NetApp filled a gap in its flash storage portfolio today with an $870 million deal to buy SolidFire and finally threw in the towel on its long-delayed FlashRay product line.
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The SolidFire acquisition will give NetApp a scale-out all-flash array with sophisticated volume-level quality of service (QoS) controls. The product initially held appeal in particular with cloud service providers, but the Colorado-based startup later added storage features to expand its customer base to general enterprises.
Meanwhile, NetApp relied largely on its FAS and EF Series storage systems loaded with only solid-state drives (SSDs) to compete in the hot all-flash array market. The company had long promised a scale-out FlashRay product designed from the ground up for flash. But the development work dragged on for years, and only a single-node FlashRay model has seen limited availability to date.
NetApp CEO George Kurian cited the SolidFire acquisition as “an excellent example of our investment in areas of growth,” but he said the trade-off is the immediate discontinuation of the FlashRay program. Kurian said NetApp would not bring the FlashRay product to market, although he claimed much of the program’s intellectual property is currently integrated into NetApp products or available for future development.
“We feel that with All Flash FAS we can cover the preponderant majority of the use cases that FlashRay used to be planned for, and with SolidFire, we can cover the remaining as well as multiple new use cases that neither FlashRay nor All Flash FAS would have been able to cover,” he said.
Kurian said NetApp will have all-flash offerings to address each of the three largest all-flash array market segments: the SolidFire line for “customers that want to deploy an Amazon- or a Google-like highly distributed, shared-nothing environment built on top of white-box economics,” the All Flash FAS (AFF) for the “enterprise buyer who values a lot of storage services,” and the EF Series for application owners focused on performance and consistent low latency.
He said the SolidFire technologies would complement the All Flash FAS product line and provide opportunities for new customers in the cloud service provider market as well as with enterprise data centers that want to deploy next-generation, Web-scale architectures on premises for applications such as NoSQL databases, Hadoop and DevOps.
“SolidFire’s market is bigger and faster growing than the All Flash FAS market. I think it represents the choices that customers make to deploy Web-scale designs increasingly in their data centers,” said Kurian.
But Kurian also said that NetApp was pleased with the growth rates of the EF and All Flash FAS products for enterprise use cases. He cited a $370 million run rate for the EF and All Flash FAS lines.
“The performance and economics of flash are continually improving, and therefore it is being used to address a broader and broader range of use cases in the enterprise,” said Kurian. “And this caused us to want to address those customer segments that are now transitioning from disk to flash.”
Kurian said NetApp reviewed all of the all-flash array architectures in the market and thinks it acquired “the best and the most differentiated set of capabilities for the customers’ data centers of the future.” SolidFire CEO Dave Wright will head the SolidFire product line within NetApp’s product operations, he said.
NetApp’s and SolidFire’s boards of directors unanimously approved the $870 million cash deal, which will be financed through debt, according to NetApp’s chief financial officer, Nick Noviello. He said NetApp expects to repay the debt over the course of its fiscal 2017.
“I’m excited about the potential of the SolidFire acquisition to further the topline growth of NetApp over time,” said Kurian.
NetApp expects the SolidFire acquisition to close in its fiscal 2016 fourth quarter. The company’s fiscal 2015 fourth quarter ended on April 24.