• 12/21/2015
    4:00 PM
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NetApp Snaps Up Flash Startup SolidFire

Veteran storage supplier acquires hot storage startup to boost its all-flash portfolio.

NetApp has inked a deal to acquire SolidFire for $870 million in cash to bolster its position in the fast-growing all-flash storage array market.

The acquisition of SolidFire's all-flash storage systems complements NetApp's all-flash arrays and uniquely positions the company to target three market segments -- enterprise infrastructure buyers, application owners and web-scale organizations, NetApp CEO George Kurian said in a conference call Monday.

Founded in 2010, SolidFire targeted its solid-state drive storage platforms at cloud service providers. Earlier this year, the Boulder, Colo.-based company was named by Gartner as a "visionary" in its 2015 Magic Quadrant for solid-state arrays for the second consecutive year.

"The all-flash array part of the market is definitely hot," Stuart Miniman, Wikibon senior analyst and principal research contributor, told me in an interview Monday.  NetApp's acquisition of SolidFire will help it compete better against IBM, HP, and EMC, he said.

However, Miniman said NetApp doesn't have a good history when it comes to acquisitions. He cited Spinnaker Networks and Decru as examples of acquisitions that NetApp handled poorly.

"I've got a lot of friends at SolidFire. They've got solid technology and an excellent team," he said. NetApp needs "to take a page from what EMC has done [with acquisitions], which is to let the products have a bit of independence," he added.

Miniman noted that NetApp has had a lot of challenges recently. According to CRN, which broke the news about the SolidFire deal, NetApp has dealt with many financial problems this year and many of its executives have left the company, including former CEO Tom Georgens. CRN also reported that Cisco, EMC and Samsung had tried to buy SolidFire.

In a blog post this fall, Miniman noted that most all-flash array products target enterprise deployments with the exception of SolidFire, which he said "has strong adoption in service providers and a significant number of OpenStack deployments."

Sunnyvale, Calif.-based NetApp said it will incorporate SolidFire products into its data fabric strategy and expects the deal to close in the fourth quarter of its fiscal year 2016. SolidFire CEO Dave Wright will lead the SolidFire product line within NetApp.

In Monday's conference call, Kurian said NetApp plans to discontinue its FlashRay all-flash array product line after the deal is completed.


Some Good Acquisition

This year we have registered some of very good or i can say constructive acquisitions/ mergers in IT/ Storage industry. I hope comings year can yield expected business to these acquisitions. Market is going agressive and impressive, time to see feel it, i believe.

Re: Some Good Acquisition

The storage industry is definitely going through tremendous change. @aditshar, are there particular storage acquisitions you see as constructive?

Re: Some Good Acquisition

Yes @ Marcia, I do see some of the acquisitions as constructive, reason being companies these days look for services from vendor who can provide complete solution rather than just part of it. This makes service/ manufacturing companies even more competitive, either you need to develop the missing part or you can acquire someone to increase market and competency.

Re: Some Good Acquisition

You bring up a good point @aditshar -- I hear a lot about how customers are increasingly looking for one-stop shops and to reduce the number of vendors they work with.

Re: Some Good Acquisition

"However, Miniman said NetApp doesn't have a good history when it comes to acquisitions. He cited Spinnaker Networks and Decru as examples of acquisitions that NetApp handled poorly."

Marcia, how to handled the new company and technologies developed by them for business is more important. In certain cases we have seen that after M&A, parent companies spoiled and ruined the acquired companies, just to reduce competition and to promote their existing products in a monopolistic nature of business. I personally feels that that's not a fair deal for industry and customers.

Re: Some Good Acquisition

You're right @Mynet, there can be those kind of worst-case scenarios after an M&A. They seem kind of rare to me, though -- do you see them happening a lot?

Re: Some Good Acquisition

Marcia, i have seen many such case. In such cases M&A is not for growth of others; only to destroy the competitors.

What price, Pure?

Founder John Colgrove's and CEO Scott Dietzen's Pure Storage would also have been a great catch.

Re: What price, Pure?

Good point Charlie. Pure Storage is hot all-flash storage startup that went the IPO route with mixed results. I guess it's rebounded now. Stuart Miniman noted that storage companies have had a tough time with IPOs in the past couple years.

all-flash array M&A

According to 451 Research, this deal is the largest to date in the all-flash array market. EMC's acquisition of XtremIO in 2012 for $430 million is the second largest. 

Re: all-flash array M&A

Marcia, by such M&A, number of service/solution providers are becomes less and that's may lead to another dangerous situation of monopolistic nature of business.


NetApp isn't buying SolidFire just to boost its lackluster performance in the all-flash array market, according to 451 Research. In a research note, analysts wrote: "...its greater potential is in helping NetApp meet the challenge that all storage incumbents face – the rise of public clouds, and demand from enterprises for systems that will allow them to build their own private clouds."