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Disk drive sales leader Seagate Technology continued its expansion-by-acquisition strategy Dec. 21 with the announcement that it will acquire privately held EVault, a provider of online backup services, in an all-cash transaction for about $185 million.

With the deal, Seagate significantly augments its service business, which includes data recovery, online backup/recovery and archiving for SMBs (small and midsize businesses).

EVault will operate as a wholly owned subsidiary and a new Seagate division, Seagate Storage Services, and focus primarily on the needs of the midtier market, a company spokesperson said.

Seagate, of Scotts Valley, Calif., bought out one of its largest HDD competitors, Maxtor, last spring for $1.9 billion. As a result, the company increased its world hard drive market share from 30 percent to about 41 percent, according to researcher IDC.

“Today’s announcement highlights a strategic next step into services, which is a natural extension of Seagate’s core business and will leverage our brand leadership and channel expertise to deliver solutions to the SMB market,” said Bill Watkins, Seagate’s CEO.

“Over the past three years, Seagate has been executing a strategy designed to broaden its customer base and increase growth opportunities by expanding beyond its core hard disk drive business into the broader storage solutions category,” he said. “Our objective for Seagate Services is to become a leading provider of services to manage and protect our customers’ digital content throughout its lifecycle.”

EVault is the third acquisition for Seagate in the area of services.

In 2005, Seagate purchased Mirra, a leading provider of networked digital content protection products for the home and small-business markets; and Action Front, a professional in-lab data recovery company.

The company will use Seagate Services to pursue “underserved SMB markets”—customers with limited IT infrastructure or appropriate resources, the spokesperson said.

One of the most frequently cited IT challenges in research surveys is improving data availability and recovery. Since the SMB market is said to total about 74 million businesses worldwide, Seagate believes it is positioned to address this multibillion-dollar market, the spokesperson said.

“Seagate has been offering recovery services for their customers,” said analyst Dianne McAdam of The Clipper Group, in Wellesley, Mass.

“They have services that will recover data from disk or tape media that has been damaged and cannot be recovered with normal processes. So, the acquisition expands on their recovery services—now they can offer, in effect, the service to perform the backups for customers. They provide the expertise and the second-site location.”

With the acquisition of EVault, Seagate Services’ new data recovery and online backup/archival services will focus on professional in-lab and on-site retrieval of content for corrupted or inaccessible storage devices for all media formats and all brands, the spokesperson said.

EVault is one of the industry’s largest suppliers of online network backup, recovery and data protection solutions for SMB and remote enterprise computing.

Founded in 1997, the company is privately held, based in Emeryville, Calif., with about 250 employees. It has more than 8,500 customers, including hundreds of financial, health care and legal organizations.

The acquisition is expected to close in the third quarter of Seagate’s fiscal year 2007, the spokesperson said.

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