Violin Memory declared bankruptcy in October 2016 and has now been acquired by Soros, ending its time as a public listed company. Nevertheless it remains one of the foremost disruptors of the traditional storage array market, You’ll want to learn more about its potential as a private company.
Violin Memory ended its life as a publicly listed company this week as it was acquired by Quantum Partners, which is an investment fund managed by Soros Fund Management. I show its revenues and net losses by quarter in the Figure above.
I last spoke to the company in June last year, when it talked positively about the future – suggesting that it’s poor market performance was largely due to the transition from its ‘legacy’ 6000 line to the newer – and rapidly growing – flash-based 7000 products. While this product shift perhaps took too long for the company’s status as a public company, it bodes well for its fortunes as a private one. Violin Memory last year reported that it had 10 of the Fortune100 as its customers, including 5 who had migrated to the flash platforms – 3 of whom had committed to major purchases in the next 12 months. I’m sure reassuring these customers will be one of the first priorities following privatisation. Toshiba had been an investor and supplier of drives to Violin Memory; it should be relieved about this week’s announcement I’m sure.
My Figure above shows my measurement of the revenues of raw spinning and solid (DRAM and NAND) suppliers to all markets including PCs and laptops as well as data center storage. In the last couple of years there has not been a tremendous difference in fortunes between the 3 types. The disk drive suppliers have already been consolidated down to 3 suppliers, while consolidation has also taken hold of the solid state ones (where SK Hynix and Micron are the 2 largest). Having fewer vendors means that the introduction of new, high capacity, drives sometimes creates big peaks and troughs; it also means that manufacturers can make easier pricing adjustments to maintain the price differentials between the 2 technologies.
All-flash arrays were introduced first by start up companies, who succeeded in disrupting the established storage systems vendors’ business by giving users much faster application speeds. Over time most of these vendors have been acquired by the bigger storage players (TMS by IBM in 2013, SolidFire by NetApp in 2015, XtremIO for $430m by EMC, etc.), while Violin and Pure Storage chose a different path by becoming publicly listed companies.
The use of flash storage in the data center is spreading from application acceleration (often by stock traders who need very low latency and had the money to buy expensive solutions) to a more general use due to a narrowing of the price/GB difference with spinning disc and its obvious advantage in consuming much less electricity. I’m expecting some major announcements in coming months concerning NVMe and NVMeoF which should allow flash drives to be unleashed from the current necessity to connect them as if they were spinning disks – so watch this space!
Of course it may now prove more difficult to follow Violin Memory as a private company (as before I repeat my plea to keep us analysts informed about your revenue and customer progress!), but I hope that the storage disruptor isn’t too disrupted by its experiences as a public listed company.