Overland Storage has bought Zetta, a disk virtualisation software company, for $9 million, to supply protected primary storage alongside its disk-to-disk backup and tape backup product lines.

There will now be three product lines: NEO tape automation for tertiary storage; REO disk-to-disk backup for secondary storage; and a new and un-named protected primary storage line using Zetta software - CEO? LEO? ZEO?

Overland has just been dumped by its main OEM, HP, which has decided not to take Overland's next-generation, half-height, mid-range tape automation product on board. HP, responsible for 53 percent of Overland's revenue, has presumably got a new supplier in mind although it has not said who. New HP CEO Mark Hurd is in the middle of cost-cutting measures as he unravels the Fiorina legacy. It may buy in product from, possibly, ADIC, Quantum or StorageTek, or even try for a manufacturing deal. HP used to buy from StorageTek but changed to Overland after the Compaq acquisition.

Overland's contract with HP expires in mid-2006. Chris Calisi, Overland CEO, says his company will concentrate on higher-margin branded product sales. He put a brave face on the HP rejection, saying: "Changes, such as the cessation of a long-standing relationship, present challenges that must be viewed as opportunities. We intend to leverage our worldwide network of resellers, arguably one of the most powerful sales channels in our industry, to become the leader in mid-range protected tiered storage solutions."

The tape automation market is both consolidating and commoditising as the LTO format is crushing its DLT/SDLT and other format competition. Virtually all autoloader and library tape products now support LTO. With four suppliers of LTO drives - HP, IBM, Quantum (Certance), and Tandberg - competition is driving down prices at the drive level. Competing tape automation and library products offering the LTO format is also a factor in driving down prices. A third factor affecting the tape market is the rapid rise of disk-to-disk backup.

Overland's new product line will protected drive arrays where disk space is provisioned as needed from a virtual pool, Zetta's so-called thin provisioning. Data will also be protected by frequent snapshots and replication functions supporting both file and block-based data. REO appliances will likely be used as the destination for snapshots and replicated data. It is also likely that there could be a security element controlling access in the new product line.

Calisi said: "The Zetta software will form the heart of our primary Protection OS software. We will separately source the server and storage components and expect to deliver a protected primary storage appliance to market by mid-October 2005."

He is hoping that a trio of inter-linked data protection product lines embracing primary and secondary disk storage and tape storage will appeal to mid-range and smaller businesses and get his company out of the commoditising tape product hole it is being sucked into.

All tape automation vendors have embraced disk backup front ends for their tape products. StorageTek is being bought by Sun and is already supplying a set of disk-based products. Other tape automation companies are helping consolidation along, with, for example, Quantum buying Certance, or hoping to ride the consolidation and commoditisation wave by becoming more efficient and raising sales volumes to compensate for falling margins.

Techworld reviewed an earlier version of the Zetta software here.