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Western Digital Corporation (WDC - Analyst Report) continues with its merger and acquisition strategy with the addition of the privately held company,VeloBit,to its list of buyouts. The acquisition of the storage I/O (input/output)optimization software provider helped Western Digital’s shares to move up 1.0% in late trading on Tuesday touching an all-time high.

Post acquisition,VeloBitwillbe integrated into “Hitachi Global Storage Technologies” (HGST), which is now part of Western Digital.

The combination of HGST SSDs and VeloBit software will enhance the overall value of HGST’s datacenter storage solutions.VeloBit's SSD caching software will not only increase the speed of applications, but also increase server density by providing better input/output performance, thereby, improving the efficiency of both the processor and storage resources.

Data storage technology is changing rapidly, especially with the advent of flash technology. As data storage is becoming increasingly important for data centers and big conglomerates, new storage technologies to enhance the performance and meet new challenges are coming on the market.

WDC is coming up with cost effective products for high capacity data centers. Specifically, the high capacity storage devices would require this technology to perform even better, and would be able to store and retrievea reasonable amount of data for the companies at a lower cost. Therefore,the acquisition will better position WDC in the data center market, which is increasingly using SSD technology.

Western Digital is facing tough competition from its rivals, like Seagate Technology plc (STX - Analyst Report). However, we believe that with the introduction of VeloBit's SSD caching software and the newly-introduced drives, Western Digital will be able to grow its market share in the enterprise space.

Currently, Western Digital has a Zacks Rank #3 (Hold). Investors could consider other technology stocks such as NetApp Inc. (NTAP - Snapshot Report) and EMC Corp. (EMC). Both the companies carry a Zacks Rank #2 (Buy) and are worth buying.

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