EMC has bolstered its range of products that back up customers’ data on disk instead of tape, announcing Wednesday that it will pay US$165 million to acquire Avamar Technologies.

Avamar, of Irvine, Calif., makes data-storage software that allows companies to ensure they back up each data segment only once, a process known as de-duplication. Avoiding redundant backups can save network bandwidth, backup time and money.

These economic savings are increasingly pushing corporations to store their data on disk instead of tape, according to Mark Sorenson, EMC’s senior vice president for information management software.

EMC has seen increasing market competition from Hewlett-Packard in recent quarters. The two companies were virtually tied with about 20 percent market share each for the second quarter of 2006, followed by storage system vendors like IBM, Hitachi Data Systems, Dell and Sun Microsystems, according to the analyst firm IDC.

EMC has fought back by acquiring a series of smaller companies to expand into new market segments. Avamar will be the 12th company bought by EMC this year, representing a $2.8 billion total investment.

Joining EMC will give Avamar an enormous boost in its competition with other providers of software applications for disk-based storage, such as Data Domain and Diligent Technologies. All three companies make forms of data-reduction technology, which find repetitive patterns in stored data and use algorithms to compress the rest.

Avamar’s Axion 3.5 is the company’s latest version of this capacity optimized storage software. EMC expects an easy integration in this merger because Avamar already uses EMC’s Clariion servers as a target for disk-based backup and EMC’s Centera servers for long-term archiving.

Avamar, a privately held startup founded in 1999, reported strong financial results last month. In the third quarter alone, the company signed up new customers including Desert Diamond Casinos, Level3 Communications, the New York State Lottery, Pomona College and the Virginia Department of Motor Vehicles. Avamar President and Chief Executive Ed Walsh will stay with the company, joining EMC and reporting to Sorenson.

-Ben Ames, IDG News Service (Boston Bureau)

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