Former consumer SSD vendor makes a play for the enterprise
The $327 million purchase of start-up Pliant Technology by flash memory giant SanDisk was a surprising headline to wake up to last Monday, not the least of which being the big purchase price. But there’s a lot more to that story.
Our readers know that Pliant Technology has been a favorite subject in our newsletters, analysis and discussion. Our first dialogue with Greg Goelz, Pliant marketing vice president was in early 2009, before the announcement of the Lightning Enterprise Flash Drive. We were, frankly, expecting an appliance announcement rather than an HDD form factor product. We later had a chance to review and analyze benchmark data on the first version, a 3Gbps SAS drive with high performing single level cell (SLC) flash memory. The drive was unique in that it was available in both 2.5-inch and 3.5-inch HDD form factors. The 3.5-inch version had higher performance because of the ability to place more flash chips in the larger space and take advantage of increased multi-pathing.
Later, we interviewed Pliant President Mike Chenery. When the company was founded in 2006 by Mike, who had recently completed a tour of duty with Fujitsu, there were few takers from the venture capital community. But Pliant got help even more valuable than money, he was “loaned” a complete engineering team by a major silicon manufacturer with deep experience in RAID, SAS and SATA controller silicon. As the buzz in the SSD market began to rev in 2008, suddenly there was plenty of venture capital available, and Pliant raised $8 million in Series A funding in early 2008 and had completed two more rounds by early 2009, for a total of about $27 million.
Fast forward to the present: With OEM customers such as EMC, HP and IBM, and a wave of consolidation going on in the HDD business, Pliant found itself a very hot acquisition target. SanDisk, which co-owns the world’s largest flash foundry with Toshiba, feared being left out of the wave of enterprise SSD purchases that is underway:
– A foundry owner and competitor of SanDisk shipped 75,000 SSDs to a single enterprise customer.
– Each of AOL’s 50,000 servers has a flash drive inside for boot and logging functions.
– EMC has shipped 14PB of enterprise flash drives since 2010.
– A foundry owner has shipped 500,000 HDD format SSDs in the most recent quarter.
– Seagate’s acquisition of Samsung’s HDD and SSD business, and Western Digital’s acquisition of Hitachi’s HDD and SSD business has created a level of consolidation in the industry that will support excellent gross margins going forward.
– The enterprise SSD SAS/SATA market is predicted to grow 80% to 100% year over year, a rate that is even surprising to many analysts that have been following market developments.
Pliant has high performing SSDs that use both SLC and 2 bit per cell multi-level cell (MLC) flash memories, the latter requiring more smarts in the controller, but delivering a much lower cost per GB. The combination of low cost flash memories from SanDisk’s foundries with Pliant’s controller architecture and channel experience creates a new playing field in the SSD industry. The startup nature and small size of Pliant has been a concern for large enterprise customers as well as OEM buyers, which has been effectively eliminated by the SanDisk deal. The execution of the resulting business operation will certainly be interesting to watch.
SanDisk stock gapped up from $46.50 to nearly $50 per share after Monday’s announcement. With an overall sell-off of stocks on Tuesday, the share price closed at $46.34, leaving us wondering whether Wall Street will embrace the deal in the short term. The long term is all about technical execution and sales and marketing.
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