The flash storage solution provider SanDisk’s planned acquisition of Fusion-io is the latest in a series of deals among solid-state drive providers in the rapidly consolidating PCIe SSD solution segment.
On 16 June 2014, the flash storage solution provider SanDisk announced that it has entered into a definitive agreement to acquire Fusion-io, which focuses on flash-based Peripheral Component Interconnect Express (PCIe) flash card hardware and software. SanDisk expects the $1.1 billion cash transaction to close during its fiscal 3Q14.
SanDisk's solid state drive (SSD) portfolio of offerings lacked a PCIe solution. Its planned acquisition of Fusion-o brings together complementary technology and gives SanDisk access to a substantial customer base. This marks the third deal in the past three weeks involving PCIe SSD solution providers in this rapidly consolidating market. The others were SK Hynix's 30 May acquisition of Violin's PCIe SSD assets and Seagate's 29 May acquisition of Avago's LSI Accelerated Solutions Division (ASD) and Flash Components Division (FCD) assets, including PCIe and other proprietary SSDs, as well as the SandForce flash controller technology .
Fusion-io is the dominant vendor in the PCIe SSD market, which overall shipped 531,000 units during 2013. SanDisk is the No. 2 vendor in enterprise Serial Attached SCSI (SAS) interface SSDs and in PC and enterprise SATA-interface SSDs. Fusion-io's ioTurbine technology overlaps with SanDisk's FlashSoft flash caching approach, but SanDisk will benefit from other flash-optimized Fusion-io software technology, which will help broaden its appeal through an enhanced value proposition. In addition, vertical integration with a flash fab at its disposal for competitive pricing and availability will enable Fusion-io to offer more compelling capabilities to global customers, including hyperscale customers. We expect Fusion-io customers will benefit from vertical integration and further cost and software optimizations achieved as a division of SanDisk.
SanDisk will likely require a year to integrate and enhance various product road maps as its target market continues to mature, become more standardized and evolve through increased competition. That competition currently includes Intel's newly ramped-up PCIe products and offerings from vendors such as Western Digital, Seagate, SK Hynix and to a lesser degree, Toshiba and Samsung. During 2015, competition will further escalate as inexpensive notebook PC PCIe SSDs begin to flood data centers; however, SanDisk already has an entrant in this market. Beyond 2015, SanDisk's new ULLtraDIMM SSD enterprise-class, ultra-low latency, memory channel storage solution has the potential to further increase its market share in the high-end enterprise SSD space.
SanDisk competitors and OEMs:
Evaluate potential changes to your company’s position due to Fusion-io becoming a vertically integrated division of SanDisk, which should engender enhanced cost and software optimizations.
Expect no immediate change in Fusion-io's OEM relationships with HP, Dell and IBM because of a current lack of compelling competition; however, in the long term, this may present a risk.
Ask SanDisk to share evolving road maps for overlapping products and to detail strategic plans for Fusion-io’s hybrid storage array acquisition, ioControl, formerly called NexGen.