The first meeting of the Boston Big Data Summit was held yesterday. Since the announcement on October 2, the event has had a great reception. Just over a hundred people attended, with an almost even split between “end users” and “vendors.” By a significant margin, the vendors were entrepreneurs or self described “startup types.” Many established players were also represented in the audience.

The program featured a keynote speech by Curt Monash, a leading analyst and strategic advisor to the software industry. This was followed by a lively panel discussion with Ellen Rubin, founder and vice president of products at Cloudswitch; David Cohen, chief architect for the Cloud Infrastructure Group at EMC Corporation; and Larry Dennison, president and founder of Lightwolf Technologies.

The Boston area has long had a tradition of nurturing entrepreneurship in “big iron” and enterprise class products, and the audience yesterday reflected that tradition. Late in September, Bob Zurek and I met to discuss the possibility of setting up this forum. We recognized that there were no technical forums that were geared towards Database Management Systems (DBMS) and Information Management (IM) professionals in the Boston area, and felt that there was an acute need for one.

In setting up the Boston Big Data Summit, we had a simple mission: to create a technical forum for DBMS and IM professionals, and foster innovation and entrepreneurship in these areas, through networking, debate and the sharing of experience. The forums would necessarily be somewhat geeky (that’s what you get when you have two geeks running the show).

The goal was to make them accessible to everyone at no cost. Our sponsors Foley Hoag, Infobright, Expressor Software, and Kalido made the event possible, and we intend to continue to fund this venture through corporate sponsorships.

Yesterday’s event is, hopefully, the first of a regular series of events that we will be organizing. The next event is scheduled for sometime in January, and we would like the one after that, in the spring, to be a day long event with multiple speakers, panelists and discussion areas. The excellent reception to yesterday’s event is a clear indication of the need in this area.

The keynote speech reflected Curt’s extensive experience and depth of knowledge in the field of Big Data, analytics, and the companies and technologies in the space. Curt described the market and provided three different ways of segmenting the market for these products, a segmentation that was the subject of much discussion after …Next Page »

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Some tech companies seem to be at their best when things are at their worst. Those are the ones you really need to keep an eye on, especially in a recession. Isilon Systems is one of those companies.

The Seattle-based data storage firm (NASDAQ: ISLN) is announcing its third-quarter earnings this afternoon, and it will be interesting to see how well its products are selling across a wide range of industries—everything from movie studios and media companies to financial institutions and biomedical research organizations. I recently sat down with Isilon’s founder and CEO, Sujal Patel, for a wide-ranging interview about the nine-year-old company’s technology and business strategy. It makes for a pretty compelling case study of a tech startup’s growing pains, and how it has bounced back from adversity to become a leading player in a crowded and competitive field.

In case you don’t know all the twists and turns in Isilon’s history, here’s a quick recap. Patel, a former engineer at Seattle-based RealNetworks (NASDAQ: RNWK), co-founded Isilon in January 2001. The basic idea was to provide cheaper and more efficient data storage for companies needing to host or deliver video, music, and other multimedia content that requires a lot of storage space. In his previous role as chief architect of RealNetworks’ media delivery software, Patel had seen many customers struggle to upgrade their storage capabilities. So there was a real problem to solve. But the tech bubble had collapsed, so customers weren’t necessarily in the mood to buy. Patel says he “pretty much timed the worst spot of the decade to start a company.”

What’s more, there were already about 250 venture-funded storage companies out there, Patel says, and about 50 of them sounded just like Isilon. Patel says he built his business plan around solving the specific problem Real’s customers had, and “how that problem would be pervasive across all mid-range to large enterprises over the next decade.” To start with, he set an incredibly narrow customer focus on photo-sharing and streaming media websites, and media companies.

Isilon’s technology approach was to cluster together a large number of storage “bricks”—each one includes disks, memory, processing, and networking—into a single storage unit. It was a novel approach in the field of network-attached storage, which today is a $4 billion industry with big players like NetApp, EMC, and Hewlett-Packard. Isilon’s technology requires solving some very tough software problems, but the payoff is better storage performance that is also cheaper and easier to manage, for companies dealing with huge amounts of unstructured data. “We can build one gigantic network drive, and we can scale it as the customer’s needs change over time,” Patel says.

Venture capitalists were sold. In August 2001, Isilon closed an $8.4 million funding round …Next Page »

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Massachusetts Governor Deval Patrick traveled to Holyoke, MA, yesterday to talk about the next steps for the planned Holyoke High Performance Computing Center, a massive project designed to advance the state of the art in “green computing” for life sciences, cleantech, and other applications, while also bolstering business development in economically depressed western Massachusetts. Construction is slated to begin in the fall of 2010 and be completed in late 2011, the governor said.

The partners in the project—which is a collaboration between the Massachusetts state government, Accenture, Boston University, Cisco, EMC, MIT, and the University of Massachusetts—have raised over half of the money needed for construction, according to a press release yesterday from the governor’s office. (The actual dollar amounts weren’t named in the release.)

Since the state’s initial announcement about the project in June, the partners have made “considerable progress” on a working plan for the facility, according to the release. That includes setting up an organizational and business structure for the center, estimating capital costs and operating budgets, outlining a research agenda, and creating preliminary building designs and construction schedules. It’s expected that the facility will be located somewhere near the Connecticut River, which produces abundant hydroelectric power, or along Holyoke’s network of industrial canals, which could provide cooling water for its computing and climate-control equipment.

The three academic institutions contributing to the Holyoke center—BU, MIT, and UMass—issued a statement yesterday saying they are committed to “work diligently over the next 120 days with the Governor, Housing and Economic Development Secretary Bialecki, Energy and Environment Secretary Bowles, and other cabinet officials, Congressman Olver, Holyoke officials and our colleagues in industry to move to the next stage of planning the HPCC.” The statement said the next steps include acquiring a site, setting up agreements on how the various institutions involved will share responsibility for the center, and raising the rest of the money required.

Several entities assisting with the project—the Pioneer Valley Planning Commission, the City of Holyoke, and the John Adams Innovation Institute—have also collaborated to launch a website called Innovate Holyoke as a resource for news on the facility. The site was developed by Ten Minute Media, a Web design company run by young Holyoke-based entrepreneur Brendan Ciecko, who wrote about the computing center project for Xconomy in June.

In remarks yesterday, Governor Patrick said the computing center would serve as “an anchor of a highly competitive and vibrant innovation district in the Pioneer Valley,” which includes the three western Massachusetts counties traversed by the Connecticut River. “The potential for job growth and advances in technology and research is unprecedented, and both the center and this collaboration will serve to create long term prosperity for Holyoke and regional economies throughout Western Massachusetts.”

[Update, 10/23/09: The John Adams Innovation Institute of the Massachusetts Technology Collaborative has published a useful summary of yesterday's event in Holyoke.]

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The deals rained down on the Northwest this past week. We saw some strong activity in biotech, gaming, and software.

—Integrated Diagnostics, the new biotech company founded by Lee Hood, has secured $30 million in venture funding from Menlo Park, CA-based InterWest Partners, the U.K.-based Wellcome Trust, and Germany-based dievini Hopp Biotech holding, as Luke reported. The startup aims to detect cancer and neurodegenerative diseases like Alzheimer’s in their earliest (and most treatable) stages.

—Washington state’s venture funding numbers for the third quarter of 2009 fell to $144 million, down from $275 million in the previous quarter, as Bruce reported. And one deal in September, the $50 million investment in Calypso Medical, a Seattle-based developer of technology that pinpoints radiation therapy for cancer to minimize side effects, dominated the state’s third-quarter figures.

—Decho, the Seattle-based subsidiary of EMC (NYSE: EMC), formed a partnership with British mobile network operator Vodafone to develop new data backup services for European markets. Financial terms weren’t given. The products will be built using Mozy, the online backup service operated by Decho.

—Redmond, WA-based Bionavitas formed a partnership with Seattle-based Blue Marble Energy to make biochemicals from algae, as Luke reported. Financial terms of the deal weren’t announced, and the companies didn’t say exactly what they plan to make under this alliance.

—Seattle-based Evri formed a partnership with media giant Hearst to power its new website and news aggregator, LMK (which stands for Let Me Know). Evri, a Paul Allen-backed startup that uses semantic analysis and natural language processing to find connections between entities on the Web, is providing the content-filtering software for LMK.

—Omeros, the Seattle biotech company developing a treatment to improve recovery from knee surgery, completed its initial public offering last week, raising $68.2 million, as Luke reported. The state’s first IPO in more than two years was underwritten by Deutsche Bank and Wedbush PacGrow Life Sciences. Omeros (NASDAQ: OMER) opened trading at $10 a share and closed its first day at $8.73, giving it a market valuation of about $186 million.

—Seattle-based Amazon (NASDAQ: AMZN) participated in a $19 million Series C investment in Engine Yard, a cloud computing and software automation company based in San Francisco. Amazon was a previous investor in Engine Yard, along with Benchmark Capital and New Enterprise Associates. The latest deal also included new investors DAG Ventures, Bay Partners, and Presidio Ventures.

—Seattle-based PopCap Games raised $22.5 million in its first outside funding round since its founding in 2000. The investment was led by Meritech Capital Partners, based in Palo Alto, CA, and also included participation from investors Larry Bowman and John McCaw. The money will be used to help accelerate PopCap’s global expansion and distribution of its games.

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Seattle-based Decho announced today it has formed a strategic partnership with Vodafone, a British mobile network operator, to develop cloud-based data backup services for personal computers. Financial terms of the deal were not released. The new products for European markets will be built using Mozy, the online backup service operated by Decho, which is a subsidiary of Hopkinton, MA-based EMC (NYSE: EMC).

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Now that the media craze around cloud computing seems to have died down just a bit, I thought it would be a good time to take a considered look at what one of the Northwest’s most prominent venture capital firms is working on in this space, which is having increasing influence in every area of software and information technology (IT).

Over the past couple of months, I’ve had a chance to talk with a number of VCs at Bellevue, WA-based Ignition Partners, and they’ve shared a great deal of knowledge and insight into how they think about cloud computing and virtualization. What follows is not a comprehensive look at the firm’s strategy, but rather a few thematic highlights that struck me as important to those interested in cloud-based technologies and business models. To an outside observer at least, what Ignition does in this area will go a long way towards determining its long-term success—and to some extent, it already has.

First, a couple of definitions. Cloud computing, as most see it, is about using remote servers run by vendors like Amazon or Google to store and process data over the Internet, instead of buying and maintaining your own local machines. In fact, Amazon’s chief technology officer, Werner Vogels, has a more industry-focused definition, one that Ignition Partners agrees with: cloud computing is “IT as a service,” delivered in a scalable way to multiple customers via the Web.

Virtualization is a related but different animal; it can be thought of as enabling cloud computing, among other things. Ignition defines virtualization as separating software from hardware—and applications from operating systems—so it lets you run multiple operating systems on a single server, for example, or multiple applications on your desktop, all with minimal setup and security hassles. Big companies like Microsoft, VMware, IBM, and Citrix compete heavily in this space.

But back to Ignition. The firm was founded in early 2000 by ex-Microsoft and McCaw Cellular executives, and now has more than $2 billion under management. It invests in both early-stage and growth-stage companies in the U.S. and China, focusing on consumer tech, communications and wireless, and business software and infrastructure. Ignition has received its fair share of criticism in the press, stemming from incidents like the closure of Sotto Wireless earlier this year, and last fall’s accounting scandal at Entellium—both companies it backed.

Yet Ignition is strong enough in cloud computing and virtualization that, given how central these issues have become to most aspects of IT, it seems like a key differentiator for the company. Especially at a time when most if not all venture firms are going back to basics and thinking about where their most valuable expertise lies. Indeed, Ignition’s biggest win to date was in virtualization: XenSource’s $500 million …Next Page »

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Seattle-based Decho, which is an EMC (NASDAQ: EMC) company, and China Telecom announced today a partnership to deliver cloud-based data services to Chinese Internet users. The companies’ first offering is called eYun, and is based on Decho’s Mozy online backup service. Financial terms of the partnership weren’t given. Decho was formed in November 2008 by Hopkinton, MA-based EMC, in a merger between Utah-based Mozy and Seattle-based Pi.

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EMC (NYSE: EMC), the Hopkinton, MA-based information infrastructure company that anchors Boston’s infotech industry, today unveiled a series of executive-level changes intended to better integrate its disparate businesses, which range from storage, content management and archiving, security, and IT management to cloud computing services.

Most significantly, the company said it has hired veteran Intel executive Pat Gelsinger away from the giant chipmaker, where he ran its largest business group, and has given him the newly created title of President and Chief Operating Officer, EMC Information Infrastructure Products.

Gelsinger will report to EMC chairman and CEO Joe Tucci, and will oversee EMC’s entire information infrastructure business—meaning all of EMC’s product divisions except VMware (NYSE: VMW). (EMC owns an 84 percent stake in the Palo Alto, CA, virtualization software maker, but treats it largely as a separate company; VMware president and chief operating officer Paul Maritz reports directly to Tucci.)

Gelsinger will also join the newly expanded “executive office of the chairman” at EMC, as will Howard Elias, who has been promoted to President and Chief Operating Officer, EMC Information Infrastructure and Cloud Services. Elias was formerly president of EMC’s Global Services division and its Ionix IT management group.

David Goulden, EMC’s executive vice president and chief financial officer, will also join the expanded executive office, which previously included only Tucci and EMC Vice Chairman Bill Teuber.

The existing presidents of EMC’s divisions–for example, Mark Lewis in the content management and archiving division, and Art Coviello in the RSA Security division—all remain in place. In essence, Gelsinger, 48, has been brought in to provide unified leadership for EMC’s entire line of software and hardware products businesses, while Elias, 52, will do the same thing on the services side. But they’ll both do it from within a tight-knit, cross-cutting executive office whose role, in part, will be to look for ways that EMC’s product innovation can benefit its services operations, and vice-versa.

“It’s a reorganization of the structure of how we bring our products and services together,” says Michael Gallant, an EMC analyst and media relations manager. “This is a signal that we will be continuing to deliver more joint solutions and developing long-term road maps with a lot of the different technologies from the different divisions together.”

Such a reorganization may be particularly important for EMC in an age of blending and interoperability, when technologies such as virtualization allow different software and operating systems to run on common hardware, and when large companies have technology from a wide range of vendors under the same roof.

Indeed, EMC may be counting on Gelsinger—who oversaw a panoply of enterprise products at Intel, including PCs, servers, and communications and storage products, not to mention its next-generation Nehalem microprocessor architecture—to …Next Page »

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The pace of New England tech and life sciences deal making was swift over the last week and a half—and there was noticeable bump in M&A transactions.

—Boston-based RockPort Capital Partners participated in a $47 million financing round for Norwegian electric vehicle maker Think.

—iWalk of Cambridge, MA, picked up an undisclosed amount of new financing in a deal led by General Catalyst. The startup, a spin-off of MIT’s Media Lab, makes an actively powered prosthetic foot and ankle.

–Goffstown, NH-based WoodPellets.com, an aptly named supplier of wood pellets for the home heating market, raised $11 million in a Series B financing round led by Cambridge, MA-based Monitor Clipper Partners and joined by return investor .406 Ventures of Boston. Wade explains how the startup is bringing advanced software to bear on the traditionally low-tech industry.

—IT storage and management giant EMC (NYSE: EMC) of Hopkinton, MA, acquired Santa Clara, CA-based software maker FastScale Technology for an unspecified sum.

—EMC also inked a deal to acquire Mountain View, CA-based Kazeon Systems, a maker of litigation-support software; terms of the deal were not disclosed.

—Waltham, MA-based defense behemoth Raytheon (NYSE: RTN) revealed a deal to acquire Cambridge-based BBN Technologies for an undisclosed sum. http://www.xconomy.com/boston/2009/09/01/raytheon-to-acquire-bbn/ Wade took a fascinating look at BBN’s long history of innovation, including the firm’s role in sparking the Internet almost 40 years to the day before the announcement.

—Video-on-demand technology provider SeaChange International (NASDAQ:SEAC) of Acton, MA, acquired its Dutch counterpart EventIS Group for $45 million.

—Lab equipment and diagnostics maker Thermo Fisher Scientific (NYSE: TMO) of Waltham acquired Hennigsdorf, Germany-based diagnostics maker B.R.A.H.M.S. for €330 million (US $470 million).

—Marlborough, MA-based drug maker Sepracor (NASDAQ:SEPR) agreed to a $2.6 billion buyout offer from Japan’s Dainippon Sumitomo Pharma. Sepracor would maintain its Massachusetts and Canadian operations, as well as its name, after the close of the deal.

—Daktari Diagnostics of Cambridge raised $2.8 million in a Series A round of financing from Norwich Ventures, Partners Innovation Fund, Hub Angels, Mass Medical Angels, Launchpad Venture Group, Boston Harbor Angels, and others; the startup is out to develop a handheld device for performing blood tests crucial to the management of HIV disease in remote areas.

—Cambridge-based Biogen Idec (NASDAQ: BIIB) made an unsolicited bid worth more than $350 million to acquire Redwood City, CA-based Facet Biotech (NASDAQ: FACT). Biogen and the California firm have a partnership focused on developing a new antibody drug for multiple sclerosis.

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Hopkinton, MA-based EMC (NYSE: EMC) announced today it has agreed to buy Kazeon Systems, a Mountain View, CA, maker of “eDiscovery” software for litigation support inside large corporations and law firms. EMC said Kazeon will become part of its Content Management and Archiving business unit, and that Kazeon’s technology will complement the company’s existing line of SourceOne eDiscovery tools. The terms of the deal weren’t disclosed.

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Hopkington, MA-based information storage and management company EMC announced today that it has acquired FastScale Technology, a Santa Clara, CA, provider of software platforms and applications for enterprises. EMC said in a statement that the acquisition will strengthen its cloud computing capabilities by dramatically increasing “the performance and scalability of private cloud infrastructures.” Terms of the deal were not disclosed.

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[Updated, August 29, 1:40 pm---see below]

Xconomy is saddened to note that Richard Egan, the “E” in EMC, has passed away. The co-founder, with Roger Marino, of the Hopkinton, MA-based data storage and information management giant, Egan was diagnosed with advanced lung cancer in May. He died at his Boston home yesterday, according to an extensive article in the Boston Globe and other press reports.

When Egan and Marino started EMC in 1979, their first product was office desks for computer users. The company began selling memory boards in 1981, for thousands of dollars per megabyte. It grew into a Fortune 500 company with 40,000 employees around the world; its flagship Symmetrix storage systems are found in the data centers of hundreds of large corporations, and its myriad software products are used for everything from data center virtualization to security, document management, and online backup. EMC’s success made Egan a billionaire.

“Thirty years ago this week, Dick founded EMC with his partner, Roger Marino,” EMC president and CEO Joseph Tucci said in a statement quoted by the Globe. “Dick’s vision became one of the world’s top technology companies, and his legacy will live on through the tens of thousands of lives he affected in so many positive ways.’’

A major fund-raiser for the Republican party, Egan was named by President George W. Bush in March 2001 as the United States ambassador to Ireland. He served in the position for 15 months.

[Update, August 29]: The Boston Herald, citing police and other sources, reported on its website today that Egan died of a self-inflicted gunshot wound. His nurse reportedly heard the shot and called 911, the account said.

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Boston- and Cambridge-based tech and life sciences firms cut the usual assortment of deals this week, but their brethren further out in New England were unusually active as well.

—Marathon Technologies raised a $7 million round of equity financing from undisclosed investors. The Littleton, MA-based firm makes disaster-recovery software for virtual and physical servers.

—Norwalk, CT-based Akademos, an online seller of used college textbooks and course materials, raised $2.5 million in equity funding from Kohlberg Ventures of Portola Valley, CA.

—Online video game maker Turbine, of Westwood, MA, reportedly collected $6.57 million of a planned $50 million Series D round of financing from existing investors. If completed, the new round would bring Turbine’s total venture funding to $145 million.

—EMC (NYSE: EMC) virtualization subsidiary VMware (NYSE: VMW) agreed to acquire San Mateo, CA-based SpringSource for $420 million in cash and stock. The deal marks VMware’s largest acquisition to date.

—Boston and U.K.-based crowdsourcing software firm Imaginatik (AIM:IMTK) raised $2.6 million from unnamed new and previous investors.

—MyWebGrocer, a Colchester, VT-based provider of …Next Page »

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VMware (NYSE: VMW), the Palo Alto, CA-based virtualization subsidiary of Hopkinton, MA-based information management giant EMC (NYSE: EMC), said yesterday that it has agreed to acquire SpringSource for $420 million in cash and stock. The San Mateo company makes tools used by developers to write Java software. The deal, VMware’s largest acquisition to date, has some analysts scratching their heads, but VMware said it makes sense because SpringSource’s tools will help VMware customers build software that runs in virtualized internal or cloud computing environments.

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It was a fairly quiet week for deals in the Northwest, with some activity in biotech, software, materials, and devices.

—Seattle-based Arzeda, a developer of artificial enzymes, formed a partnership with DuPont to create new crop seeds that incorporate Arzeda’s technology, which should increase the productivity of the plants for food, as Eric reported. Financial terms were not released.

—Arlington, WA-based MicroGreen Polymers raised $1.6 million from WRF Capital and angel investors including Northwest Energy Angels, Alliance of Angels, and Atlas Accelerator, as Luke reported in an exclusive. The company has developed technology to recycle plastics into cheaper and more environmentally friendly coffee cups, food packaging, and other items. The money is part of an ongoing round that MicroGreen expects will net $3 million to $4 million this month.

—In another Xconomy exclusive, we talked with the founder of Santa Clara, CA-based Data Domain (NASDAQ: DDUP), Kai Li, a Princeton University computer science professor who has been visiting the University of Washington for about a year. Data Domain just got bought by Hopkinton, MA-based EMC (NYSE: EMC) for $2.1 billion in cash. Li spoke in depth about the ideas behind Data Domain, its growth and acquisition, and the future of data storage.

—Luke reported that Seattle-based Kineta, a biotech firm with an unusual business model, acquired the licenses to an array of compounds from Redwood City, CA-based Airmid with the goal of reaching clinical trials for drugs to tamp down autoimmune diseases like rheumatoid arthritis and multiple sclerosis. Kineta is looking to run promising drug candidates through early-stage clinical trials and then form partnerships with bigger drugmakers to run bigger trials, collecting upfront payments, milestones, and royalties on any product sales.

—EndoGastric Solutions, a medical device company based in Redmond, WA, and Redwood City, CA, raised $7.5 million from undisclosed investors. The firm, which was originally incubated in Kirkland, WA, at Scout Medical Technologies, makes devices that treat heartburn and obesity. It previously raised $79 million in venture capital from MPM Capital, Advanced Technology Ventures, and other investors.

—Seattle-based Cozi, a startup that makes family organizing and activity planning software, formed a partnership with Nestle to launch its service on the food company’s website, as Eric reported. Cozi’s software will be rebranded on the site with both companies’ names. Financial terms of the deal were not announced.

—Earth Class Mail, a Seattle company that delivers physical mail to businesses digitally, is providing key technology for Kansas City, MO-based Perfect Output’s document management service, as Eric reported. Financial details of the partnership were not given.

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There’s not one but two venture-fund closings to report this week. More below on those, and the rest of the week’s deals news from New England’s life science and tech firms.

—Hopkinton, MA-based EMC (NYSE: EMC) won a protracted bidding war with rival NetApp over software maker Data Domain. After EMC increased its offer for Santa Clara, CA-based Data Domain (NASDAQ: DDUP) to $33.50 per share, Sunnyvale, CA-based NetApp (NASDAQ: NTAP) announced it would bow out of the competition for control of Data Domain, a maker of tools for data deduplication. Greg got a great exclusive (as far as we can tell) interview with Kai Li, Data Domain’s co-founder and chief scientist, about the company’s technology and strategy, the future of data storage, and the implications of the EMC deal.

—Excel Venture Management of Boston closed a $125 million fund, which it intends to invest in life sciences companies poised to affect a broad range of industries, including information technology, alternative energy, agriculture, textiles, and chemistry. Luke had an interesting chat with one of the firm’s managing directors, Juan Enriquez, about its plans and some of the startups already in its portfolio.

—Fellow life sciences venture firm 5AM Ventures surpassed the $150 million target for its third fund. 5AM, which has offices in Waltham, MA, and Menlo Park, CA, pulled in $159.2 million from 34 investors.

—Bedford, MA-based Rapid Micro Biosystems raised $18.6 million in a Series A round from Kleiner Perkins Caufield & Byers, TVM Capital, Quaker BioVentures, and VIMAC Milestone Medica Fund. The startup makes technology,

—E-mail archiving firm Sonian of Dedham, MA, raised $4.1 million out of a planned $6.6 million private stock offering, according to documents filed with the SEC.

—The numbers from June, provided by our new partner, ChubbyBrain, showed that healthcare startups were attracting the most investment in Massachusetts, accounting for 9 of the 17 deals done during the month. Not a single deal in June involved cleantech or energy.

—Quincy, MA-based Modiv Media, a provider of in-store digital media tools for grocery stores, raised $1.2 million out of a planned $2.52 million financing round.

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Now I know why venture capitalists walk the halls at the University of Washington—you never know who you might run into. My timing was impeccable yesterday as I sat down with Kai Li, the co-founder and chief scientist of Data Domain (NASDAQ: DDUP), the Santa Clara, CA-based data storage company that just got bought by EMC (NYSE: EMC) for $2.1 billion in cash.

Li, who is a computer science professor at Princeton University (he has been visiting the UW for the past year and has some strong Seattle connections), made time for me despite his busy schedule. The deal with EMC has been in the works since June 1, when the Hopkinton, MA-based data storage and management giant launched its bid to acquire Data Domain despite a pending acquisition attempt by rival NetApp (NASDAQ: NTAP) initiated in May. Many twists and turns ensued, culminating in yesterday’s announcement by NetApp that it had taken itself out of the running, clearing the way for EMC’s takeover, at a bid of $33.50 per share.

Data Domain’s story is a compelling one. Li co-founded the company in 2001, together with Brian Biles (currently vice president of product management) and Ben Zhu (former chief research officer), with the idea of developing advanced “deduplication” software to get rid of redundant data before it gets stored, thereby saving companies storage space, time, and money. Li served as chief technology officer and CEO in the early days of the company, but since 2002 has been a consulting chief scientist and director. Over the next few years, Data Domain gained traction in the data backup and disaster recovery market and went public in June 2007, raising more than $110 million in an IPO.

In a wide-ranging interview, Li (left) talked about Data Domain’s technical approach, its market strategy, a little bit about the EMC deal, and the broader future of data storage. Here is an edited account:

Xconomy: So how does the EMC acquisition affect you?

Kai Li: I don’t know yet. EMC has been the leader in storage systems in general. They’re bigger than other players in the storage market, comparing with NetApp, IBM, HP, Dell, and Sun (now part of Oracle). EMC is the premier storage vendor for data centers. We haven’t been communicating with EMC because of the definitive agreement with NetApp, so I haven’t talked to EMC yet.

X: How does the deal affect Data Domain’s operations?

KL: EMC has written a letter to Data Domain employees. They said they’ll keep Data Domain …Next Page »

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Sunnyvale, CA-based NetApp (NASDAQ: NTAP) said today it would not try to top EMC’s $33.50 per share offer for Data Domain (NASDAQ: DDUP), clearing the way for the Hopkinton, MA-based storage and information management giant to acquire the much-sought-after provider of data deduplication software.

NetApp kicked off the competition for Data Domain on May 20 with a $25-per-share offer that Data Domain’s board quickly accepted. But then EMC came along, first offering $30 per share—a price NetApp matched—then $33.50.

In a statement today, NetApp said it couldn’t afford to keep upping its bid. “NetApp applies a disciplined approach to acquisitions, one focused intently on creating long-term value for our stockholders,” said NetApp chairman and CEO Dan Warmenhoven. “We therefore cannot justify engaging in an increasingly expensive and dilutive bidding war that would diminish the deal’s strategic and financial benefits.”

As a result of the termination of their merger agreement, Data Domain has paid its original suitor a $57 million break-up fee, NetApp said.

The $33.50-per-share bid from EMC (NYSE: EMC) came on July 6 and is worth about $2.1 billion overall. “This is a compelling acquisition from both a strategic and financial standpoint,” EMC CEO Joseph Tucci said in a statement. “We look forward to bringing Data Domain together with EMC to form a powerful force in next-generation disk-based backup and archive. I have tremendous respect for Data Domain’s people, technology and business, and anticipate great things ahead for our respective companies, our customers and partners.”

In a July 6 letter to the Data Domain board, Tucci said EMC had already received approval from federal regulators to proceed with an acquisition of Data Domain, and that the transaction could be completed in as little as two weeks. EMC said today it expects to complete the acquisition “before the end of July.”

Deduplication software like that made by Data Domain reduces storage needs by eliminating redundant data before it’s sent to archival servers. EMC already offers deduplication as part of its Avamar family of backup software. But it’s a different kind of deduplication from that offered by Data Domain.

Avamar handles “source” deduplication, meaning that data is filtered out before it’s transmitted to a backup system, which saves bandwidth. But Data Domain offers “target” deduplication, meaning redundancies are identified at the backup location, ultimately saving more space.

EMC wants to offer its customers both forms of deduplication. In repeated missives to Data Domain’s board, EMC argued that target deduplication technology would find a broader market under EMC than under NetApp’s ownership. Now it will have the opportunity to test that theory.

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Determined not to be outbid by rival NetApp for data deduplication software maker Data Domain, Hopkinton, MA-based EMC (NYSE: EMC) today increased its takeover offer to $33.50 per share.

In a letter to Data Domain’s board of directors, EMC CEO Joseph Tucci said the EMC offer is “far superior” to the latest $30-per-share bid from Sunnyvale, CA-based NetApp (NASDAQ: NTAP)—in part because EMC has received permission from the Federal Trade Commission to acquire Santa Clara, CA-based Data Domain without further regulatory review. That means EMC could complete the acquisition within as little as two weeks, Tucci wrote.

To make it easier for Data Domain (NASDAQ: DDUP) to say yes, EMC has also removed the “deal-protection” provisions that went along with its earlier offer, including a termination fee.

Both EMC and NetApp would like to acquire Data Domain for its advanced deduplication technology, which removes redundant information from corporate data streams before it’s archived, saving storage space. Data Domain officials have not commented on the latest EMC bid, but in June the company recommended that its shareholders reject EMC’s offer. NetApp, meanwhile, said today that it has received clearance from the Securities and Exchange Commission to proceed with the acquisition.

Data Domain may be in an awkward spot between two aggressive suitors, but the situation has certainly helped the company’s own stock price. Data Domain shares have shot up from about $15 before NetApp’s initial $25-per-share acquisition proposal in late May to more than $34 today—perhaps reflecting shareholder expectations that the bidding will go even higher.

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It’s no surprise that the president of RSA, the security division of Hopkinton, MA-based information management giant EMC (NYSE: EMC), has strong views about the need for better security practices within corporations and government agencies. But Art Coviello, who joined RSA in 1995 and helped engineer its 2006 acquisition by EMC, says the problem isn’t that companies aren’t aware of today’s cyber security challenges—it’s that they often aren’t doing the right things to address them.

Companies try too hard to protect the machines that data live on, rather than the data itself, Coviello told me during an interview earlier this month. They dive into faddish new technologies like cloud computing and social networking without investigating the new kinds of security risks they pose. And they focus too much on achieving technical compliance with government regulations, rather than on minimizing the risks those regulations are meant to address.

Coviello spoke with me shortly after RSA issued the latest report from the Security for Business Innovation Council, a group of 10 security executives from companies like Motorola, JP Morgan Chase, Time Warner, and Novartis. RSA assembled the council to draw attention to ways that businesses can continue to innovate—a process that often involves adopting untested new technologies—without exposing themselves to new waves of fraud, data breaches, and other cyber attacks.

Coviello was eager to share the recommendations in the report, which range from suggestions about specific security policies and technologies that companies can adopt to ideas for broad industry cooperation on ways to thwart cyber criminals. But I also asked him for his perspective on the recent increase in the number of New England-area companies offering so-called “governance, risk, and compliance” software, and for his views of the Obama Administration’s performance so far on cyber security issues. (See page 3. A preview: he’s reserved, but optimistic—and has some specific suggestions on who President Obama should name as the new cyber security czar.) A condensed version of our interview follows.

Xconomy: What’s the main purpose of this latest report from the Security for Business Innovation Council?

Art Coviello: One of the things we tried to establish early on is that security doesn’t have to be viewed as an inhibitor of innovation. It can be viewed as an enabler of innovation. This is the fourth in a series of reports that does just that. It gives tips and advice on how [security] can not only not get in the way, but how it should give people confidence to do more things online.

But one part of what we’re bringing out here is that when it comes to things like cloud computing and social networking, people are just jumping ahead, and saying we’ll take care of the security later. That’s a bad idea.

X: Forgive me if this question sounds cynical, but cloud computing and certain forms of social networking are among EMC’s services and software these days—and so, obviously, is security. Wouldn’t almost any report coming from a group convened by the security division of EMC be recommending more adoption of security software?

AC: I can see how you could be cynical about almost anything that gets produced by a technology company. But the guys who are part of this study are independent. We facilitate it, we don’t pay them for it. You’ve got people like Bill Boni from Motorola, Anish Bhimani from JP Morgan Chase, David Kent from Genzyme, Craig Shumard from Cigna. You have a cross section of people, and they’re not making any money from cloud computing or social networking.

Having said that, the fact is that the horse is out of the barn, and people are going to be adopting these technologies, because they improve productivity and communication. You are not going to slow it down, but you can expose yourself to risks that you would feel fairly sorry about if you don’t …Next Page »

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