Why would SanDisk buy Fusion-io for $1.1 Billion?

Subject: Editorial, Storage | June 17, 2014 - 06:56 AM |
Tagged: sandisk, fusion-io, buyout

Fusion-io was once a behemoth of flash memory storage. Back when SSDs were having a hard time saturating SATA 3Gb/sec, Fusion-io was making fire breathing PCIe SSDs full of SLC flash and pushing relatively insane IOPS and throughput figures. Their innovations were a good formula at the time. They made the controller a very simple device, basically just a simple bridge from the PCIe bus to the flash memory. This meant that most of the actual work was done in the driver. This meant that Fusion-io SSDs were able to leverage the CPU and memory of the host system to achieve very high performance.

iops (2010).jpg

Fusion-io ioDrive 160 creams the competition back in 2010.

Being the king of IOPS back in the early days of flash memory storage, Fusion-io was able to charge a premium for their products. In a 2010 review, I priced their 160GB SSD at about $40/GB. In the years since, while flash memory prices (and therefore SSD products) have steadily dropped in price while achieving higher and higher performance figures, Fusion-io products have mostly remained static in price. All of this time, the various iterations of the ioDrive continued to bank on the original model of a simple controller and the bulk of the work taking place in the driver. This actually carries a few distinct disadvantages, in that the host system has to spent a relatively large amount of CPU and memory resources towards handling the Fusion-io devices. While this enables higher performance, it leaves less resources available to actually do stuff with the data. This ends up adding to the build cost of a system, as more CPU cores and memory must be thrown at the chassis handling the storage. In more demanding cases, additional systems would need to be added to the rack space in order to handle the additional storage overhead in addition to the other required workloads. Lastly, the hefty driver means Fusion-io devices are not bootable, despite early promises to the contrary. This isn't necessarily a deal breaker for enterprise use, but it does require system builders to add an additional storage device (from a different vendor) to handle OS duties.

iops (2014).png

In 2014, the other guys are making faster stuff. Note this chart is 4x the scale of the 2010 chart.

Lets fast forward to present times. Just over a week ago, Fusion-io announced their new 'Atomic' line of SSDs. The announcement seemed to fall flat, and did little to save the continuous decline of their stock price. I suspect this was because despite new leadership, these new products are just another iteration of the same resource consuming formula. Another reason for the luke warm reception might have been the fact that Intel launched their P3700 series a few days prior. The P3700 is a native PCIe SSD that employs the new NVM Express communication standard. This open standard was developed specifically for flash memory communication, and it allows more direct access to flash in a manner that significantly reduces the overhead required to perform high data throughputs and very high IO's per second. NVMe is a very small driver stack with native support built into modern operating systems, and is basically the polar opposite of the model Fusion-io has relied on for years now.

NVMe.png

Intel's use of NVMe enables very efficient access to flash memory with minimal CPU overhead.

Fusion-io's announcement claimed "The Atomic Series of ioMemory delivers the highest transaction rate per gigabyte for everything from read intensive workflows to mixed workloads.". Let's see how this stacks up against the Intel P3700 - an SSD that launched the same week:



Model Fusion-io PX600 Intel P3700
Capacity (TB) 1.0 1.3 2.6 5.2 0.4 0.8 1.6 2.0
Interface / Flash type PCIe 2.0 x8 / 20nm MLC PCIe 3.0 x4 / 20nm MLC
Read BW (GB/sec) 2.7 2.7 2.7 2.7 2.7 2.8 2.8 2.8
Write BW (GB/sec) 1.5 1.7 2.2 2.1 1.2 1.9 1.9 1.9
4k random read IOPS 196,000 235,000 330,000 276,000 450,000 460,000 450,000 450,000
Read transactions/GB 196 181 127 53 1,125 575 281 225
4k random write IOPS 320,000 370,000 375,000 375,000 75,000 90,000 150,000 175,000
Write transactions/GB 320 285 144 72 188 113 94 88
4k 70/30 R/W IOPS Unlisted 150,000 200,000 240,000 250,000
Read latency 92us 20/115us
Write latency 15us 20/25us
Endurance (PBW) 12 16 32 64 7.3 14.6 29.2 36.5
Endurance / TB 12.0 12.3 12.3 12.3 18.3 18.3 18.3 18.3
Cost Unlisted $1,207 $2,414 $4,828 $6,035
Cost/GB Unlisted $3.02 $3.02 $3.02 $3.02
Warranty 5 years 5 years
                 

Source: Fusion-io / Intel

We are comparing flagship to flagship (in a given form factor) here. Starting from the top, the Intel P3700 is available in generally smaller capacities than the Fusion-io PX600. Both use 20nm flash, but the P3700 uses half the data lanes at twice the throughput. Regarding Fusion-io's 'transaction rate per GB' point, well, it's mostly debunked by the Intel P3700, which has excellent random read performance all the way down to its smallest 400GB capacity point. The seemingly unreal write specs seen from the PX600 are, well, actually unreal. Flash memory writes take longer than reads, so the only logical explanation for the inversion we see here is that Fusion-io's driver is passing those random writes through RAM first. Writing to RAM might be quicker, but you can't sustain it indefinitely, and it consumes more host system resources in the process. Moving further down the chart, we see Intel coming in with a ~50% higher endurance rating when compared to the Fusion-io. The warranties may be of equal duration, but the Intel drive is (on paper / stated warranty) guaranteed to outlast the Fusion-io part when used in a heavy write environment.

For pricing, Intel launched the P3700 at a competitive $3/GB. Pricing data for Fusion-io is not available, as they are behind a bit of a 'quote wall', and no pricing at all was included with the Atomic product launch press materials. Let's take a conservative guess and assume the new line is half the cost/GB of their previous long-standing flagship, the Octal. One vendor lists pricing directly at $124,995 for 10.24TB ($12.21/GB) and $99,995 for 5.12TB ($19.53/GB), both of which require minumum support contracts as an additional cost. Half of $12/GB is still more than twice the $3/GB figure from Intel.

My theory as to why SanDisk is going for Fusion-io?

  • A poor track record since the Fusion-io IPO have driven the stock price way down, making it prime for a buyout.
  • SanDisk is one of the few remaining flash memory companies that does not own their own high end controller tech.
  • Recent Fusion-io product launch overshadowed by much larger (Intel) company launching a competing superior product at a lower cost/GB.

So yeah, the buyout seemed inevitable. The question that remains is what will SanDisk do with them once they've bought them? Merging the two will mean that Fusion-io can include 'in house' flash and (hopefully) offer their products at a lower cost/GB, but that can only succeed if the SanDisk flash performs adequately. Assuming it does, there's still the issue of relatively high costs when compared to freshly competing products from Intel and others. Last but not least is the ioDrive driver model, which grows incresingly dated while the rest of the industry adopts NVMe.

Seagate Pursuing Controlling Interest In LaCie

Subject: General Tech | May 23, 2012 - 11:58 AM |
Tagged: storage, Seagate, LaCie, buyout

Seagate announced today that they will be pursuing a controlling interest in LaCie. The two companies deal in complementary areas of the storage industry with Seagate manufacturing drives and LaCie developing mobile and desktop drive enclosures and NAS solutions. In order to achieve a controlling (more than 50%) interest in the company, Seagate has offered to purchase all of Philippe Spruch’s–LaCie’s Chairman and CEO–shares. In addition to shares from an unnamed affiliate, such a buy would net Seagate 64.5% of outstanding shares of LaCie stock. Seagate is offering the LaCie shareholders €4.05 (approximately $5.09 USD) for their stock, and may be increased to as much as €4.17 should Seagate get 95% of LaCie shares and voting rights within 6 months of closing.

 

SeagateandLacie.jpg

The merging of Seagate and LaCie logos (hehe).

After acquiring a controlling interest, they would then work to buy back all other otustanding shares with a cash offer. The initial purchase of stock is still pending governmental approval. Ricol Lasteyrie & Associates has been appointed as an independent expert by the board of directors for LaCie to examine the offer and determine whether or not to accept. Should it go through, Philippe Spruch would join Seagate as the president of Seagate’s consumer storage division. He would have the current Seagate vice president Patrick Connolly and LaCie deputy general manager Pierre van der Elst reporting to him. At this time, Seagate has not disclosed how much the former LaCie employees would be paid to work for Seagate. If all the appropriate governing bodies “okay” it, the buyout is expected to happen in the third quarter of 2012 (Q3 2012).

Steve Luczo, Seagate chairman, president and CEO was quoted in the press release in stating: “Seagate has a strong commitment to the growing consumer storage market and bringing the most dynamic products to market. LaCie has built an exceptional consumer brand by delivering exciting and innovative high-end products for many years. This transaction would bring a highly complementary set of capabilities to Seagate, significantly expand our consumer product offerings, add a premium-branded direct-attached storage line, strengthen our network-attached storage business line and enhance our capabilities in software development."

The combination of Seagate and LaCie seems odd a first, because LaCie does not manufacture their own drives (so it’s not a hard drive patent portfolio Seagate is after); but they are actually complementary services. While Seagate has the hard drive storage down, LaCie has a lineup of drive enclosures and NAS boxes. By combining the two, Seagate can manufacture the drives and the enclosures themselves. Seagate does currently have a few enclosures but their expertise is primarily in the drive technology itself. The opposite is true to Lacie, so the two companies coming together is a good thing for Seagate. One thing that LaCie has done that instantly benefits Seagate is focusing on high end and premium drive enclosures. While Seagate has focused on low and midrange drive enclosures, LaCie has solely focused on high end. This is beneficial because Seagate can integrate those higher profit margin premium LaCie products into their lineup without the need for extensive research and development. Whether it will also result in an improved product lineup and/or cheaper products for consumers remains to be seen, but it has the potential to be a good thing.

Source: Seagate