Seagate Technology said on Thursday that it would buy EVault, a closely held provider of online backup services, for $185 million in cash. The move marks the biggest step yet by the largest maker of computer hard drives to boost its nascent storage services business, a Seagate executive said. The acquisition, expected to close by the end of March, is Seagate's second in the services arena.
In 2005, Seagate bought Mirra, a provider of digital-content protection products for the home and small businesses. Seagate also has acquired Action Front, a data recovery company.
"This is really planting the seeds for a market that I think is pretty exciting," said Brian Dexheimer, a Seagate executive vice president.
Once having acquired EVault, Seagate intends to offer services in the areas of data recovery, online backup and recovery, and archiving for small and midsize businesses.
"(Small businesses) need a backup and data recovery service, and data compliance. It is not different than the kind of services SunGard offers" for larger outfits, Seagate CEO Bill Watkins said. "(Services are) not going to replace my core, but we think it is a high-growth area."
Seagate plans to pitch the services to companies with 500 or fewer employees, he added.
Founded in 1997, EVault is based in Emeryville, Calif., and has more than 250 employees. Dexheimer said Seagate, which is based in the Cayman Islands but has its corporate headquarters in Scotts Valley, Calif., plans to operate EVault as a wholly owned subsidiary.
Shares of Seagate have risen about 34 percent so far this year, compared with an 11 percent increase in the Merrill Lynch Technology 100 Index, of which Seagate is a component.
CNET News.com's Michael Kanellos contributed to this report.
