Violin's $200 Million Acquisition? Don't Buy It

Posted by Howard Marks
January 22, 2013

Violin Memory, maker of all-solid-state arrays, has acquired SAN cache appliance startup GridIron Systems. While Violin didn't say how much it paid, Scality's Philippe Nicolas speculated that the deal was worth between $200 and $300 million. I, for one, am dubious.

GridIron is the second flash caching appliance vendor to be acquired at an undisclosed price recently, with NetApp snapping up NAS caching company CacheIQ in November. My sources close to both of the acquired companies told me that the companies were running short of cash, so NetApp and Violin acquired flash memory technology and technical talent on the cheap.

Violin has raised less than $200 million in venture funds itself. In its last round, which was oversubscribed, the company reached a valuation of $800 million. It seems unlikely the company would offer a quarter of its own value for GridIron. GridIron was founded in 2007 and has only announced one round of venture financing, $20 million in 2009.

While I'm a believer in flash caching technology in general, Fibre Channel cache appliances--like those made by GridIron and DataRAM--can be a hard sell. Not only are Fibre Channel users generally loyal to their incumbent storage vendors, they're also risk-averse. Typical storage administrators, when offered a choice between expensive SSD upgrades to their storage arrays or innovative technology from a startup at half the cost, will pick the SSDs every time.

By contrast, server-side caching vendors get to sell to the server team, can pitch the latency advantages of PCIe flash and have a cost advantage. NAS caching vendors such as Avere and Alacritech have a lot more context about data to help them make caching decisions, so they can get a big performance boost by caching metadata. In the case of Avere, it can also use its technology to cache data over distance, allowing users in multiple locations to work on projects such as film and video editing.

Gridiron will be Violin's second acquisition, if you don't include the technical acquisition of IP from a previous incarnation of Violin itself. Its first acquisition was Gear6, the original NAS caching appliance vendor, in 2010.

Last year Violin added application engine processors to its flagship arrays. These processors run Symantec's Storage Foundation to provide storage management features such as snapshots and replication. The processors can also run VMware ESXi on the array to create a converged platform. Could Violin be planning to use GridIron's technology on those processors? This would let Violin customers provision all-solid-state LUNs and cache LUNs on external spinning disk arrays from the same device. That would be cool, and would be worth the few millions that Gridiron probably cost.

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