Sphere 3D Buys RDX Storage Business From Imation for $6 Million

Highlights:

• Transaction will be accretive in this quarter for both revenue and gross margin;
• Market will benefit from centralized introduction of new features and capacity upgrades;
• Expands RDX market share in North America and Japan, to augment the existing strength in Europe;
• Provides greater control over the backup appliance components that form a key part of Sphere 3D's strategy to deliver comprehensive virtualization, storage and data management for on premise, cloud and hybrid infrastructures.

Sphere 3D Corp. announced that its wholly-owned subsidiary, Overland Storage, Inc., acquired the RDX removable disk product lines and existing inventory assets from Imation Corp., pursuant to an Asset Purchase Agreement, dated as of August 10, 2015, by and among Sphere 3D, Overland Storage and Imation.

The Imation RDX product lines generated approximately $14.5 million of revenue for Imation in the trailing twelve months as of June 30, 2015.

"The completion of our acquisition of the RDX product lines from Imation will accelerate our efforts to aggressively pursue the purpose-built backup appliance market which is a valuable differentiator in our reference architecture for our hyper converged infrastructure deployments," said Eric Kelly, CEO, Sphere3D. "With this transaction now complete, Sphere 3D can expand the current strong presence of our Tandberg Data business in Europe, while increasing sales in key geographies such as North America and Japan, as well as simultaneously strengthening our Global Channel Partner Network for backup appliance offerings."

According to IDC Worldwide Quarterly Purpose-Built Backup Appliance Tracker, the worldwide PBBA market got off to a strong start in 2015 with solid year-over-year revenue growth. Factory revenues grew 6.9% year-over-year totaling $719.3 million and capacity shipped reached 647PBs, an increase of 32.3% year-over-year in the first quarter of 2015.

"Sphere 3D's award winning and patented RDX removable disk technology, marketed and sold under our Tandberg Data brand, is the industry standard in enterprise-grade removable disk storage for backup, data protection and archiving, and is characterized by its very rugged design that allows the disks to be handled and transported while safely retaining data," said Nilesh Patel, VP of product management and marketing, Sphere 3D. "RDX-powered purpose-built backup appliances, like our new RDX QuikStation, are the ideal solution for Small-to-Medium sized businesses in highly regulated industries such as healthcare and financial services, where data must be secured, protected, archived and recoverable per government regulations. This acquisition also now makes available to our global partners our groundbreaking RDX+ software technology which is designed to increase storage capacities by 50% and more, providing all QuickStation and QuickStor appliance customers with future expansion to larger than 2TB capacity media."

As part of the agreement and to ensure a seamless transition for customers, Imation has agreed to provide certain customer support services through October 31, 2015.

Transaction Highlights
100% stock transaction valued at approximately $4.9 million plus the net value of existing inventory of approximately $1.4 million, based on the closing price of Sphere 3D common shares as of August 6, 2015.

NAS Market to Grow at 26% CAGR Over 2014-2019

The global enterprise NAS storage market to grow at a CAGR of 25.85% over the period 2014-2019.

NAS systems create a shared file based storage between enterprise users. NAS exists as an independent network node on the LAN and comprises individual IP addresses. File transfer is achieved through Ethernet connections between users and NAS. It facilitates simultaneous access to multiple users. NAS systems can be used as backup storage in enterprises for archiving and disaster recovery purposes. NAS systems with server mode can also function as a multimedia, database, or print server for SMEs. High-end NAS systems also support RAID technology, which converts multiple HDD into one logical unit. NAS systems are designed and manufactured by several global and local vendors.

The report covers the present scenario and the growth prospects of the global enterprise NAS storage market for the period 2015-2019. The global enterprise NAS market can be segmented, based on end-users, into large enterprises and SMEs.

New trends are emerging in the market related to infrastructure used on-site as well as in data centers. Data centers are being made software defined, which is achieved through advancements in NAS systems. Hybrid arrays are being developed by merging both SAN and NAS systems to improve enterprise storage efficiency. NAS systems are now connected to the cloud to transfer data to cloud storage. These systems reduce the complexity of evolving enterprise operational environments.

According to the report, enterprises worldwide are expanding their businesses to remain competitive. The market is driven by the growing amount of business data, mostly unstructured data. Many data centers are being built to store and process these data. The need for data backup and archiving along with multiple user access to files simultaneously will catapult the demand for NAS systems. These systems are being added with additional features to mitigate current business storage challenges. NAS windows server systems enhance collaborative enterprise environments.

Further, the report states that with enterprise environments evolving constantly in terms of data generation as well as increases in the number of users, storage infrastructures face challenges.