Rackable Acquires Terrascale for $38M

Rackable Systems announced last week they had finalized an agreement to acquire Terrascale Technologies for $38M. Terrascale is a provider of clustered file system technology who’s ability to leverage the high I/O throughput in high performance clusters will make them an integral part of Rackable’s future storage solutions, primarily on the Linux platform.

In a statement, Rackable CEO, Tom Barton, said, “As the demand for high capacity, open architecture storage systems continues to grow, Terrascale‚Äôs technology provides a very compelling alternative to expensive solutions from legacy storage vendors.”

While one can’t argue that enterprise demand for storage products is increasing steadily, the acquisition comes as a bit of a surprise from the normally conservative server vendor.

Rackable, known more for the high performance compute and storage clusters they sell than the software that runs on them, may be on the leading edge of a trend where vendors that sell into the datacenter are seeking immediate product diversification. A good example of this might also be Avocent’s recent purchase of Cyclades. While Avocent is historically known as a KVM switch vendor selling into the Microsoft Windows space, company executives attending last month’s LinuxWorld Conference & Expo in San Francisco indicated that with the purchase of Cyclades and the pending acquisition of LANDesk, their focus is on the management of the entire datacenter regardless of the OS or hardware.

The HPC market has leveraged venture capital heavily in the last several years without a remarkable amount of consolidation — Rackable picked up $21M in February of 2003 and went public in June of 2005. However, with the buy cycles on large clusters getting longer and longer, clock speeds no longer on a meteoric rise, the current trend toward virtualization over multiple machines, and the high energy costs associated with powering and cooling rapidly expanding datacenters eating into operating budgets, we may start to see some of vanilla rack vendors struggle if they aren’t able to expand their offerings.

Terrascale is being viewed by analysts as a good fit for the server vendor. The two companies have partnered on a number of installations including a 198-node storage cluster for the University of Florida completed last December.