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Another small flash array vendor has been gobbled up by a storage giant.
Western Digital Tuesday said it agreed to acquire Tegile Systems, a private vendor that WD funded and supplied with flash arrays. The latest Western Digital acquisition is expected to close in September. Financial terms were not disclosed, but two sources with knowledge of the deal put the purchase price at around $55 million.
Western Digital in 2015 acquired Tegile investor SanDisk Corp., giving WD a financial stake in Tegile. The HDD-maker led Tegile's $33 million Series E round in April, the second of two funding tranches it provided to the flash vendor. SanDisk also participated in two previous Tegile funding rounds before it became part of Western Digital. Tegile had a total of $174.5 million in funding since its 2010 launch.
The Tegile deal comes as Western Digital, through its SanDisk subsidiary, works to finalize the purchase of the semiconductor memory business of its NAND partner, Tokyo-based Toshiba Corp.
Tegile and Western Digital have long-standing OEM partnerships. Tegile ships arrays with Western Digital hardware components as standard equipment. It also participated last year in a joint venture by Western Digital with China's Unisplendour Corp. to launch Unis-WDC Storage Co. Ltd., of which WD owns 49%.
"Our strategic intent is to move up the stack and build a relevant, competitive systems business," said Phil Bullinger, Western Digital's senior vice president and general manager of data center systems. "One of the reasons we were very interested in Tegile is how complementary it is to our existing object storage business for big data. Tegile gives us a pillar for fast storage."
Bullinger said Western Digital eventually wants to integrate Tegile IntelliCare health analytics and capacity-prediction software with other products.
Based in Newark, Calif., Tegile Systems started shipping hybrid flash arrays in 2012 and added all-flash storage models in 2014. Privately owned Tegile has declined to reveal its revenue, but claims to have 1,700 paying customers. Sales of all-flash arrays accounted for about 60% of Tegile's revenue last quarter.
Although it is no longer the case, Tegile's IntelliFlash HD arrays originally were based on the SanDisk InfiniFlash all-flash chassis; InfiniFlash sales never took off.
Western Digital acquisition follows HPE-Nimble deal in flash market
If the deal goes through as planned, Tegile would be the second flash startup this year to be absorbed by a larger vendor. Hewlett Packard Enterprise in March picked up Nimble Storage for $1.2 billion. That follows a string of large vendors buying all-flash pioneers over the past five years, including IBM's purchase of Texas Memory Systems, EMC's acquisition of XtremIO and NetApp's pickup of SolidFire.
The Western Digital acquisition frees Tegile from needing additional private funding, which may have been difficult to secure now that investors seem to have soured on enterprise infrastructure companies. Tegile is growing beyond the startup phase, yet does not rank among the top five vendors in all-flash market share.
Tegile CEO Rohit Khetrapal said he expects Tegile product sales to benefit from being part of a large company.
"Tegile has built a phenomenal product, both with our IntelliFlash as well as our IntelliCare product," Khetrapal said. "This allows us to continue to continue building the business with [Western Digital] investments and have our products attached to the strong Western Digital brand."
Tegile sells the flagship T Series unified block and file all-flash and hybrid arrays, the HD2040 multi-tiered flash series, Tegile IntelliStack converged infrastructure, and the recently announced Tegile IntelliFlash N-5000 Series NVMe all-flash arrays. Those products now will be folded into the Western Digital data center systems business unit. That group includes HGST's ActiveScale geodistributed object storage for midrange enterprises, which is based on Amplidata technology that Western Digital acquired in 2015.
Western Digital may wind up competing with storage OEMs that buy its drives
Tegile's 300 employees are expected to join Western Digital. That includes Khetrapal, who will join Western Digital as an executive in charge of Tegile's product development.
The Western Digital acquisition of Tegile creates opportunities, along with OEM challenges, said Eric Burgener, a research vice president for storage at IT analyst firm IDC.
"This gets Western Digital back into the systems game with an entry in that arena," Burgener said. "There is one key difference between InfiniFlash and Tegile. InfiniFlash did not directly compete with Western Digital's downstream [array vendor] customers. Adding Tegile positions Western Directly to directly compete" with vendors who use its disks in hybrid midrange storage gear, Burgener said.
Western Digital has been on a multiyear buying spree, highlighted by its $19 billion takeover of flash giant SanDisk. It also bought HDD rival Hitachi Global Storage Technologies for $4.3 billion in 2012. Other Western Digital acquisition targets in recent years include SSD vendor sTec, all-flash array vendor Skyera, PCIe flash startup Virident Systems, flash caching technology of VeloBit and Amplidata.
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