Violin Systems, which is focused on the high end of the performance storage market, reaches down to acquire the SME-focused storage business of X-IO Storage. The long-term goal is to fully integrate both technologies to provide high-end systems with the price-performance advantages of the X-IO technology.Violin Systems only recently emerged from bankruptcy, but now, with new organization, new funding in place, and with a focus on the extreme performance part of the storage market, they are flexing their muscles. They made their first acquisition since the re-organization, picking up X-IO Storage’s storage array business, as that company rebrands itself as Axellio and shifts its focus to its newer solution areas in hyperconverged and edge computing. Terms of the deal were not disclosed.
The really aggressive part of Violin’s strategy isn’t its plan to expand its Total Addressable Market by picking up X-IO’s products, partners and channel aimed more at the mid-market space. It is the vision of integrating the two product lines together to combine the strengths of both – Violin Systems’ extreme scalability and performance and X-IO Storage’s price-performance features – to create performance solutions that are both high performance and relatively low cost.
“Our intent over time is to converge the technology and to leverage X-10’s price performance features, which make their products quite economical,” said Mark Lewis, Violin Systems’ Chair and CEO. “We think that we can bring elements of the Violin Technology into the X-IO ISE arrays, to further improve their performance characteristics. Longer term, we believe we can marry the technologies together, and converge the platforms. The timing for this would be late 2019. This would produce scalable platform that does 4-5x what the other flash arrays do today, and still have 40 per cent lower cost. We think that the market will find this quite compelling.”
Earlier this month, Violin Systems announced the Violin XVS 8, their new storage solution for the extreme performance market. It features ultra-low latency, which will drop IOPS to 50 µs, and the ability to customize deduplication and compression by the individual LUN. By the new year, both NVMe over fabric and predictive analytics capabilities will be added through software upgrades. The new product set represents a laser-like focus on extreme performance, something Lewis contrasted with the late Violin Memory, which after pioneering the all-flash market lost focus and drifted into other areas of storage where their skills mattered less and their limitations showed up more. Lewis stressed that the acquisition and integration of the X-10 storage business won’t lead to Violin making accommodations to go lower in the market, and that their focus will remain.
“We are very aware of this issue, and know that it is something that we have to manage,” he said. “Technology-wise, we will stay very focused on extreme performance. It is true that X-IO has a legacy of being more price performance- focused, but performance will drive Violin as a whole.”
Lewis said that the same core strategy will be able to cover both markets.
“There aren’t a lot of difference in today’s datacentres,” Lewis said. “People run on Oracle databases, on SQL server, on VMware. We have a very horizontal platform, so our affinity won’t be to one vertical versus another. This is simply an extension, which increases our TAM, and that is a good thing. When I was at EMC, we acquired Documentum, and we thought there were great synergies because they both sold to the same enterprise buyers. They did, but they were different buyers within the organization. This is a different situation. We are both solving the same kind of problems and selling to the same type of buyers.”
They will also sell through much the same kind of channel partners.
“We will quickly allow partners from both Violin and X-I0 Storage to sell the current generation of both product lines,” Lewis said. “Violin has had enterprise customers who need a smaller entry model, and X-I0 has had customers who have been looking to scale up. That expansion will happen immediately, as will the integration work that will converge the two product lines over the next 12-16 months, to the point where we can scale from where X-IO is today, to a point much larger than where Violin is today.”
Exactly how the partner program or programs will be structured has not yet been determined.
“We have very complementary partner programs, although many of the partners themselves are different,” Lewis said. “We haven’t gone into detail and looked at nuances, and it is too early to tell exactly what we will do, but every partner will have access to the current generation of both companies’ products.”
The deal has been in the works for months, with discussions starting between X-IO CEO Bill Miller and Lewis’ predecessor as CEO, Ebrahim Abbasi.
“Bill and I have been working on this for months,” Lewis said. “It made a lot of sense for both organizations to go ahead with this, particularly as their technology base is very complementary to what Violin has done. Violin’s focus has been on the Global 2000, and we have 600 customers, while X-IO brings in 1600 customers from the SME space.”
“We have always had a very low failure rate, which means much lower cost of support,” Miller said. “We have patents and further pending patents around dedupe which are a big different from the way everyone else does it. Competitors in the flash array market have a lot of memory and CPU thrown at their arrays, which drives up their cost. This has given us a leading price-performance point.”
So why, if X-IO’s storage technology was so good and their price-performance ratio was outstanding, did they wind up having the business acquired? In a word: scale.
“I came in as CEO three and a half years ago, and we looked closely at our data storage business,” Miller said. “It was clear that we really didn’t have enough scale for our marketplace. We have been thinking since how we would get more scale. We didn’t have the muscle to do so ourselves in a market where scale and volume matter. We didn’t have the access to financing to overcome this by growing organically. We looked at acquiring someone else. We had been using some of our engineering talent around hyperconverged and edge computing, where the market isn’t quite so competitive, and we thought we could do some interesting things there. So we decided to sell off the storage business.”
The result, Miller said, leaves Axellio better able to fully pursue these growth areas, while moving the storage assets to a bigger, stronger, better capitalized company.
“If we had gone off to build the next-generation product ourselves – which we were prepared to do –it would have cost at least a year,” Lewis said. “This acquisition literally takes a year, maybe more, off that plan and provides some other benefits, as long as it doesn’t violate our strategic objective of focus. That kind of conflict would be the worst thing we can do. We will also constantly be on the lookout to see if we can find something else to acquire that would bring similar benefits.”