SanDisk Acquires SSD Maker Fusion-io for $1.1 Billion
SanDisk, best known for making those little blue memory cards for consumer mobile devices such as smartphones and cameras, is pivoting big time into the enterprise.
The Milpitas, Calif.-based flash memory provider made a strategic buy into the enterprise solid-state storage business June 16 by acquiring Fusion-io for $1.1 billion.
The all-cash offer is for $11.25 a share, 21 percent higher than Fusion-io's closing NYSE price on June 13. The deal has been approved by both company boards. Because the share price went higher on June 16 ($11.40, up about 22 percent from the June 13 close) than the offer price, investors may be anticipating a counterbid from another buyer.
SanDisk, whose flash memory chips are widely used in smartphones and cameras to store photos, video and documents, has been developing them to build and sell its own higher-end solid-state drives. The company also makes embedded flash drives, USB flash drives and digital audio players in addition to its flash memory cards and SSDs.
SanDisk Repositioning Itself for Enterprise
"SanDisk was already positioning the company as more of an enterprise storage company. ... What the Fusion-io deal does is it enhances that significantly," Cross Research analyst Steven Fox told Reuters.
Fusion-io, best known for hiring Apple co-founder Steve Wozniak as its chief scientist, was founded in 2006 and went public in June 2011. Thanks partially to an endorsement from Facebook, which uses the company's fast storage arrays in its data centers, Fusion-io ended up with a market value of about $1.8 billion on its first day as a public company.
The company's market cap June 16 was listed at $1.23 billion.
Fusion-io's ioDrive was the first direct-attached, solid-state server storage array that used PCI-Express, or PCIe, connectivity. The ioDrive is small—barely larger than a typical handheld device—and uses advanced NAND flash chip clustering to perform the same functions as a spinning disk storage array, only with much faster read/write performance and much less power draw.
PCIe Can Replace Regular Flash Disks
Most IT shops, if they use NAND flash, utilize it in purpose-built solid-state drives. Fusion-io's angle is that its units plug into the same sockets as hard disk drives and are much faster. For example, the company claims ioDrive is capable of 120,000 random read/write IOPS—about 100 times faster than a typical Serial ATA drive.
PCIe was introduced by Intel in 2004. It is a computer-expansion card standard based on point-to-point serial links, rather than a shared parallel bus architecture, and is designed to replace the older PCI, PCI-X and AGP standards.
Fusion-io, whose CEO, Shane Robison, previously was a longtime Hewlett-Packard storage executive, has been busy creating other products during its eight years in business. The company also has a NAND flash-optimized OS subsystem called the ioMemory VSL (Virtual Storage Layer) for better utilization of NAND flash memory and storage arrays.
The company introduced its latest product, ioScale, last year. Each ioScale PCIe unit provides up to 3.2 terabytes of Fusion ioMemory capacity that is performance-tuned for the needs of Webscale environments.
Key features of Fusion ioScale include up to 3.2TB of capacity on a single half length PCIe slot, with a single controller, enabling a small form-factor server to reliably scale to 12.8TB or more, reducing the need for disk drive bays.
"The Fusion-io PCI flash technology is a perfect complement to SanDisk's existing SSD and UltraDIMM assets," longtime industry observer and co-founder/CTO Satyam Vaghani of SanDisk partner PernixData told eWEEK. "The move also indicates SanDisk's willingness to have a more direct presence in the enterprise space."
PernixData makes a data storage accelerator for virtualized data centers.
How might this impact the flash market in general?
"The consolidation wave toward more complete server flash hardware portfolios continues. Western Digital did it in the recent past, and we are now seeing it from SanDisk," Vaghani said.
"Why establish a broader portfolio and business around server flash? I believe that multiple vendors have come to the conclusion that the control point for storage in the software-defined data center is on the server side right beside applications. Server flash is going to be the hardware foundation of that control point. If done right, this might even disrupt a lot of flash-based innovations going on in storage systems today," Vaghani said.
More Industry Reaction
"It was no surprise that SanDisk is the buyer," solid-state IT analyst Jim Handy of Objective-Analysis told eWEEK. "The company has been using its strong cash position to acquire its way into the enterprise SSD market.
"I think that SanDisk will be a big boost to Fusion-io. Although Fusion-io had a good relationship with Samsung, its customers still will feel better with a captive source of flash supply."
Handy pointed out something that some industry watchers may not know.
"A lot of people think of Fusion-io as a supplier of PCIe SSDs, and that any other PCIe SSD supplier is on an equal competitive footing," Handy said. "In truth, PCIe hardware is just the tip of the iceberg for the company; it has software solutions that few PCIe SSD suppliers even understand. These solutions are what gives the company its competitive edge."
Fusion-io has main offices in Salt Lake City, Utah, and San Jose, Calif. Wozniak, co-founder of Apple Computer in the mid-1970s, has served as a key technical adviser to the Fusion-io research and development group since February 2009.