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NetApp acquires Instaclustr for database as a service

Instaclustr is being acquired by NetApp in a bid to the help the vendor grow beyond its on-premises storage roots into the bustling market for cloud software as a service.

NetApp on Thursday acquired the privately held database-as-a-service vendor Instaclustr. Financial terms of the deal were not publicly disclosed.

Instaclustr, based in Redwood City, Calif., had raised $22 million in venture funding since the company was founded in 2013. The company provides a series of managed cloud services, including database as a service (DBaaS), based largely on open source technologies. Among the managed cloud services that Instaclustr offers are Kafka event streaming, Apache Cassandra and, more recently, PostgreSQL database features thanks to its acquisition of Credativ in March 2021.

For its part, NetApp has been steadily growing its capabilities in recent years thanks to a series of acquisitions. In June 2020, NetApp acquired Spot, a cloud infrastructure management tools provider. The Spot business unit under NetApp's ownership expanded further just last month, with the acquisition of Fylamynt for cloud automation. The Instaclustr technology and business operations will be folded into the Spot by NetApp business unit once the deal closes, which NetApp expects will be in the first quarter of its fiscal 2023.

NetApp moving into DBaaS and cloud

Analysts have a somewhat positive view on the NetApp acquisition, as it is an extension of a direction that the company has been heading in recent years.

NetApp got its start as a storage vendor with on-premises systems and has added cloud data services. Marc Staimer, president of Dragon Slayer Consulting, said the acquisition of Instaclustr is about NetApp's continued efforts to expand into Cloud SaaS offerings. He added that NetApp's most recent acquisitions have little to nothing to do with its storage business.

"On-premises storage is a shrinking market, based on revenue," Staimer said. "NetApp is diversifying into cloud SaaS offerings, and Instaclustr appears to be another cog in that plan."

Building out NetApp's cloud management vision

Steve McDowell, an analyst at Moor Insights and Strategy, said that from his perspective, the NetApp acquisition of Instaclustr is a positive development.

Instaclustr is a great acquisition for NetApp. Instaclustr extends NetApp's cloud management portfolio with technology that's already proven. I applaud the move.
Steve McDowell Principal analyst, Moor Insights & Strategy

"Instaclustr is a great acquisition for NetApp," McDowell said. "Instaclustr extends NetApp's cloud management portfolio with technology that's already proven. I applaud the move."

According to McDowell, NetApp's strategic vision is focused on enabling IT to manage workloads in the cloud. McDowell noted that NetApp has executed on that vision with multiple acquisitions in less than two years, and all are focused on cloud management. The focus on the cloud for NetApp is paying off in his view, McDowell said, adding that NetApp's cloud business was nearly 7% of its overall revenue last quarter, and growing at a triple-digit rate.

"Cloud is a bright spot that's helping differentiate NetApp in the crowded and increasingly staid storage market," he said. 

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