Iomega buys CSCI in bid to boost declining business

Buy will get us past Zip file era, says company president

Iomega has reached an agreement to acquire managed services provider CSCI. The acquisition marks a planned expansion of Iomega’s target market beyond just small and medium-sized businesses.

Iomega will acquire CSCI for US$4.5 million (NZ$7.24 million) in cash and US$7 million in stock, with the potential for another US$1 million in future incentives.

Iomega is the company behind such technologies as the Rev removable hard drive and the iStorage data backup service, and is best known for its Zip Disk mobile media, a technology that is quickly losing steam. When asked about the CSCI acquisition, Tom Kampfer, Iomega’s president and chief operating officer, replied, “We need to reinvent ourselves after our Zip product line, which is coming to the end of its technology life.”

Although Iomega’s core offerings — including Rev backup storage, networked storage and other products that will continue to be developed — remain strong, Kempfer points to the need to expand Iomega’s line-up.

“There’s continuous competition in the hardware space and we need growth engines. We need to move beyond hardware,” he says.

CSCI, which, like Iomega, is based in San Diego, specialises in providing managed security services and is the creator of the OfficeScreen suite of virtual private networks for small and medium-sized businesses. “With respect to the SMBs, there is an incredibly fragmented market serviced by a number of small companies like CSCI,” none of which has the right mix of products for managed services, Kempfer says.

Iomega hopes to use CSCI’s offerings to unite its product line, he says. “If I’ve got a managed services customer I’m going to take care of them.

“It is not a stretch to sell them storage through the same channels, manage that storage and [provide] offsite backup and disaster recovery services as needed.”

The transaction is expected to close within about 60 days.

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