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SanDisk gobbles up Fusion-io for PCIe flash; fate of arrays not clear

SanDisk expanded its enterprise flash product line today by acquiring PCIe flash leader Fusion-io for $1.1 billion. However, SanDisk provided few specifics about its plans for its newly acquired products.

SanDisk is known primarily as a PC solid state drive (SSD) vendor although its enterprise revenue shot up in 2013 and this is its second acquisition for server-side enterprise flash in 10 months.

Fusion-io was an early flash success story, turning its dominance in the PCIe market to an initial public offering in 2011 but fell on hard times last year.

“This will position us for a leadership position in enterprise storage,” SanDisk CEO Sanjay Mehrotra said on a conference call this morning to discuss the deal.

SanDisk last August acquired SSD and flash controller company Smart Storage for around $307 million. Smart Storage sells ULLtraDIMM flash memory cards that sit in the server’s motherboard and have lower latency than PCIe cards. Mehrotra said the Fusion-io technology complements SmartS torage’s UltraDIMM product, which is seen as competitive with PCIe flash. He claimed there is a market for both types of products as well as SAS and SATA SSDs.

Fusion-io expanded its product line in April 2013 by acquiring storage array startup NexGen Storage for $114 million. Fusion-io sells the NexGen hybrid flash arrays under the ioControl brand. Those arrays use Fusion-io flash instead of solid state drives (SSDs).

However, Mehrotra would not commit to the ioControl product. He did not mention the arrays when discussing Fusion-io technology during the call. When asked twice if SanDisk would continue the hybrid SAN array product, Mehrotra said he would talk about that about it after the deal closes. He expects that to happen in Setember.

Mehrotra also declined to say how the deal would affect SanDisk’s current early development of PCIe flash products.

SanDisk moved into the enterprise SSD market when it acquired Pliant Technology for $327 million in 2011.

The combined revenues from SanDisk and Fusion-io would have made SanDisk the No. 2 overall SSD vendor last year behind Samsung, according to Gartner’s SSD and solid-state array market share report published last week. SanDisk and Fusion-io combined for more than $1.6 billion in revenue in 2013.

According to Gartner, SanDisk jumped from fifth in SSD shipments in 2012 to third in 2013, passing Fusion-io and Micron. SanDisk’s SSD revenue increased 263 percent over the year (compared to 53 percent growth for the entire market), from $355 million to $1.3 billion and its market share grew from five percent to 11.7 percent. It grew more than any other SSD vendor in 2013.

While most of SanDisk’s 2013 revenue came from PC SSDs, it did jump from eighth to fourth in revenue from enterprise SSDs. SanDisk enterprise revenue increased 181 percent (compared to 47 percent for the entire market) to $375 million and its market share went from 4.4 percent in 2012 to 8.5 percent last year.

Meanwhile, Fusion-io’s revenues declined sharply in 2013 as its early large customers Facebook and Apple greatly decreased their spending while competition grew after storage giant EMC and others entered the PCIe market. Fusion-io switched CEOs in May 2013, pushing out David Flynn and replacing him with Shane Robison.

Robison is out now, too. Mehrotra said Fusion-io president/COO Lance Smith will become senior VP and president at SanDisk, leading the Fusion-io development and marketing teams.

Fusion-io fell from fourth in 2012 in total SSD revenue to eighth in 2013. Fusion-io’s revenue declined 18 percent to $339 million last year. It stood eighth overall and fifth in enterprise SSD revenue. Its market share of 7.7 percent of the enterprise market was down from 13.6 percent.

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