Western Digital's $685 million acquisition of PCI express (PCIe) flash startup Virident Systems this week underscores the difference in solid-state storage strategies between Western Digital and hard drive rival Seagate.
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Western Digital has fully embraced flash, adding solid-state drive (SSD) controller manufacturer sTec, caching software startup VeloBit and Virident Systems to its HGST enterprise drive subsidiary this year. Western Digital also sells SAS-based SSDs through a joint development program with Intel Corp.
Seagate has an SSD partnership with Samsung but does not own any enterprise flash technology. Seagate did invest $40 million in Virident and has an OEM deal to sell its products but let Western Digital buy the startup.
The sTec and Virident deals have not yet closed, but no other bidders are expected for either.
Western Digital CEO Steve Milligan said his company has closely evaluated the flash market since 2008, and "we've been carefully assembling a set of assets that we feel will enable us to be competitive in this space."
When asked during a conference call to discuss the Virident deal Monday if Western Digital is looking to add more flash companies, Milligan said the vendor will use a "deliberate approach to determine if additional investments" are needed. Those investments could be acquisitions or internal projects.
Western Digital is a strategic investor in flash-array startup Skyera, but Western Digital subsidiary HGST's president Mike Cordano said, "Our primary interest [in Skyera] is to make sure we're aware how enterprise-class SSDs are being used from a system level. We want to make sure we're gaining market knowledge."
Western Digital is not expected to buy Skyera or any array vendors because that would make it competitive to the large storage vendors who buy its hard drives -- and presumably, the sTec SSDs.
Virident's main product is the FlashMAX II multi-level cell PCI card, which has been sold mostly through OEM deals with EMC and Seagate. Virident Systems also sells FlashMAX Connect software, which provides high availability, pooling of storage across servers and caching for its PCIe cards.
EMC sells Virident FlashMAX II cards as part of its XtremSF PCIe flash portfolio, and Seagate sells Virident PCIe cards as its X8 Accelerator. Seagate has not commented on the future of the X8 Accelerator product in the wake of the Western Digital-Virident deal.
Virident CEO Mike Gustafson will become HGST senior vice president and lead the Virdent team inside Western Digital. Gustafson was the CEO of BlueArc when Hitachi Data Systems bought the NAS vendor in 2007.
"HGST is playing offense," Gustafson said. "It's connected to the market and putting together a great package. This space is as dynamic and dramatic as any part of storage that I've seen for the 20 years I've been in the business. The technology is real and has the potential for positive and negative disruptions for end customers."
"It sounds like they put together a plan and now they're executing on it," Jim Handy, SSD analyst for Objective Analysis, said of Western Digital. "Buy somebody who has traction and somebody else who has good technology and look for synergies."
Will Seagate buy Fusion-io?
The Western Digital-Virident deal prompted speculation that Seagate will buy PCIe flash market leader Fusion-io, which would come at a much larger price tag than Virident. The hefty price paid for Virident, whose annual revenue was in the $50 million range, suggests there was another bidder. It is not clear if that was Seagate, but Seagate certainly would have been given the chance.
"Western Digital is buying out a good player from underneath Seagate," said Tim Stammers, senior analyst at 451 Research. "Seagate had $40 million invested in Virident and a seat on the board, so they knew about this deal."
Stammers said Seagate is running out of options unless it wants to pay big for Fusion-io.
"Seagate's done nothing yet for flash," he said. "I'm not sure who is left. If they don't buy somebody soon, it's going to be too late."