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ScaleIO Raises $12 Million For Software-Based Storage To Compete Directly With EMC, IBM And Hitachi Data Systems

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ScaleIO has raised $12 million in a Series A round from Norwest Venture Partners (NVP), Greylock Israel and private investors for its software-defined storage technology.

ScaleIO is one of a new breed of storage providers that use software to scale across thousands of servers. Its software uses the hard disk on application servers to create high-performance, shared virtual storage array networks (SAN).

The company claims it gets 80 to 90 percent savings for its block storage technology compared to traditional SAN providers such as EMC, IBM and Hitachi Data Systems, which have prospered over the past 10 to 20 years in a market valued at $20 billion by IDC.

By eliminating the need for expensive hardware, mid to large enterprise customers and cloud service providers can deploy a distributed storage environment at a fraction of the cost. This also translates to lower cost of operations and management, which makes storage software appealing.

ScaleIO has a veteran team of partners that have designed and developed storage software products at companies such as IBM, NetApp, and Xtremio (acquired by EMC).

Amazon Web Services (AWS) provides a block storage service that has elasticity and the capability to use across thousands of servers. AWS provides the hardware through its service, which is popular because of its performance and affordability. ScaleIO also eliminates the need for expensive hardware, allowing mid to large enterprise customers and cloud service providers to deploy a distributed storage environment at a fraction of the cost.

ScaleIO’s challenge is in scaling the business. The storage business is dominated by resellers that have deep relationships with the traditional storage providers. But ScaleIO CEO Boaz Palgi says he has had no problem selling direct to customers and expects similar success when developing a channel. That’s in part due to the low cost of the technology compared to the SAN providers.

“I go after the same competition and win,” Palgi said.