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Microsoft is making a sly move in its cloud war with Google

Business Insider | Jan 4, 2018, 12.00 AM IST
Business Insider

Avere Systems Avere Systems CEO Ron Bianchini

Microsoft has announced its intent to purchase Avere Systems, a Pittsburgh-based data center storage company. The deal represents a move to boost Microsoft's cloud business - and undermine Google's. Avere had raised $97 million in its lifetime, including an investment from Google itself.

Microsoft on Wednesday announced plans to buy a startup data center storage company - a move that represents a strike at archrival Google.

The software giant is planning to buy Avere Systems, a Pittsburgh-based provider of data center storage software and hardware. Avere's products make it easier for companies to share their storehouses of data between their own servers and massive cloud computing platforms like Google Cloud or Microsoft Azure. The company's customers include the Library of Congress and "Despicable Me" animation studio Illumination Mac Guff.

Microsoft cloud customers will benefit from the tie-up, because it will allow them to run "the largest, most complex high-performance workloads" in Azure, Microsoft said in a blog post .

"We are excited to welcome Avere to Microsoft, and look forward to the impact their technology and the team will have on Azure and the customer experience," Microsoft said.

The companies did not disclose the terms of the agreement or when they expect it to close.

But in addition to helping the Windows maker, the deal is a swipe at Google.

Notably, in March, Avere took in $14 million in funding from investors including Google - not GV or CapitalG, the company's affiliated venture capital arms, but from the search giant itself. That slightly unusual investment put Avere in an elite club of Google-backed startups including the mysterious Magic Leap , Pokemon Go developer Niantic , and Elon Musk's SpaceX . At the time, Avere CEO Ron Bianchini told Business Insider that the Google relationship came from a place of strategic overlap, namely their joint interest in so-called "hybrid" computing models .

Hybrid computing systems allow enterprises to combine both cloud-based services with their own on-site servers. The model is something Google Cloud boss Diane Greene has been pursuing over the last several years. Her push in hybrid systems has been something of a response to Microsoft, which has long claimed hybrid computing as part of its cloud computing advantage, given that it already enjoys a big presence in corporate data centers with popular products such as Windows Server and SQL Server.

By snapping up Avere, Microsoft will add its storage expertise to its own portfolio. It will also box out Google from influencing Avere's development. Additionally, Microsoft will get to build on its existing presence in Pittsburgh, where universities including Carnegie Mellon are turning out highly-trained software and hardware engineers.

The deal likely won't turn the tide in the cloud war by itself. But it's a nice move by Microsoft to reinforce its position as the second-place cloud computing provider behind market-leading Amazon Web Services.

Avere had raised $97 million from investors including Menlo Ventures, Norwest Venture Partners, Lightspeed Venture Partners, Tenaya Capital, and Western Digital Technologies, as well as from Google.

Last March, Bianchini told us that he was confident the $14 million Avere had just raised would be "the last money we need." Thanks to Microsoft, it turned out he was right.

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