The list of SSD company acquisitions in this article goes from
2000 upto 2015
3 Easy Ways
to Enter the SSD Market
Nowadays it seems like
everyone wants to get into the SSD
It looks attractive (for those who are in other parts of
the storage market which are declining or flat lining.) Although I explained in
last year -
why not all segments will do equally well.
There's always a
rush to get into technology markets at the point when the bendy bit of the
curve pokes its head above the visibility horizon.
horizon is when a new market reaches a size that even lazy
analysts can't fail to
notice - typically $1 billion annual revenue.
As long as the projected
market size (at the other end of the curve) is big enough - typically $10
billion - all that an aspiring company has to do is cut and paste some analyst
/ editor quotes about the future size of the market into the bullet points
under the graph. (No one ever checks to see if they are authentic - and no one
ever waits 5 years to see if they come true.)
If you're unfamiliar
with hockey - the interesting bit of the curve is simply a straight line which
heads due North - almost at right angles to the horizontal time line. Strictly
speaking - to make it more plausible - it should have a small tilt -
maybe 60 degrees instead of 90?
If you're taking notes - you must
follow the conventions about which way the graph is drawn and be sure to aim
the curve in the approved direction ( / ) to show rapid market
growth. If it goes the other way ( \ ) it shows a crashing market. And
you won't get the money.
Add some more few bullet points in the
powerpoint about how everyone else has failed to see this opportunity (except
you) and create a spreadsheet which shows how your revenue will go up like a
rocket - even if you only get a small percentage of the total available market -
provided the VCs give
you the money fast enough to ensure you have
advantage. (The clock is ticking even as you click on the next slide.)
Investors love to see these kind of plans. They've never seen anyone do it
before. They don't know what else to do with their money - and it's safer
tossing cash at start-ups than investing in banks. (If you're reading this
on the late night repeat - that may, or may not, still be true.)
been involved in the SSD market as an integrator or analyst for
And many SSD founders have said they've found the content on this site useful
in helping them decide to get into the market - or modifying their plans - if
they were already in it.
So I feel confident about compiling a list of
3 easy ways to get into the SSD market - along with examples, cases studies, to
do lists, and links to help you succeed. Here goes... SSD Market - Easy Entry Route #1 - Buy a Company which Already
is the easiest way to make a big splash in the storage market. It's no
different in the SSD market. Moreover it's easier now than ever before.
There are more SSD oems in the market to choose from.
The effects of the recession (and increased competition - due to all those
new SSD oems) mean that it's harder to be successful. That can make the
prospect of being acquired more attractive (to some companies).
an SSD company has the superficial attraction that you have a good idea of what
you're getting. But it's much harder to choose a suitable target than you may
Sometimes things go wrong. For example:- in 2008 the
newswires were buzzing
with stories about
SanDisk. But it didn't
happen - because SanDisk's management didn't want to be acquired. Instead the
market learned a lot about the weaknesses in Samsung's IP portfolio. The
longer this fiasco went on - the more Samsung's competitors benefited from the
In my role as Occasional SSD Agony Aunt - I've
spoken to people about the "SSD acquisition problem" at both ends
of the game. Here's what I've learned.
The acquiring company has to do
a lot of research to understand what it's getting and the acquirer has
to evolve its own understanding of the market.
Who's the best company
to acquire? - is a question I've been asked many times...
To which I
always reply - "There is no such thing as a single company or technology
that's competitive in every part of the SSD market."
me being evasive, and it's not because I can't think of any good SSD companies.
But the market is much more complex than most people think. And by the time
you've done your homework, learned about the market and whittled down a
shortlist, a new SSD press
release from out of the blue may completely invalidate all the thinking
which led to your shortlist. Which means you have to start all over again.
order to be helpful - I always suggest that acquirers study the present and past
lists of the Top 10 SSD
Companies. They are based on the SSD search volume of millions of readers.
Unlike an opinion based shortlist - it's a good empirical place to start.
(Earlier in this decade I noticed that companies named in my "top 10
lists" of other subjects had an unusually high tendency to get acquired.
That wasn't my fault! It simply indicates that if a company sticks out in one
type of search - by potential customers - it may also be extra visible in
another type of search - by would-be acquirers. It's a different type of search
best SSD companies don't want to be acquired - or are picky about whom
they may be willing to partner with. If they've got a revenue stream and are
seeing very high customer inquiries and growth - the founders will rightly (or
optimistically) think that whatever their company might be worth now - it will
be worth a lot more in another year's time. As long as they're profitable and
have got enough cash flow - why should they even discuss the subject? A lot of
SSD founders or managers have worked in bigger companies before - and part of
the reason they're where they are now is frustration at the slow market
reaction times of other companies. When you're the boss and having fun and
making money - there's more than enough to do without wasting time talking to
potential acquirers - who may just end up picking your brains and resurfacing as
competitors. Note this is markedly different to
companies - most of which never progress to a profitable revenue stream - and
where the sole aim of founding the company is to get acquired.
obvious reasons it's much easier acquiring an SSD product line from a company
which is going bust (or has already done so).
Here are just some
examples (pre May 2009) of SSD companies (and SSD product lines) which have
already been acquired.
Acquisitions - part 1 of 2- examples upto May 2009
This is the other most significant SSD
acquisition, even though it happened in 2006 - because it was a major
flash memory oem
acquiring a successful flash
Prior to this acquisition M-Systems had developed high
speed MLC controller technology and achieved early market success in the use
of SSDs in phones. M-Systems had also designed fast 3.5" flash SSDs
for use in enterprise servers. The successor to this IP is what made SanDisk
itself so attractive as an acquisition target later (in 2008 by Samsung).
Oracleannounced it has
entered into an agreement to acquire
Pillar Data Systems -
which was already majority owned by Oracle CEO Larry Ellison. Pillar at this
stage was a maker of hard drive based storage arrays which included a small
percentage of 3rd party COTS SSD capacity (SSD ASAPs hybrid) rather
than a pure play SSD vendor.
a definitive agreement to acquire
approximately $370 million. The transaction is expected to close early in the
first quarter of 2012. SandForce president and CEO, Michael Raam will
become General Manager of LSI's newly formed Flash Components Division.
OCZ agreed to acquire
the UK Design
Team (approximately 40 engineers located in Abingdon) and certain assets
from PLX Technology which
will enable OCZ to accelerate the development of its next generation of fast
SSDs - while also reducing development costs.
it has acquired the assets of UK based Virtensys
which marketed rackmount
SSDs stuffed with Micron's PCIe SSDs and supported by a patented
multi-server sharing virtualization interface.
it has acquired CMOx pioneer Unity
Semiconductor for an aggregate of $35 million in cash. As part of this
acquisition, the Unity team members have joined Rambus to continue developing
innovations and solutions for next-generation
company - ID7 - which had been
collaborating on the development of FIO's ION data accelerator software. ID7
was the primary developer of the
SCST (SCSI target subsystem for
Linux). Fusion-io also announced it had achieved 9.6 million
byte) from a single 365GB MLC
ioDrive2 (PCIe SSD).
it had agreed to acquire Altera
for $16.7 billion. Altera's FPGAs had been used as customizable components in
SSD controller and interface designs for decades - but Altera had only entered
the SSD market with its own flash controller design in the same month as the
it would acquire Dot
Hill Systems in an all-cash transaction valued at $9.75 per share, or a
total of approximately $694 million. This move (which is compatible with the
long term market consolidation model proposed by StorageSearch.com) enables
Seagate to credibly position itself as one of the leading platforms in the
mid range enterprise hybrid
storage appliance market.
acquired EMC for
approximately $67 billion. (At the time EMC's revenue in enterprise flash arrays
was in the region $1-2 billion.) The acquisition also included EMC's stake in
the storage software
company VMware - which
remained in public ownership.
When it works well,
acquisition is a powerful way of getting a strategic foothold in the SSD
market. It gives you access to products and technology which competitors can't
easily replicate. And if the acquired company has a strong base of patents than
that may provide another lucrative source of revenue in the future.
But what if your needs are tactical? You need to get into the SSD market
quickly - but it's likely that your needs will change. You need the flexibility
of getting into the technology now - but in a way that doesn't leave you locked
into an expensive dead-end if things change?
That's where the next
method comes in. SSD Market - Easy Entry Route #2 - Badge Engineering / OEMing /
Integrating Someone Else's SSD Product
This kind of deal
is extremely common in the storage market.
Unlike an acquisition - this
is strictly a marriage of convenience. (Sometimes I get the impression I'm
reading the pre-nuptial in the text of the OEM Announcement press release.)
the one side is typically a company which already has an established route to
market and strong marketing brand. Let's call them OldRichCorp. Whatever they
put in a box - with their label on it - will sell (no questions asked) to their
loyal faithful customers. (In real life it's harder than that - but this is the
story told by the negotiators in OldRichCorp when they're putting a new
contract in place.) The main risk for OldRichCorp is that if it doesn't
offer an oemed SSD product at all - then its customers may be tempted to take
their whole business to their main competitor OtherBigCorp to get these
features. OldRichCorp knows from its long dark corporate history that it should
not try to develop this technology in-house. And although it has set up a task
force to look into the subject of acquiring an SSD company - it can't afford
to wait years without having a saleable solution.
The other partner,
let's call them HotTechnologyCo, typically has some best of breed, hot
technology product - but suffers from the disadvantage that their product is
just a small part of the solution that users buy. Although HotTechnologyCo
does sell a proportion of products to end-users - the cost of capturing each
new customer is high compared to the value of each product. Much easier to sell
at a lower price to volume customers who do all the marketing for you.
Unfortunately this almost guarantees that HotTechnologyCo never invests enough
resources to stand alone. There are many risks for HotTechnologyCo because the
bulk of its business future is in the hands of a single big customer. If sales
are low there is little that HotTechnologyCo can do to push sales along. On the
other hand, if sales are high - OldRichCorp may be tempted to switch its
business to one of many new suppliers emerging in the market.
irritation that IBM felt in the early 1980s when rushing to cobble together
PC product line. It was already years
coming to market - and that meant it had limited choices. No realistic
choice at all for the microprocessor supplier (Intel had already sown up the
market for 16 bit designs) and a limited range of suppliers for a "ready to
run OS". Nevertheless those choices had a profound impact on the PC market
for the next 25 years. Is it possible that one of the many OEM deals which have
already been reported on these pages will have the same effect on the SSD market
as those early PC market choices?
I don't think so - because the SSD
market is too multi-dimensional and fragmented. But it is nevertheless true that
when companies like OldRichCorp cast their favors publicly on suppliers - it
helps to advance the whole market - even if they turn out to be transient
"I gave you the best years of my life" wailed
HotTechnologyCo when she was dumped by OldRichCorp.
prettier then, and younger" says OldRichCorp. "And I found you playing
around with You Know Who."
Markets are cruel. And we hope is that
all this Darwinian activity leads to better products sooner.
about my use of the terms such as "Badge Engineering" - which sounds
derogatory - but which I think (coming as I do from a design background) more
accurately summarizes succinctly what goes on in a lot of deals. Does
OldRichCorp do anything technical to leverage the products they get from
HotTechnologyCo - apart from putting the stuff in a box with their own logo?
They don't even do that to start with. Stage 1 on technical value add
- is getting the driver bugs sorted out. Stage 2 may be some parameter
tweaks. But in most cases the value added part of the design is easily
transferrable to products from another source.
Here are just a handful
of examples of SSD OEM deals which have been announced in the SSD market.
SSD Market - Who OEMs Whom?
- some examples from StorageSearch.com
Nearly all the examples above
relate to high volume deals in the flash SSD market. The exception being
Dynamic Solutions International. DSI, for many years oemed rackmount SSDs from
Texas Memory Systems, which it integrated into the banking and financial
markets. These products were initially RAM SSDs. But the product range now
Another difficult to enter market - in which low
volumes of SSDs are oemed by other companies is the
military / defense
market. But being designed into an embedded system or product is different to an
oem product which is actively marketed under a different brand.
SSD Market - Easy Entry
Route #3 - ReUsing 3rd Party SSD IP
In this category I've
grouped together these activities
licensing SSD IP (designs, technology and patents)
Now, having seen the earlier
parts of this article, you may have been hoping that this, too, would be
another one of those "easy to do" methods which simply requires a big
enough credit card limit or intelligent purchasing department. Isn't designing
your own SSD from chip level building blocks quite hard?
is not a quick trip to the virtual SSD mall in the hope you'll see some nice
bits. You've got to know what you're doing - and what the trade-offs are in
reusing 3rd party SSD IP. But it's still a lot easier than designing
everything yourself. And that's why I've included it in this article.
companies cross license their patents simply to reduce the risk of being sued by
each other - or as the end-point to such litigation.
I'm not talking
about such defensive moves here.
A more likely scenario on licensing IP
may be that you're working on a small form factor SSD and expect great
performance - but while you were designing the media part of the SSD for a
SATA-2 interface the external market has moved on - and that doesn't look so
attractive any more - or is not the best showcase for your memory performance.
Instead your marketers think your product might be better going straight to a
SATA-3 or 8Gbps host interface or even PCIe. If you know another company which
can offer you a ready to use design - that could shave valuable microseconds off
your latency and increase the throughput you can put on the datasheet.
maybe you're a flash memory
company who suddenly realizes that adding the right chips to your memory can
significantly affect their saleability. Being locked out of the SSD design
represents a lost market opportunity that's bigger than a new world leading
notebook or server, You can't design motherboards and operating systems but you
know a lot about designing chips. With the right start you can crash into the
SSD party and secure your forward revenue stream.
Or maybe you're a
hard disk maker
looking at ways to get into the SSD space. You've left it late because you
really couldn't understand why people would buy these ridiculously expensive
(cost per gigabyte) storage components (when you've spent decades pushing the
curve the other way). And you had a bad experience with the
market - which made you suspicious about SSD projections. Now you realise - that
it doesn't matter if you get it! Users are buying them for reasons which you
find incomprehensible (because you were talking to the wrong
analysts). HDD sales
are down. If users are going to buy SSDs they might as well buy them from you.
You know enough about host interfaces and chip designs - but need some
pre-rolled (as opposed to roll your own) flash array IP.
maybe you're a
RAID adapter company and
are looking for a new market. Many SSD oems are putting RAID inside their SSD
systems - and because of latency issues - that reduces the market for your
products (originally designed for hard drives). But have you seen the price they
charge for a RAID plus some flash chips? How hard can it be to make money in
such a crazy market?
SSD Market - IP
Technology (Dis)Agreements - a few examples from StorageSearch.com
For more stories about
licensing, patents etc which have appeared on these pages -
on this search.
For a general directory of storage chip and
interface suppliers - click here.
finally this is the place for
SSD controller chips.
It includes a directory, news, articles etc. That was going to be - The End of this article. I only
promised "3 easy ways..." - but if you've got this far then you might
find these links useful too...
The crowd sourced
intelligence of StorageSearch readers meant that for 8 years we got the best
results in the end - even if - from an individual point of view - the reasons at
the time - didn't seem so obvious.
Was there ever an ideal
earlier time and opportunity to inject SSD DNA into enterprise computing
architecture (and OSes) which could have prevented the buildup of complex
integration and associated rip and replace and bypass surgery - of so many
layers of systems software - which have inevitably followed?
"It's funny to think
that back in the old days of the SSD market most of the talk which revolved
around acquisitions and SSDs assumed that it was the SSD companies which
were being acquired (by traditional computer, rotating storage and chip
companies) rather than the other way around."