The deal means that companies that have invested heavily in EMC hardware can use Egnyte on top of their current hardware stack, and get the normal benefits of cloud storage and file management without having to leave their legacy data behind.
For EMC, it’s a decent way to extend the value of their physical devices. For Egnyte, it potentially opens up new customers and revenue streams. Egnyte has indicated in the past that it expects to be cashflow neutral by the end of 2014, and that its revenues on a run-rate basis are currently between $25 million and $35 million.
EMC’s market capitalization is $59.46 billion, implying that Egnyte will have a large new potential customer base to sell into.
Egnyte recently announced that it would lean on Google’s cloud to store its raw customer data in the future. Google Ventures is an investor in Egnyte. I bring that up because the EMC deal smells strategic. EMC is worth a massive multiple of Egnyte, and has revenue of around 1,000 times the hybrid storage company.
If EMC were worried about cloud storage products eating at its on-premises hardware business, Egnyte could be a pretty reasonable pickup for the legacy firm. It would be interesting to see EMC pick up a company that was a growing Google cloud customer.