Storage Vendors, Flash Manufacturers, Buy Into Startups

Over the past few months I've noticed a string of investments in storage system startups by flash foundries and SSD vendors. Both the foundries and vendors emphasize the synergies that vertical relationships can produce, but my cynical side knows some relationships begin with great promise and end in divorce court.

The obvious synergy coming from a close relationship between SSD and array vendors is in the supply chain, with the SSD supplier gaining a direct market outlet and the array vendor gaining "most favored nation" status for guaranteed availability and price.

Less obvious, but potentially more important is the engineering connection. While the designer of an all-solid-state array could treat SSDs as black boxes, the more the designer understands about the quirks of the flash, controller and firmware in those SSDs the better.

Tight SSD and array controller integration could result in better wear-leveling across not just the flash in a single SSD, but across the whole array. This would lengthen SSD life and potentially reduce the amount of over-provisioned flash, and therefore the cost of the array. Meanwhile, the SSD vendor gets valuable feedback about new flash controller features that the array vendor, and other OEM customers, would find valuable.

Some of the relationships I've noticed lately:

• Toshiba has a strategic investment in Violin Memory that includes both the usual supply arrangement and a deal to sell Violin-designed products under the Toshiba brand in some, primarily Asian, markets

• SSD vendor SanDisk, which has a flash foundry joint venture with Toshiba, recently made a strategic investment in all-solid-state vendor Whiptail

• Samsung was a founding investor in Pure Storage and has a stake in Astute Networks

• SSD vendor STEC has invested in array software vendor Nexenta

• Most recently, all-solid-state startup Skyera, which was founded by key players in Sandforce (the flash controller vendor now part of LSI) has attracted funds from Western Digital and Dell Ventures

Old Is New

In the old days, computer vendors such as DEC, CDC and IBM made their own terminals, disk drives, printers and, most importantly, processors. Over the years, merchant component suppliers such as Intel and Seagate took over. Today, even IT vendors with complete product lines, such as HP and IBM, use off-the-shelf components.

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While we haven't in this country seen the computer industry equivalent of a Japanese keiretsu, we've had close, and even incestuous, relations between component and system vendors for decades. In 1982, shortly after the introduction of the Intel 8088-based PC, IBM bought 20% of then beleaguered Intel to insure Intel could develop more advanced x86 processors. Seagate and XIO also have a long entanglement with Seagate buying and selling Xiotech and the independent Xiotech buying its ICE technology from Seagate.

Here in the present, the marketing folks who send out press releases would like us to view every equity investment as a vote of confidence, but it ain't necessarily so.

I remember one PC vendor from the 1980s telling me that I should rest assured that the company was financially sound because Seagate now owned over a million dollars of its stock. Seagate told me it accepted the equity as payment for disk drives the PC vendor had failed to pay form rather than writing off the debt and forcing the PC vendor into bankruptcy.

While these tight connections should allow array vendors and their component suppliers to refine their products, I wouldn't base a product decision on the familial relations of my potential suppliers.