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Seagate acquires LSI Nytro, SandForce flash products

Seagate will finally move into the enterprise flash business with its $540 million acquisition of LSI's SSD controller and PCIe card platforms.

Hard disk drive giant Seagate made its long-awaited move into enterprise flash this week with its $450 million acquisition of LSI's flash business.

Seagate said it plans to acquire the LSI Nytro PCIe flash cards and SandForce NAND controllers from Singapore-based chip maker Avago, which acquired LSI Corp. for $6.6 billion earlier this month. Seagate said it expects the LSI flash deal to close between July and October.

Seagate has a long history in the hard disk drive (HDD) market and is one of two major HDD vendors remaining. But flash is becoming a popular alternative in enterprise storage because of its superior performance to spinning disk, and its falling price mitigates its big disadvantage over HDDs.

Seagate's HDD rival Western Digital built up a flash arsenal by paying $685 million for PCIe card startup Virident Systems, $340 million for SSD vendor sTec, and an undisclosed sum for caching software startup VeloBit in 2013.

Seagate did not own any enterprise flash technology until picking up LSI's.

"This looks like a pretty good deal for Seagate, considering how much Western Digital paid for Virident," said James Bagley, senior analyst at Storage Strategies Now. "Seagate had an OEM deal with Virident that went away in the Western Digital acquisition. For $450 million, Seagate is getting the second largest PCIe market share [behind Fusion-io], along with the SandForce SSD controller technology."

LSI Corp. launched the LSI Nytro product family in 2012. Nytro combines PCIe flash technology, intelligent caching and management software to accelerate performance for direct-attached storage (DAS) and storage area networks (SANs).

Seagate expects the combination of its enterprise solid-state drive (SSD) product line and the SSD controller business to produce at least $150 million in revenue over the next year.

Joseph Unsworth, Gartner's research vice president for NAND flash and SSD, said Seagate has work to do to make the SandForce SATA SSD controllers ready for prime time in the enterprise.

"The vast majority of the SandForce controller technology has been for mainstream PC and low-end server SSD SATA applications," Unsworth said. "An SSD controller company is only as good at its next-generation controller. Unfortunately, the latest SandForce controller technology -- which is capable of PCIe and SATA -- as well as addressing advanced NAND process geometries and three bits per cell -- has struggled to come to market."

Unsworth said Seagate will need to digest LSI's assets quickly and get the controller technology up and running as fast as possible to satisfy OEM customers.

"Many customers have already been looking to Marvell, Silicon Motion and Phison for an alternative given the uncertainty with the LSI SSD and controller business," he said.

"While this is a necessary move for Seagate to enhance its flash product portfolio, it will need to act swiftly to assuage key customers on both the controller and PCIe SSD side that there will be seamless or enhanced continuity of supply and it is in better long-term hands [than with Avago/LSI]."

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