, virtual machines, email, audio, video and documents), the 90s paradigm of forcing everything into expensive, single-system DBMS residing on an internal corporate SAN has become unwieldy and impractical."

“We are extremely pleased to be joining Red Hat,” said AB Periasamy, co-founder and CTO of Gluster. “We believe this is a perfect combination of technologies, strategies and cultures and is a great development for our customers, employees, investors and community.”

Henry Baltazar, senior analyst of The 451 Group, commented, “The scale out storage technology and expertise Red Hat is gaining from the acquisition of Gluster will serve as a powerful foundation for future public, private and hybrid storage clouds.”

The transaction is expected to close in October, subject to customary closing conditions. Red Hat will also assume unvested Gluster equity outstanding on the closing date and issue certain equity retention incentives.

Growing Storage Sector

“Industry analysts estimate the total addressable market for unstructured data storage at approximately $4 billion and growing. This is an exciting new area of potential growth for Red Hat and one in which we intend to invest aggressively,” said Charlie Peters, EVP and CFO of Red Hat. “While we expect Red Hat’s operating income to continue to grow nicely next year based on revenue growth, we expect that non-GAAP operating margin for fiscal year 2013 could be approximately 150 basis points lower than fiscal 2012 as we make additional investments to help realize Gluster’s potential. At that level, Red Hat’s operating margin will still be among the highest compared to other high-growth software companies when they were at the $1 billion revenue stage,” he added.