This post is a bit behind considering Mark Lewis confirmed the acquisition of NearTek’s assets on September 20th, 2006 at the Storage World Conference in Boston.  Nonetheless I thought I would post my thoughts on the acquisition.  For those of you who don’t know who NearTek is they were a VTL startup who sucked up ~80 million in venture capital and built a decent product but failed to gain market traction.  EMC is in a win/win position with this purchase but things look grim for FalconStor.  EMC has be OEMing the FalconStor VTL code (cleaned up, modified and stabilized by EMC but at the most basic level FalconStor) as the CDL or CLARiiON Disk Library since April 2004.  The best case scenario for FalconStor is that EMC continues to OEM their code and uses the threat of NearTek to purchase the FalconStor code at a lower cost.  Worst case is EMC actually plans to replace FalconStor with NearTek in the CDL product line.  EMC’s market share in the VTL space has grown from 4.6% in fall of 2004 to 17% in the spring of 2006, with this type of growth the loss of EMC as a FalconStor partner could have significant impact.  Should be interesting to watch.

-RJB