In its third acquisition this year, Data storage firm NetApp Inc. said Wednesday it’s buying the Israeli cloud infrastructure optimization startup Spot.

The companies didn’t reveal the amount, but a source told Calcalist the price was $450 million. Spot had raised about $52 million in funding and employs 150 people in Tel Aviv, San Francisco and London.

Spot sells a platform that helps companies to optimize their cloud computing spending across multiple providers in order to save them more money. It uses artificial intelligence software to help its customers manage cloud workloads across different data centers, claiming it can achieve savings of 80% on average.

Spot does that primarily by tapping into excess server capacity offered by public cloud providers such as Amazon Web Services Inc., Microsoft Corp., Google LLC and Alibaba Cloud, the subsidiary of Alibaba Group Holding Ltd.

These cloud companies sell excess data center capacity, which is usually referred to as “spot instances,” at significantly discounted rates, rather than not sell it at all. But most enterprises fail to benefit from these cheaper prices because they can’t predict their availability.

But Spot says it can accurately predict the availability of this excess capacity thanks to its AI-powered software. It can also intelligently manage, provision and orchestrate spare capacity to help its customers take better advantage of these cheaper compute resources.

NetApp has traditionally been a seller of data storage hardware, but its business has slowed in recent years because of the growth of cloud computing services such as AWS. The company’s response has been to shift its strategy to products that enable customers to access their data wherever it lives, as if it were on a local file system.

The acquisition of Spot appears to fit with that strategy. Anthony Lye, senior vice president and general manager of NetApp’s Public Cloud Services, told SiliconANGLE in an interview that the plan is to offer Spot’s platform for continuous compute and storage optimization. It will target traditional information technology buyers with enterprise applications, cloud-native workloads and data lakes, he said.

“We both believe that there’s an opportunity to pivot from an infrastructure-driven application architecture to an application-driven infrastructure,” Lye said.

The executive told SiliconANGLE that NetApp and Spot were very familiar with each other, as both use each other’s services. NetApp’s IT organization uses Spot’s platform to optimize its cloud spending, while Spot has purchased NetApp’s Cloud Volumes.

“Spot gives us direct access to cloud-natives customers,” Lye said. “Spot will be our platform for Application Driven Architecture, both in compute and storage. We will feed our technologies into the Spot platform and its API.”

Spot founder and Chief Executive Amiram Shachar (pictured) told SiliconANGLE that the two companies have a much bigger opportunity by joining forces. “We saw the same vision,” he said.

The companies said Spot will continue to maintain its own brand and product portfolio as a part of NetApp. Spot will also expand its product roadmap with the financial backing from NetApp.

“Compute and storage are the key architecture components of next generation applications that enterprises operate,” said Constellation Research Inc. analyst Holger Mueller. “The combination of Spot and NetApp brings these two together and will make am attractive offering for CxOs.”

The acquisition of Spot follows NetApp’s earlier buys of Talon Storage Solutions Inc. in March, and CloudJumper Corp. in April. NetApp said at the time that Talon Storage would help it add new remote and branch office capabilities to its cloud data services portfolio, which includes Azure NetApp Files, a service that enables workloads to run on Microsoft Corp.’s Azure cloud without any changes being made to their code.

The acquisition of CloudJumper, meanwhile, is meant to help NetApp improve its desktop virtualization capabilities.

NetApp has been trying to convince the world that it’s a cloud company for a few years now, and its recent spate of acquisitions shows a clear strategy that goes beyond just cloud storage is starting to emerge, analyst Steve McDowell of Moor Insights & Strategy told SiliconANGLE. He said Spot will give NetApp cloud management capabilities that extend beyond storage, just as the recent CloudJumper acquisition brought non-storage related remote desktops into the fold.

“Talon Storage gave NetApp the ability to move cloud storage closer to the customer,” McDowell said. “CloudJumper brought remote desktop capabilities into the NetApp’s portfolio. Now it’s bringing in Spot, which gives it a nice cloud management and orchestration offering.”

The analyst explained that these capabilities will drive further demand for NetApp’s core cloud file services, and that the company is coming close to offering a total cloud solution that extends beyond storage.

“The challenge is in making what looks like a solution into an actual solution,” he continued. “There’s a lot of integration work that needs to happen to make it all whole, both from a product and cultural perspective. Becoming a cloud company from what was a very traditional enterprise storage company won’t be easy.”

Still, McDowell said he liked what the company is doing, since it isn’t trying to just buy market share, but rather putting together the puzzle pieces it needs for a much broader cloud offering that will ultimately tie together on-premises with cloud.

“NetApp has nearly reached the natural limit of how big its storage market is going to be,” he said. “Apart from finding a path into the server market, which would be an insane play for anyone right now, cloud is the only real expansion opportunity for the company.”

Shachar previously appeared on theCUBE, SiliconANGLE’s mobile livestreaming studio, in August 2018, when he spoke more about his company’s cloud cost optimization platform:

With reporting from Robert Hof

Photo: SiliconANGLE