Fusion-io Acquires NexGen Storage for $119 Million
Getting hybrid storage appliances
This is a Press Release edited by StorageNewsletter.com on April 25, 2013 at 2:55 pmFusion-io, Inc. acquired Colorado-based NexGen Storage, Inc.
NexGen is a developer of hybrid storage appliances based on Fusion ioMemory for SMEs. By using software in combination with ioMemory and standard disk drives, NexGen transforms industry-leading x86 server platforms into hybrid storage systems that provide the performance of an all-flash array at a fraction of the cost.
This acquisition is a strategic expansion of the software-defined Fusion-io product portfolio, accelerating Fusion-io’s opportunity in the SME market with a solution built to allow customers to provision both performance and capacity according to their needs. The ioControl management software at the core of the NexGen hybrid storage system transparently shares all storage resources and maintains simultaneous performance targets for multiple applications. With the software, customers can provision, prioritize and maintain predictable performance efficiently and cost effectively. It also ensures that customers have an upgrade path to all-flash solutions as their data demands continue to grow.
"Many SME businesses have lean IT teams and budgets, making it critical to offer an integrated and affordable entry point for flash powered application acceleration that delivers consistent performance, even under demanding workloads like VDI and analytics," said David Flynn, Fusion-io CEO and chairman. "The hybrid NexGen solution combines memory attached flash and disk on leading server platforms to provide a system tuned to deliver performance, price and capacity. With this acquisition, we will maintain the current NexGen product model as we transition to supporting customers’ preferred server platforms with our OEM partners."
"We architected our solution around Fusion ioMemory because it offered the highest reliability, the most predicable performance, and because it is built as a platform for easy developer integration," said John Spiers, co-founder of NexGen and new Fusion-io SVP and GM, NexGen products. "The NexGen ioControl software uniquely eliminates the need for another layer of latency in storage tiering and the bottlenecks introduced by SSD storage controllers, making it the ideal hybrid system to evolve into an open, software defined platform at Fusion-io."
As data demands continue to expand for businesses of all sizes, the ioControl software enables IT teams to control and prioritize acceleration for mission critical, business critical, and even non-critical applications.
Through the software, the NexGen system:
- Enables customers to independently provision performance and capacity with a software defined architecture that provides the performance of an all-flash array at the price of a hybrid system;
- Delivers dynamic real-time flash write caching, read caching and tiering with managed performance targets, providing sustained and predicable performance for multiple applications;
- Provides enterprise reliability with Fusion ioMemory, which is estimated to support over 250 times more data written over a system’s lifetime compared to systems based on SATA and SAS SSDs;
- Accelerates application performance at least three times more than systems that integrate SSDs behind legacy storage controllers; and
- Transparently moves data between high performance and low cost storage media, eliminating the need for another software layer to manage storage tiering
SMBs have strong relationships with their VARs. To continue supporting SMEs through their preferred IT providers and expand availability of the NexGen hybrid storage system to customers worldwide, NexGen’s network of VARs will be added to the global Fusion-io reseller channels.
Fusion-io adds approximately 50 NexGen employees to its team.
Fusion-io paid approximately $114 million in cash and approximately $5 million in stock for all of the outstanding stock, warrants and vested equity awards of NexGen, subject to the adjustments and escrow and other provisions set forth in the agreement among the parties. In addition, Fusion-io assumed all unvested NexGen employee equity awards.
The NexGen hybrid storage system is available.
Comments
The consolidation continues in the SSD market.
In SSD SAN for virtual servers, NexGen was launched in 2010 by Kelly Long and John Spiers who were the original founders of LeftHand Networks, sold to HP for $360 million in December 2008.
The company got two financial rounds in 2011: $2 million and $10 million. Consequently the price of $119 million is a good one for NexGen's founders and VCs including Next World Capital, Grotech Ventures and Access Venture Partners.
Fusion-io's cash and cash equivalents totaled $354.6 million at the end of fiscal third quarter 2013 ended March 31, 2013, but with a decrease of $13.9 million compared to the prior quarter-end.
According to CFO Dennis Wolf, "The revenue contribution from NexGen in
the fourth quarter will be de minimis, and we expect acquisition to be
approximately $0.01 to $0.02 dilutive to earnings. (...) Our cash and
cash equivalents will be reduced by approximately $110 million in the
fourth quarter due to the acquisition of NexGen Storage."
For Fusion-io, it's a good move to enter into flash appliances offering better margin that SSDs, but there is a risk for the buyer to compete with its own customers.
But chairman and CEO David Flynn said: "To be clear, we are not getting in to the box business. As always, we focus on adding value in software and allow our partners the flexibility to add value in the integration for end-users."
Gavin McLaughlin, solutions development director at X-IO, send us his comment on the new deal: "Fusion-io's acquisition of hybrid flash/disk array vendor Nexgen Storage is further evidence that all-flash vendors are recognising the need to broaden their solutions portfolio and include a hybrid solution that delivers performance, price and capacity, to enable them to respond to customer demand."
"Whilst NAND flash is an extremely useful tool in a storage vendors' portfolio, a true balance of cost, risk and growth can only be achieved through blending enterprise grade solid state and enterprise grade HDDs. Despite the hype around all-flash, we've maintained for some time that flash is a useful tool to solve IO bottlenecks rather than being the solution itself and it has become apparent that real-life users are starting to see that all-flash arrays are not necessarily faster, cheaper or better than existing hybrid based arrays. This acquisition further supports the mind shift in the market towards a more balanced approach," he added.
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