Western Digital Acquires VeloBit

Western Digital Corporation has acquired privately held VeloBit, Inc., provider of high-performance storage I/O optimization software.

VeloBit will be fully integrated into HGST, a wholly-owned subsidiary of Western Digital.

Headquartered in Lincoln, MA, VeloBit enhances storage system performance with its software technology by adding a transparent acceleration layer utilizing SSDs.

Financial terms of the transaction were not disclosed.

The acquisition builds on HGST’s strategy to enhance the overall value of datacenter storage by integrating HGST SSDs with software. VeloBit’s SSD caching software accelerates applications and increases server density by enabling higher I/O performance, lower latency, and more efficient usage of processor and storage resources.

Both the VeloBit acquisition and the proposed sTec acquisition by Western Digital reflect acceleration by its HGST subsidiary in the growing and strategic enterprise SSD space, augmenting its technology position and IP portfolio with additional engineering and design resources.

"In VeloBit we saw a great team that has developed and commercialized breakthrough I/O optimization software," said Mike Cordano, president, HGST. "The acquisition of VeloBit is an important step in our strategy to develop robust software capabilities to augment our successful SSD product portfolio."

"We are convinced that the best way to meet our customers’ needs is to tightly integrate storage optimization software with the hardware," said Duncan McCallum, co-founder and CEO of VeloBit. "In HGST we have found the ideal partner to continue to develop our ground-breaking caching, compression, and cache coherence technology. This acquisition will enable us to continue to expand the range of products and services we offer to our customers."

VeloBit has won multiple competitive product benchmarks in the areas of I/O acceleration and server density optimization. VeloBit HyperCache was chosen by Storage Magazine as a 2012 Storage Product of the Year.

VeloBit was founded in September 2010 by an experienced team of storage industry experts and entrepreneurs to commercialize inventions in caching and data compression. The company was funded by Fairhaven Capital and Longworth Venture Partners.

Wells Fargo Securities, LLC has acted as the financial advisor to VeloBit in connection with this transaction.

Comments

Like SanDisk, WD is really pushing investments into SSDs and it's clear that the HDD maker has finally understood that there was some risks to remain exclusively focused on HDDs.

In 2009, WD bought SiliconSystems for $65 million and it was its first acquisition into SSDs for a firm involved in the embedded systems market. Its biggest investment in the sector was $340 million last month to get SSD maker sTec. Now it's start-up VeloBit, in caching software using SSDs, a much smaller firm that WD probably got for a sum in the $10 million range.

As of last March, VeloBit has sold its software to around 500 systems in the world, 53% for Windows Server, 20% each for VMware and Linux, 7% for Hyper-V. It boosts VDI, server density and database capacity, and accelerates applications at a low cost, using SSD to create a transparent application acceleration layer that boosts performance and capacity by up to 20x, according to the company.

Formerly Phast Data and based in Lincoln, MA, VeloBit was founded in September 2010 and got an unknown amount of Series A financial funding from Fairhaven Capital and Longworth Venture Partners in January 2011.

Now WD and HGST, that is going to integrate sTec and Velobit within its own enterprise SSD activity, have the capacity to increase their small market share in flash drives throught HGST's partnership with Intel. Their business is not significant in PC SSDs and represented only 7.1% in the worldwide market of enterprise SSDs in 2012, according to Gartner, behind leader Intel (18.1%), Fusion-io (13.6%), Samsung (9.8%) and Google (what is doing this company in the Gartner's ranking?) (8.9%).