Networking analytics provider Virtual Instruments and storage analysis company Load DynamiX announced today that they would merge, with the latter company’s backers putting up $20 million to help the process along.
The new company will use the Virtual Instruments name and brand, but it will be led by Load DynamiX President and CEO Philippe Vincent. The status of Virtual Instruments CEO John Thompson, who is also the chairman of Microsoft’s board of directors, was initially unclear, but a spokesperson subsequently confirmed that he is no longer with the company.
It’s a strong move for both companies, according to 451 Research analyst Henry Baltazar. For Virtual Instruments, it’s a badly-needed injection of new prospects and new cash – the company let two-thirds of its workforce go in November, after reaching a ceiling in terms of its customer base and running low on funding.
And for Load DynamiX, the merger and assumption of the Virtual Instruments brand saves the company a lot of time. From a market positioning standpoint, said Baltazar, Load DynamiX has been trying to reach Virtual Instruments’ level, and break out of the testing niche by adding analytics and monitoring capabilities.
“This is really a good shortcut for [Load Dynamix], because they were going to spend money already to start building up those tools, and building up their marketing and brand,” he said. “And here, they get to absorb VI’s tools, VI’s existing engineering team, VI’s partnerships and relationships, and probably save a couple of years that they would have spent developing.”
Baltazar said that the restructured company will be targeting the upper tiers of the enterprise market, since larger companies are going to be the ones with the types of large storage arrays best suited for Virtual Instruments’ combined offering.
“For example, the big one is Flash arrays – everybody wants to buy a Flash array, [but] Flash arrays are still relatively expensive,” he said. “Before you make that bet, you’re probably going to want to model it.”
The storage market is also in flux more generally, said Baltazar, which means that there are more new products to evaluate out there.
“It’s an interesting move – they’ve got a lot of work to do ahead, they’re going to have to do some integration work ahead and view it as a competitive space, but obviously, it’s a move that both companies needed.”