Overland Plans Primary Storage Acquisition

The San Diego-based company aims to expand its product line to include a primary storage line via an acquisition to be announced on or before Aug. 15, the date of its fiscal 2005 financial report, Calisi told CRN. He declined to name the company that Overland plans to acquire but said the deal would make Overland one of a handful of vendors that supply primary disk storage, secondary disk-based backup storage and tape storage to the channel.

"All three tiers will be tied together," Calisi said. "Primary, secondary, tertiary--our VARs are going to be able to get all three from one vendor with a common operating system."

Overland&'s move into primary storage comes as it&'s losing its biggest OEM customer, Hewlett-Packard. Overland on Wednesday said HP informed the vendor that it will begin purchasing tape automation products from another supplier at the end of their three-year contract, which expires in July 2006. HP accounts for about 53 percent of Overland&'s revenue, according to Robert W. Baird, a Milwaukee-based financial analysis firm.

Though disappointing, the loss of HP wasn&'t a total surprise, Calisi noted. Overland has been expanding its channel business ever since he joined the company about four years ago, when Compaq accounted for nearly all of Overland&'s roughly $155 million in sales, he said. At that time, the channel accounted for about $20 million in sales, compared with about $100 million today, he added.

"We've done a nice job of diversifying the business," Calisi said. "Years ago, [the loss of HP] could have been fatal."

Overland's channel partners applauded the company's planned foray into primary storage.

"I'm all for them expanding their product line," said John Zammett, president of HorizonTek, a Huntington, N.Y.-based storage solution provider. "They have the best channel program in the business."

By taking on primary storage, Overland would be making a wise move to expand its horizons, according to Greg Knieriemen, vice president of marketing at Chi, a Cleveland-based solution provider.

"We all know that companies like Overland Storage and StorageTek can't survive on tape alone," Knieriemen said. "Moving into disk solutions will help Overland's channel. They need the acquisition. Overland makes great tape products. They don't break. They don't need any support. But the problem is, the company has no road map for RAID."

Yet that situation stands to change, Calisi said. "Our goal is to equip our resellers with a product that protects data from the moment it is written," he said. "We want it protected, make sure it's always there and deliver it to the channel with high margins, as we've always done."