HPE will buy Zerto for $374 million and use its continuous data protection capabilities to bring disaster recovery, backup and data migration offerings to the GreenLake portfolio.
Hewlett Packard Enterprise (HPE) has entered a deal to acquire Zerto and add it to its GreenLake family of cloud services offerings.
HPE will acquire the cloud data protection and disaster recovery (DR) vendor for $374 million cash, pending regulatory approval. After the transaction, Zerto will become part of HPE's Storage business unit. The deal is expected to close within the next two months.
Zerto's journal-based continuous data protection (CDP) technology will add DR, backup and data migration capabilities to the GreenLake portfolio. After the sale, HPE will make Zerto available as a service on GreenLake and Data Services Cloud Console.
Existing Zerto customers should see no disruption from the acquisition and will benefit from having the backing and support of a much larger corporation, said Tom Black, senior vice president and general manager of HPE's Storage business unit. Many aspects of Zerto will be preserved, such as its core journaling technology, and CEO Ziv Kedem and CTO Oded Kedem, who are brothers, will continue to have leadership positions after the deal is finalized.
"When we acquire companies, we don't dissolve and disband them. Zerto customers will see increased momentum around roadmap and around go-to-market," Black said.
The most noticeable change for Zerto customers will be control management integration with HPE, but that is still under development, Black added.
Zerto's CDP technology was a strong incentive for a purchase, Black said. According to internal survey data, 75% of HPE customers said that due to COVID-19, DR has gone from a top 10 IT concern to a top 3 issue. Zerto's ability to restore environments to a point seconds before an outage occurs in a matter of minutes was something HPE wanted immediately, and it made more sense to buy it now than to spend years developing it in-house, Black said.
Additionally, HPE already had a technology partnership with Zerto, as it does with Veeam, Acronis and other Zerto competitors. HPE was confident about bringing Zerto in-house due in part to this established relationship, Black said.
HPE and Zerto must continue to operate independently during the regulatory period leading up to the purchase, so Black could not comment on joint development plans or provide details on what Zerto's roadmap might look like post-acquisition.
Mutually beneficial
There is a trend of cloud storage vendors trying to become as comprehensive as they can by folding data management and protection capabilities into their platforms, said Krista Macomber, a senior analyst at Evaluator Group. HPE adding Zerto to its GreenLake product line makes a lot of sense, as it stands to gain more than just DR, she added. Zerto's technology lets customers move data among different virtualized environments and clouds, providing a high degree of data mobility.
Between increased ransomware and natural disasters, protecting data and restoring it quickly has become much more important nowadays, Macomber said. Unlike HPE's other data protection partners, Zerto started as DR and expanded to backup instead of vice versa, so minimizing recovery time and recovery point objectives was its purpose from the start. With more than a decade to refine its product, Zerto essentially saves HPE all that development time with this deal.
Zerto has had time to develop its technology, and HPE capitalized on the opportunity.
Krista MacomberSenior analyst, Evaluator Group
"Zerto has had time to develop its technology, and HPE capitalized on the opportunity," Macomber said.
The company had an inconsistent 2020, laying off 200 employees in March and securing a $53 million funding round just three months later. Furthermore, a former Zerto employee, who requested anonymity, said that in the past six months, they and at least two others left the company for a competitor, citing lack of confidence in Zerto's core product to remain relevant in an increasingly cloud-native and containerized world.
Zerto was hitting a growth plateau that it couldn't overcome on its own, and HPE's larger distribution network represents a chance to fix that, said Dave Raffo, another analyst at Evaluator Group. The acquisition is therefore mutually beneficial, as HPE gets market-tested technology for its GreenLake portfolio and Zerto likely avoided having to get another funding round to continue to scale.
"From HPE's perspective, Zerto's technology was sound -- they just needed a little help with growth," Raffo said.
