Cisco invests in NeoPath

Corporate dance

Comment NeoPath Networks, a startup provider of file storage virtualisation, has announced it received $11m in a funding round that includes Cisco Systems and previous investors August Capital, DCM-Doll Capital Management, and Gabriel Venture Partners.

NeoPath indicates it will use the funds to continue customer and partner growth and to further enhance its products. NeoPath was founded in 2002, and offers a storage appliance that optimises file storage management. The product sits in the network and manages files stored across NAS systems in a single pool, using virtual namespace and load balancing. Customers include companies in the service provider space, as well as financial services, government, aerospace, and manufacturing industries. Cisco is NeoPath's first strategic investor, but it is not specified how much Cisco has contributed to funding.

The storage market continues to be a hot space, with many startups competing alongside industry giants in a space with double-digit growth. So too, is the file virtualisation space hot, and the number of startups is dwindling rapidly.

Cisco is not the first company to show interest in this space. When NeoPath got started, it was competing with Rainfinity, which is now part of EMC and sold as the EMC Rainfinity Global File Virtualisation appliance. NeoPath also competed with NuView, which was purchased by Brocade and is now part of its Tapestry family of software products. Other startups include Acopia Networks and Attune Systems.

File virtualisation will only continue to grow in importance. Networked storage became popular in the form of NAS and SAN when users had too much storage lurking on individual servers. It made more sense to store data in central locations. File virtualisation has emerged now that organisations must manage the islands of files stored throughout the network, especially as ILM approaches become more popular.

With ILM, storage managers try to match data or files to equipment with the appropriate costs and performance. With ILM, where information resides also depends on its age, so tiered storage is also causing information to move, driving up demand for file virtualisation. In essence, growing stores of information require better management and the vendors are doing their best to make sure their solutions have all the pieces, both through organic development as well as through acquisition.

Cisco has contributed to this latest round of funding but has refused to comment on any future plans, including possible OEM deals or an outright purchase of NeoPath. Nevertheless, the investment has sent the high-tech community into a buzz.

If Cisco believes that NeoPath is a good storage migration tool and wants to grow its presence in the virtualisation space for networked storage, then indeed the industry should have excitement about any movement the company makes.

We believe this bodes well for NeoPath in helping it in a market that has both startups as well as veterans competing in it. Any help from Cisco will give NeoPath broader exposure and help it be better positioned against smaller rivals. For Cisco, working with NeoPath at any level will help it build its capabilities.

Through its relationship with EMC, it does have exposure to Rainfinity, but NeoPath could become a partner for developing its own products and compete more against Brocade. The market will continue to watch these two in their corporate dance with great interest.

Copyright © 2006, IT-Analysis.com

Joyce Becknell is research director at The Sageza Group, addressing strategic and tactical issues for clients located in Europe. She works with vendors, business partners, regional and local ISV and channel partners. Prior to joining Sageza, Joyce has worked as an industry analyst covering IBM, Sun, HP, Cisco, Dell, Microsoft, and Compaq, and has worked for both Dell and Tricord.