Oracle’s made another major buy today, announcing that it has agreed to acquire Pillar Data Systems, a privately held storage technology company that is majority-owned by Oracle’s own chief executive officer, Larry Ellison. Neither parties disclosed the financial terms of the acquisition, though the transaction is structured as a 100% earn-out with no up-front payment.

Pillar Data Systems is a privately-held company based in San Jose. Pillar produces storage area network (SAN) block I/O storage systems and is one of the leading providers for highly scalable SAN block I/O storage systems. Pillar has a customer base of some 600 businesses running with 1500 systems using Pillar products. Adding Pillar to its array will help Oracle to deliver a complete line of storage products combined with Oracle software. Sun Microsystem resold its SAN storage product before it was acquired by Oracle, so adding Pillar would be critical for Oracle to own a proprietary storage system.

“The acquisition of Pillar Data Systems provides Oracle with a compelling SAN storage architecture that complements our core strengths,” said John Fowler, Executive Vice President of Systems at Oracle. “Customers can optimize the value of their Oracle applications, database, middleware and operating system software by running on Oracle’s storage solutions.”

Oracle follows other big companies’ practice to acquire independent storage vendors, such as Dell’s acquisition of Compellent and Hewlett-Packard’s purchase of 3Par. Storage is a key component of the cloud and software services as they provide for the storing, maintaining and delivering of massive amount of data including as media, software, documents etc.

All major players are taking big steps around storage and in particular to improve I/O storage.  I/O bottleneck is a major problem for servers as they transfer data.  Keeping friction minimal for data access and transfer is a key component in addressing the data management needs of today, and in the future.

Pillar I/O storage systems delivers an innovative storage solution that boasts more than 2X the typical utilization rate, is simple to manage, less expensive to scale, and can save 65% of ownership cost. Oracle aims to target the mid market areas after the acquisition with its Sun servers with Pillar storage on the back end.