A teardown analysis conducted by the market research firm IHS, due to be released tomorrow, has pegged Samsung’s cost of materials and manufacturing to produce the U.S. version of the 32 gigabyte model of the S4 at slightly above $237 per unit. Without a contract subsidy, the entry-level 16GB version of the phone costs $639 when sold by AT&T Wireless.

The cost is somewhat higher than that of Apple’s iPhone 5, the base model of which costs $205 to build for a 16GB version, according to an IHS analysis conducted last fall. It’s also well above the cost of Nokia’s Lumia 900, which costs $209 to build, IHS found at the time.

The S4 cost is not far below the cost of Samsung’s larger Galaxy Note tablet, the cost of which IHS estimated last year to be $270.

Most phone manufacturers source their components from many different suppliers. But Samsung, a large, diversified manufacturer of many different kinds of electronic components, has used its significant capabilities to supply itself with many of the key parts inside most versions of the S4 phone sold around the world.

“Samsung’s strength is this ability to in-source to itself,” IHS analyst Vincent Leung said in an interview. “They just keep adding to the list of components that they can supply to themselves.”

One key component that Samsung did not supply to itself for versions of the phone being sold in the U.S. was the main applications processor. U.S. versions of the phone contain a Snapdragon processor from Qualcomm, which contributes $20 to the overall cost.

Versions of the phone sold in Korea and other markets around the world contain a Samsung-made chip called the Exynos 5 Octa that costs $28. Samsung is known to be manufacturing at least four variations of the phone for different market geographies around the world, including at least two being sold in the U.S., one going to AT&T and T-Mobile, and another going to Verizon Wireless and Sprint, said Andrew Rassweiler, another IHS analyst.

“Samsung is demonstrating its ability to suit the tastes of carriers in different regions of the world,” Rassweiler said. “It comes down to what the market is willing to spend on the features offered.”

The fact that Samsung used the Qualcomm-made chip is a testament to the U.S. chipmaker’s prowess. “Even with all the vertical integration it’s doing, it’s not like Samsung has given up on Qualcomm,” Rassweiler said.

One interesting difference between the U.S. and Korean versions resulted from the difference in the choice of processor. U.S. versions of the phone contain an image-processing chip made by Japan’s Fujitsu that added $1.50 to the total cost. Leung says that in the Korean versions, some of the image processing is handed off to Samsung’s Exynos chip.

Samsung also supplied the flash memory used to store data on the device. IHS estimates that 16GB of memory added $28 to the cost of the device.

The Korean giant also supplied itself with a display and touchscreen parts, which added $75 to the cost of components. The combined display package also includes Gorilla Glass, a strong glass material made by U.S.-based Corning.

Samsung is also thought to have supplied itself with several unlabeled components, including the camera module and some wireless baseband chips.

A few non-Samsung suppliers include Broadcom, which provided Bluetooth and Wi-Fi chips; Maxim, which provided a power-management chip; and Triquint Semiconductor, which provided some wireless chips.

As of 3:05 pm ET today, Fusion shares were trading at $19.89, up $3.26 (or 19.6 percent) from a $16.63 closing price Wednesday. For one thing, the company reported quarterly results yesterday, and gave forward guidance for the current quarter that was better than anyone expected.

Another thing? There’s a new Facebook data center going up in Iowa. And as everyone who follows Fusion-io knows, Facebook and Apple are its marquee customers. A new data center means that a lot of new Fusion-io products are selling.

As CEO David Flynn pointed out in an interview this morning, that can be a blessing and a bit of a curse. Earlier this year, Facebook and Apple trimmed orders and Fusion was forced to trim its outlook. Now, with Facebook building again on a site that’s big enough to accommodate at least two more facilities just like it, there’s a brighter outlook. But if you take out the up-and-down side of Fusion’s business that caters to Apple and Facebook growth, Flynn said, there has been a nice, steady, predictable ramp.

There are also new customers to report: Box, the fast-growing enterprise cloud services company, has started adding Fusion-io products to its servers. So has music service Spotify.

Then there’s the matter of the $119 million acquisition of NexGen, a Louisville-based company that specializes in taking traditional hard-drive-based storage products aimed at mid-range companies and combining them with Fusion-io’s flash-based technology. The combination gives Fusion access to a base of customers it wasn’t previously reaching. “We started out reaching the companies at the top of the pyramid, and the fact is the size of the market opportunity in the middle market is bigger,” Flynn said.

The deal has Fusion paying $114 million in cash and $5 million in stock. It’s Fusion’s second acquisition this year. Last month, it acquired ID7, a British software firm.

Kennelly is the latest executive from a publicly traded company to join the board of Nimble. In July, Frank Calderoni, CFO at networking giant Cisco Systems, joined Nimble’s board, as well. Also on its board are Kirk Bowman, a former executive at Dell unit EqualLogic and also of VMware, Ping Li of Accel and Jim Goetz of Sequoia.

Nimble last fall closed a $40.7 million mezzanine round of venture capital funding led by Sequoia Capital and Accel Partners, and has raised a combined $98 million. Other investors include Lightspeed Venture Partners, Artis Capital Management and GGV Capital. The implied valuation is said by people familiar with the matter to be between $650 million and $700 million. I doubt it will be long before people start whispering about IPO plans, if they aren’t already.

The company said in February that it had reached a $100 million run rate in bookings for the fiscal year ended Jan. 31.

Nimble is seen right now as one of the important up-and-coming storage companies to watch among the people I talk to who follow these things. I talked last week with CEO Suresh Vasudevan, who told me that Nimble asks a pretty fundamental question about enterprise storage: Why keep backup storage separated from other storage? Every time you move your data to another storage medium, there’s an extra step, one that Vasudevan argues isn’t necessary.

The company builds storage arrays that use a unique architecture called CASL, or Cache Accelerated Sequential Layout. I won’t go into the technical weeds, but the basic idea is that the arrays use integrated flash memory not as a separate tier to speed things up, but as part of the basic design. It’s essentially a hybrid that brings together flash and spinning hard disks, and takes advantage of the unique properties of both. The end result is that many customers are able to reduce the amount they invest in storage hardware. It has so far shipped 2,000 systems, and has more than 1,100 customers.

Fusion-io, charter member of AllThingsD’s Flash Madness club, creator of flash-memory based insert cards that turn ordinary servers into super-fast data-crunching machines, today announced an acquisition.

The target is an obscure British software firm called ID7. Its speciality is software that allows storage systems to talk to interface technologies. But here’s why this deal is important: ID7 is also a major contributor to the open-source software project called SCST.

If you’re creating any kind of sophisticated storage scheme for a computer running Linux — which is pretty much anyone these days — you’re using SCST. That includes a lot of Fusion-io’s rivals, among them storage giant EMC, as well as its partners like IBM and Hewlett-Packard. SCST is basically a must-have whenever you talk storage, and ID7 is the biggest contributor to it. What it means is that everyone doing anything in the area of storage, or working toward any kind of software-defined storage scheme, will have to deal with Fusion-io.

Financial terms are not being disclosed, but ID7′s team of software developers will join Fusion-io immediately.

In a filing with the U.S. Securities and Exchange Commission dated today, Violin disclosed that it is attempting to raise as much as $50 million in new funding from existing investors. The filing is an amendment to a previous one in which it disclosed an $80 million funding round. The round now has an upper limit of $130 million, of which $96.3 million has been raised from 126 investors.

According to an investor approached to participate in the deal, but who asked not to be named, Violin has raised the funding from existing investors at an implied valuation of $850 million. The money, this investor said, would be used to fund operations until Violin completes its planned initial public offering, which now has a target date of early May.

The launch of Violin’s IPO appears to have slid several times. Last April, CEO Don Basile told AllThingsD that the offering would take place no later than Oct. 27 of last year. And as recently as last month, I heard chatter that the IPO would take place during February.

Violin was said to have filed for an IPO under the Jumpstart Our Business Startups Act, meaning the related filings with the SEC aren’t available to the public.

I called a company spokeswoman and was told the company is not commenting on financial matters.

In Violin’s last funding round, which was itself an extension of a $50 million round raised 11 months ago, GE Asset Management joined as a new investor. Other investors include Toshiba, the Japanese chip and electronics maker, and networking gear player Juniper Networks, as well as Highland Capital and SAP Ventures, the investment arm of German software giant SAP.

Now that the tech investment buzz cycle has pivoted in an enterprise-friendly direction, I thought it was time to check in with Levine, a partner at venture capital firm Andreessen Horowitz.

I talked to him late last year on the heels of a busy summer. In July, he led AH’s stunning $100 million investment in GitHub, then followed it up with an $11.2 million investment in Meteor, and in October, an investment in Udacity, an education startup.

Perhaps hinting that 2013 will be as busy as 2012, last week he led a $30 million investment in Data Gravity and joined its board of directors.

We had a pretty long conversation. His fundamental argument about why smart enterprise-focused startups make for good investment opportunities comes down to one simple notion: Pretty much everything that’s been running in the corporate IT environment — things on which companies will spend more than $3 trillion this year according to some educated estimates — is ripe for a significant disruption that will make it less costly to own and operatee, more efficient, less prone to failure and simpler to use. That means a lot of large companies who have a lot of skin in the game maintaining the status quo are likely to have their worlds seriously rocked in the coming years.

Sound like fun? It’s exactly what AH hired him for two years ago.

Here are some highlights from the first half of our conversation. I’ll post the second half soon.

AllThingsD: Peter, the thing I keep hearing people say these days is there’s this feeling that the venture community is sort of “waking up” to the enterprise, or that it’s suddenly cool. You, on the other hand, have been all about the enterprise from the start. What do you think about that?

Levine: Yeah, it’s a really good time to be investing in the enterprise. We see so many interesting companies in the space right now. Just for context, it’s interesting that you comment on the idea that people are just waking up to the enterprise, and that’s exactly how I have felt for awhile, that there’s this renaissance in enterprise computing. There’s an awakening up and down the stack for new products that are going to service the enterprise.

Like what?

In my mind there are three categories that are all being disrupted at once. Cloud infrastructure: All the underpinnings of it all — storage, security networking and virtualization — would all fit there. At the next layer there’s software-as-a-service, though now there’s almost anything as a service. That’s transforming all the on-premise applications. At the highest level, mobile is transforming how people are consuming information and data and applications they are using. … In the cloud infrastructure you can see someone like a Cisco as the old guard, or even server vendors to some extent, and the new folks being VMWare, which totally upended the server world. For networking, you might see Nicira and other companies in the software-defined networking space as examples. It’s early days in that. There’s a big shift in software driving new network infrastructure rather than hardware and components driving the network infrastructure. In the same way, a VMWare can turn a server into an infinite number of servers. With SDN, the hardware component, it may even be a server in this case, with software basically creating a virtual network.

I get the point on Software-Defined Networking, though lately Cisco would argue, and not entirely without merit, that it has some of its own SDN chops. But I think your point is bigger about incumbent companies in the enterprise.

Exactly. The point isn’t whether Cisco has the technical chops to go do SDN, and it’s not whether they see this trend or don’t see it. They see it as well as everyone else. The problem is that from a business model standpoint, it’s really hard to go from one side of the pillar to the other. We’re talking about the commoditzation of components that very strongly eat into revenue streams and how revenue is recognized. That may sound like a minor accounting rule. But it is huge. With software, if I have to prorate my revenue for three years over the course of a sales engagement, rather than book it all up front as you do with a hardware sale, it dramatically shifts the sales model, the revenue model, the go-to-market model. It’s not only about the technology. For someone like a Cisco, they may very well have the technology chops, but there it’s about commoditizing the very revenue stream you rely on for your existence.

So I presume there are more examples like this in other parts of the stack?

Of course. There’s software-as-a-service on one side. There’s SAP, which has a long history of running big on-premise apps. And then you go to the other side. The whole transformation began with Salesforce.com. Ten years ago, Salesforce.com was an outlier. It was heresy to even think about putting precious customer data outside your firewall. I think that Salesforce really paved the way for the entire software-as-a-service category. And now every part of that stack — from business intelligence to analytics, to performance management to CIO tools — are all moving from the on-premise equivalent to off-premise, SaaS-based equivalents. Every major on-premise vendor has an equivalent off-premise counterpart.

And yet here you have the same thing as in your first example: SAP and Oracle are buying SaaS companies and talking about how they, too, are running in the cloud.

It’s true. They can acquire their way in. They have a lot of money. However, I’ve worked at large companies, and when you’re in there, you have this revenue base, and have a history defining how you’ve done things for the past 20 years, from sales to engineering to architecture. So even at the executive level, you can have every intention to transform the business and move into the new cloud architectures and so on, as the strategy trickles down through the organization it becomes difficult to implement because of the way people are managed and it becomes very hard to swallow some of these acquisitions and have them flourish. Basically the old guard suffocates the new innovation by not letting it flourish.

So we talked about software-defined networks, and there was last year a lot of attention on new companies there. Where’s the next area of attention?

Three years ago we invested in Nicira under the assumption that this was coming. There are still opportunities there, but the nature of this business is such that when a successful outcome like that happens, there’s a flurry of activity, where the venture community tends to pile on the next 40 companies doing similar things. But there’s other areas. Storage is a really interesting area right now. If you look at computing being commoditized by VMware, and now networking being commoditized by SDN, storage is the most expensive component at that layer. And it has been dominated by the same architecture and the same companies — EMC, NetApp, Hitachi, IBM — for at least 20 years. Same architecture, same companies. So I do believe there is an opportunity for companies in that layer to be disaggregated. Now, people have been talking about that for a long time. I was one of the very early employees at a compay called Veritas in the 1990s. So it’s a space that I have an affinity for. The interesting part of that market is that people have talked about the commoditization of storage since then. That said, it’s actually pretty interesting.

So what is startup vs. incumbent dynamic in storage?

In the past there was only the enterprise data center. And a startup would have to go head to head against an established startup in the data center. Whatever you’re selling, storage or networking or security, you’re going head to head with the incumbent players. And for a startup it is incredibly different. There’s questions about service and support and features, and there’s a CIO who says, well you never get fired for buying X or Y. So what’s happened now — and it just became clear when I talked with a friend about this recently — is that whole cloud architectures that are being set up in parallel to enterprise data centers, maybe inside or outside a company, or whether it’s Salesforce or Facebook, or Zynga or Amazon, those are the companies that are very sensitive to price, anti-incumbent, they’re adaptable to letting startups come in. So where a lot of new startups are starting to get traction is with these new cloud architectures, and it might be within a corporate infrastructure, and where there’s green field opportunity. What you find in these environments is a lot of commoditization at every part of the cloud infrastructure layer — whether it’s compute, networking, security or storage — they’ve all been greatly commoditized as compared to the traditional data center. That parallel universe has given startups the ability to make an inroad by gaining traction and relevance. And those companies are the lead users. The cloud infrastructure has dragged the crusty old data center to innovate in a new way.

So who are the companies you’re starting to see and invest in doing that disruptive work in storage?

We recently did an investment in a company called Convergent-io, which is building a storage networking switch that will leverage commodity disks at performance and reliability rates that are equal to if not better than current storage arrays. So that is the whole magic. You have to get equal or better performance and reliability. The whole idea of using flash is really interesting, but that’s essentially using the same architecture. What I’m sort of trying to leapfrog in the storage space, is to ask how storage can become commoditized on the back of commodity components.

You’re not a believer in the idea that flash can save the world, at least inside the data center?

Flash is expensive, but it’s still a storage array that sits there with a lot of expensive stuff around it. The flash stuff is linear and sequential versus the way storage array has tended to work in the past. My belief is that fundamentally there won’t be a storage array anymore. Now, that’s a big leap. But in the same way, things will change up where software will just define the storage layer. I’m talking commodity flash and disk as being the basis for the infrastructure.

Having risen more than 3 percent to $20.09 on the New York Stock Exchange today, Fusion’s shares fell by more than 17 percent to $16.79 in after-hours trading after the company said it expects slower revenue growth as major customers Facebook and Apple slowed orders. CFO Dennis Wolf claimed the timing of orders from those two companies slipped by two quarters. Together Facebook and Apple account for 51 percent of Fusion’s business.

I just got off the phone with CEO David Flynn, who told me that having two customers account for so much of its business was always a risk. But? When Fusion first IPO’d in 2011, Apple and Facebook accounted for 70 percent of sales, so it could have been worse. “We knew there was going to be some risk with customer concentration,” he said. “Over time the concentration will work itself out,” Flynn told me.

As yet, no other single customer accounts for more than 10 percent of revenue, and therefore requires disclosure. But five of the 10 customers that bought more than $1 million in Fusion-io products in the last quarter also bought its newer product ioScale. Also, sales in Europe grew 100 percent year on year, while sales in the Asia Pacific region grew 130 percent.

Fusion-io reported per-share earnings of 2 cents in the quarter, versus 7 cents a year ago. Revenue rose more than 40 percent to $120.6 million. The results fell short of analyst expectations, which called for earnings of 8 cents on $120.3 million.

Seagate, which is the world’s biggest supplier of hard drives to PC and server manufacturers, will offer a complete line of flash-based products to its OEM and distribution partners. It will also work jointly with Virident on developing new flash-based storage products.

The investment is a strategic round, and Seagate will nominate someone to Virident’s board of directors. Virident launched in 2006 and has raised more than $63 million in four rounds of funding. Its most recent round was a $26 million series D led by Mitsui Global Investments. Other investors include Globespan Capital Partners, Sequoia Capital, Intel Capital, Cisco Systems and Artiman Ventures.

Separately, Seagate reported a fiscal second-quarter profit of $492 million, or $1.30 a share, on $3.7 billion in revenue. The results were better than the $1.27 analysts had expected. The company also said it shipped 58 million disk-drive units in the quarter ended December 28. Seagate’s shares rose 2.7 percent in after-hours trading.

Sources familiar with the matter say that Violin has acquired GridIron Systems, a company that specializes in accelerating applications that run in data centers. The deal will be announced on Monday, but financial terms won’t be disclosed.

Chatter about the acquisition first emerged on the blog of Philippe Nicolas, a French expert on the storage market and head of product strategy at Scality. He wrote on Jan. 10 that GridIron had reached a deal to be acquired, but didn’t name a buyer. He estimated the purchase price at between $200 million and $300 million.

It’s Violin’s third acquisition. The last one was the assets of Gear6 in 2010, and before that, the acquisition of the original Violin Memory stream of intellectual property. Violin is taking on about 20 employees from GridIron, and will use its intellectual property in its own storage-array products. The deal brings Violin’s total headcount to about 450.

GridIron Systems was founded in 2007, and had been backed by investments from Mohr Davidow, Foundation Capital and Trinity Ventures. It had raised about $30 million in capital.

Violin was reported to have filed for an IPO in October, but did so under the Jumpstart Our Business Startups Act, so the related filings with the U.S. Securities and Exchange Commission aren’t available to the public. Last year, it raised about $80 million at an implied valuation of $800 million in a Series D round from GE Asset Management; Toshiba, the Japanese chip and electronics maker; and networking company Juniper Networks, as well as Highland Capital and SAP Ventures, the investment arm of German software giant SAP.

Facebook has been a Fusion-io customer for a long time, along with a handful of other companies, including Apple, that use its flash-based technology to speed up the individual machines in their data centers.

Today, Fusion announced that its latest product, Fusion ioScale, which has been available to existing customers like Facebook for a while, is now generally available to new customers as well. The implications for data centers aren’t trivial. I talked with CEO David Flynn about this last week and he summed it up to me simply: Data centers are going all flash. Hard drives are on their way out. Get used to it.

Previously, Fusion’s play has been in enhancing system memory — DRAM chips, which are fast but only hold on to as much data as a computer’s processor needs to get immediate work done — with flash memory chips, which can store data longer, even after the system they’re in has been powered down. The point has been to speed up the amount of work a processor can get done by eliminating those long pauses — long for a computer, anyway, because they’re measured in nanoseconds — when a computer’s processor is sitting around doing nothing but waiting for the next batch of computing work.

Now Fusion is starting to bring flash into the data center’s storage tier. With ioScale, the idea is to bring as much as 3.2 terabytes of storage that’s tuned for the industrial-strength machines in data centers; if you use four in one machine, you boost that to 12.8 terabytes.

Eventually, Flynn told me, hard drives will be pushed out of data centers entirely, even for long-term archival storage purposes. “We are jointly planning with Facebook for when that becomes possible, and we think it will happen within a couple of years,” he said.

Flynn, who only half in jest refers to hard drives as “spinning rust,” says that once data centers convert to all flash, their energy requirements become a little looser. “If you get rid of all your spinning rust, you do not have to control the humidity and temperature of your data center as precisely as you have to now. You can do more open-air cooling, and cooling is a single point of failure,” he said. “These data centers consume as much power to condition the air as they do to power the systems themselves, and that makes the data center itself more than twice as expensive to operate.” Thus they’ll be able to run warmer, and less expensively.

The disclosure came at the Open Compute Summit in Santa Clara, where Facebook was expected to comment on the topic as well in a series of announcements that also involve processor giant Intel. The chip giant just revealed that it is collaborating with Facebook on the design of a new “disaggregated, rack-scale server architecture” that takes advantage of some new Intel technologies, including silicon photonics.

Fusion-io shares are up more than 2 percent today on word of the new product. The shares fell 4 percent during 2012.

In response, the once-lethargic $20+ billion enterprise storage industry is exhibiting unprecedented innovation. Giants like EMC and Dell are vying with, partnering with and acquiring start-ups for supremacy in a morphing landscape.

It’s a serious game. More than $3.5 billion was pumped into VC-backed storage start-ups between 2007 and 2011, with more than $1 billion in 2011 alone. And $10 billion more has been poured into M&A, with the most recent example being EMC’s $430 million purchase of a company that hasn’t finished developing an initial product. Tectonic shifts come from collisions of forces. There are three major force vectors here.

First is the demand for more scalable, instantly provisionable, faster and higher-capacity storage. Even in an anemic economy, demand for data storage grows more than 50 percent per year.

Storage in a Flash

The second driver is the widespread proliferation of flash memory. Remember when you could feel the hard drive spinning inside your iPod? Today, practically every consumer carries flash memory in his or her pocket or purse.

Flash has been around for years, but was too expensive for broad adoption. Thanks to companies like Apple, which consume enormous amounts of flash, the cost is dropping like an apple from a tree. It’s still much more expensive than rotating hard drives, but its notable physics are compelling. Solid-state flash is faster than mechanical drives, and doesn’t forget everything when the power is turned off. Perfect, right?

Flash in the Pan?

Actually, not so perfect for corporate, governmental or cloud environments. In addition to high cost, flash has some unfortunate features. For example, it wears out in the same way your favorite pair of jeans will become threadbare with use. You’ll never wear out your phone from too much texting. But in an enterprise application, the number of IOPS can be so staggering that flash has to be treated almost like a printer cartridge, a consumable.

Many companies are developing techniques to deal with flash’s inherent limitations to make it suitable for data centers. It’s a gold rush, with vast sums of capital chasing big markets. That $430 million acquisition by EMC? Yup, flash.

Why pay so much for a pre-product company? There were multiple bidders. NetApp made a rich offer, which Dell topped by a lot, which EMC topped by an equally wide margin. There will be more M&A.

Interestingly, this activity is driving breakneck commoditization. This is great for customers, but not for vendors, who will not long enjoy rapacious (oops, I meant healthy) margins on proprietary technology. Ironically, the value in flash-based systems is really in the software that wrests the value from the hardware. Everyone in the industry knows that the days of differentiated flash hardware are numbered.

When Is Storage Not Real? When It’s Virtual.

As if hot, high demand and cool flash aren’t enough, the storage games are impacted by a third force called virtualization. Virtualization has transformed computing. The leading vendor, VMware (not coincidentally, owned by storage company EMC), has built a market capitalization of roughly $40 billion. All by making fake computers.

We call them virtual machines. Your iPhone may be talking to one right now over the Internet. Their magic allows the creation of what looks like a physical computer server. A virtual machine, or VM, appears to embody central processing units, memory and communication networks like physical computers. But it’s a software abstraction. Through this prestidigitation, data centers run scores of VMs on a single server box.

Enterprises can deploy vastly more applications because virtualization from Microsoft, Citrix, Red Hat and VMware saves enormously on capital and operating expenses. And provisioning is so much faster. Just a few clicks and, voila, you have a new server. By the way, you can buy server hardware from anyone. That freedom makes vendors compete harder, which you like if you run an information technology department.

What does this have to do with data storage?

Enterprise and cloud storage still live in the physical age. That is, storage system features are embedded in proprietary hardware. Want a cool software feature? You have to buy hardware to get it. Before virtualization, this was how the server industry worked. But virtualization is stressing traditional modes of delivering storage to applications. Performance problems, high costs and inflexibility cause VM users great pain on a daily basis.

Hello, Storage Hypervisor

The key enabling technology in compute virtualization is called a hypervisor. This core magic remade the server industry for the benefit of all. Until recently, there was no storage equivalent.

Now the storage industry is beginning to buzz about the concept of a storage hypervisor — the analog of the server hypervisor, but for storage. Storage hypervisors promise to increase the effective performance of hardware by an order of magnitude. By virtualizing resources to provide the administrative paradigm needed in virtualized environments — VM-centric management — they provide unprecedented flexibility and efficiency. Naturally, the ideal storage hypervisor leverages flash, just as server hypervisors unleash the power of Intel-based silicon.

Giant publicly-traded storage vendors and ambitious start-ups alike are talking up their offerings. All have differing approaches, but share the goal of giving data-center storage buyers the benefits already bestowed on server customers.

A Serious Game

Today we observe a convergence of forces transforming a multi-billion dollar market. The unending pressure for more data increases demand for high-performance flash-based storage hardware. This in turn is driving the essential requirement for virtualization of storage hardware resources. This confluence will enable vastly larger amounts of storage to be applied to every imaginable use case, all while making the economics not only affordable, but also compelling.

The winners in this game? Corporate and cloud data centers and their users. In other words, you.

Before co-founding Virsto, Mark Davis was CEO of storage resource management vendor Creekpath, where he engineered its acquisition by Opsware (now HP).

And nestled within all that, Apple made news on the feature front as well, adding an entirely new storage option to both the iMac and the MacBook Pro: The Fusion Drive.

The Fusion Drive combines the best of both worlds: The high capacity, reliability and affordability of a traditional hard drive, with the snappy, instant-on speed of a solid-state storage drive, without breaking the budget.

If you’ve been paying attention to the features on Apple’s notebooks for the last few years, you couldn’t help but notice that solid-state storage has been creeping its way in where traditional hard drives have always held sway.

The trend, some argued, was inevitable. Flash memory is speedier and allows a computer to boot up faster, and it also tends to be more power efficient. But until recently, to have an SSD meant sacrificing overall capacity for speed. The MacBook Air maxes out at 512 GB while the hard-drive based MacBook Pro can accommodate a one terabyte drive.

The trouble with solid-state drives is that it costs too much to use enough of them to build a unit that stores as much as standard hard drives — say, a terabyte. Recently, the price per gigabyte for the flash memory used in a solid-state drive has fallen to about 89 cents, says Ryan Chien, a memory analyst at market research firm IHS. Traditional hard drives are still a lot less expensive, costing 5 cents to 10 cents per gigabyte. “And flash has come down the cost curve, but it isn’t going to catch up with hard drives anytime soon,” he says.

Flash also brings help with power consumption. A hard drive has to spin, and that takes about three times as much power as it does to move data in and out of a chip. And even at rest, a hard drive consumes a lot more power than a flash drive. That makes a huge difference in mobile machines, where power consumption and battery life are all-important considerations.

Another fact is that for most users, one terabyte is usually overkill.

Rather than stick with the standard industry trajectory under which hard drive capacity tends to double ever couple of years or so, hybrid drives have been offering a third way to keep storage capacity high, while boosting the overall speed, especially for frequently used data.

Enter the hybrid, which is what the Fusion Drive is. Basically, the Fusion Drive brings 128GB of flash with a 1TB or 3TB hard drive. The operating system and files you use the most often will be kept in the flash memory close at hand and lightning quick. Boot times will be a lot shorter than they used to be and certain key applications — like, say, iTunes and iWork — will be lightning fast as well.

Intel has a technology called SmartResponse that is similar. However, Chien doesn’t think Apple is using Intel’s approach with the Fusion Drive. “Intel is using a caching approach. Apple is using a tiering approach that’s less granular in terms of file manipulation and works on a bigger scale.” Also key: The combined drives act and appear to the user like one big drive.

The traditional storage industry had been facing sort of a bleak outlook and now has an interesting way to stay relevant in personal computers. Who really needs four terabytes today or will need eight a year or two from now? It’s better, Apple seems to be arguing, to have the drive you have, bolstered by some flash chips to give it some extra pep. Expect to see similar drives showing up in notebooks from other manufacturers soon.

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Violin, you may remember, is the memory array company that uses flash memory chips to replace the hard-disk-based memory arrays that make enterprise applications run faster. It supposedly filed for an IPO earlier this month, but did so confidentially, under the JOBS Act, so the public can’t yet inspect its S-1 documents filed with the U.S. Securities and Exchange Commission.

And that’s unfortunate because, under normal conditions, if a pre-IPO company loses a key reselling partnership, it’s material-negative business development that requires an updated filing. And that’s exactly what appears to have happened to Violin.

On Friday, Bloomberg News, in a story that appears to be based on overly chatty investment bankers familiar with Violin’s IPO process, said that Hewlett-Packard “planned to end” a deal dating back to July of 2011 to resell Violin products as part of its portfolio.

That much is true, though Violin, in a statement drafted with the apparent intent of muddying the waters on the situation, said the relationship is “unchanged.” Here it is in full:

The current HP Violin relationship remains unchanged. The VMA product family (the Violin 3000 and vSHARE software) continue to be available to customers via HP as per the announced relationship (www.hp.com/go/vma). HP engineering continue to certify the VMA with additional servers, operating systems and joint selling and promotions. POC (proof of concepts) are currently active as are additional HP certifications.

HP has stated 3Par is the long term strategic direction for their company. Violin offers other products like the Violin 6000 through both our direct sales and our global reseller network as well as other software and system vendors which have been announced over the past 12 months.

So, if by “unchanged,” you mean that HP is still selling the Violin products already qualified and in the portfolio, then, indeed, the relationship is unchanged. That’s exactly what HP sources are telling me is the case. Violin products that have already been qualified will remain in the HP portfolio, mainly just to keep current customers happy, my HP sources tell me. What HP won’t be doing is adding any new Violin products to its resale portfolio.

Instead, HP will be favoring its own 3Par storage products. That’s the storage outfit that HP acquired in 2010 for $2.4 billion after a bidding war with Dell. Doing so would make sense in light of the renewed emphasis on boosting its own enterprise products of every stripe.

I’m no expert in the provisions of the JOBS Act, nor of the finer points of S-1 filings and the conditions under which an updated one is required. I also have no idea as to how much of Violin’s stuff HP has up to now been responsible for selling. But if I were someone considering taking a chance on Violin’s IPO, I’d have a lot of questions right about now.

Violin had sales in the neighborhood of $100 million last year, according to Bloomberg, and as of March had just raised $50 million at an implied valuation of $800 million. It will be interesting to see if losing HP as a resale partner affects Violin’s IPO plans.

The teardown analysis by the firm previously known as iSuppli is still ongoing this afternoon and not yet complete. But here’s what has been found so far: Memory chips from Sandisk are in the phone, in a possible sign that Apple is curtailing its purchases from memory chip maker Samsung as a result of the acrimonious legal fight still ongoing between them.

Flash memory chips used for storage are estimated to add between $10.40 and $41.60 to the cost of the device, depending on storage capacity. The iPhone also has $10.45 worth of DRAM memory.

Another iPhone part previously supplied by Samsung — the battery — appears to have been supplied by Sony. In both cases, it’s likely that Apple is buying both memory and batteries from more than one supplier. This means that Samsung memory chips and batteries may still be found inside some iPhones and not others. The battery in the iPhone 5 cost $4, down from $5.90 on the iPhone 4S, IHS says.

The iPhone 5 also contains a wireless processor from Qualcomm and touchscreen controller chips from Texas Instruments and Broadcom. STMicroelectronics maintained its role in supplying the gyroscope chip.

The parts used inside the iPhone 5 cost a combined $197 for the base model while the cost of assembly runs about $8 a unit. The iPhone sells for $199 to $399 with a two-year contract, but without a subsidy-bearing contract it sells for $649 for the base 16-gigabyte model, $749 for the 32-GB model and $849 for the 64-GB model.

The findings are more or less in line, if slightly lower than a preliminary cost estimate of $199 on the base 16-gigabyte model that IHS issued earlier this week. The cost estimates don’t take into account costs for other items, including software development, research and development, packaging, shipping or distribution. Apple declined to comment.

The latest estimate is fairly close to the cost estimate range of $188 to $207 that IHS issued last year on the iPhone 4S. Apple is selling the iPhone 5 for $199 for a 16GB unit, $299 for 32GB, and $399 for 64GB.

That $9 difference between the component cost for the iPhone 4S and the iPhone 5 is important because it’s a relatively small difference between 3G and LTE or 4G phones, says Wayne Lam, analyst with IHS. “Most other phones built for LTE had much bigger displays, and everything got oversized. And that pushed the material costs higher,” he said. Apple’s screen is the same width as before, but is slightly longer than on the iPhone 4S.

Apple is also benefiting from a strategic investment in Sharp that paid off in the creation of a new in-cell touch-enabled display. The new display requires fewer layers than previous ones, and incorporates touch sensors directly into the display itself rather than using a touch-enabled overlay technology. The result, Lam says, is a display that is thinner than in previous generations of iPhone. The total cost of the display, IHS estimates, is $44, versus $37 on the iPhone 4S.

Another difference is in the wireless technology. With the iPhone 5 ready for LTE — Long Term Evolution — wireless networks, the cast of wireless chip suppliers has changed somewhat. Qualcomm supplied the primary wireless chip with additional chips coming from Skyworks Solutions, Avago Technolgies and Triquint Semiconductor. “We’re seeing a lot more parts from Avago and Skyworks this time around and only one from Triquint,” Lam said. The combined cost for the wireless components adds up to $34, up from $23.50 on the iPhone 4S.

There’s also a mysterious Apple-labeled chip that has not been seen in prior iPhones. Lam says it’s likely to be an audio chip of some kind. Apple is said to have been working on ways to improve audio and voice quality for phone calls.

In March, the firm took apart the latest iPad and came up with a range of estimates: $309 for the base Wi-Fi-only model to $409 for the higher-end 64GB 4G-ready model.

IHS regularly conducts teardown studies of wireless phones and other consumer electronics devices in order to find out who a company’s suppliers are. Like most manufacturers, Apple prevents its suppliers from identifying themselves publicly, much as they’d love to, so teardowns serve as confirmation of a relationship between a manufacturer and a supplier that is usually the subject of rumor and speculation.

The firm also estimates the combined cost of components — analysts check on the list prices of each part — to compile what is known in industry lingo as a bill-of-materials estimate, or BOM, that gives a fair idea how much a manufacturer, in this case Apple, makes in gross margin on each device sold. Apple doesn’t disclose its gross margin on a per-product basis, but when it reported its quarterly results on July 24, it said its overall gross margin was 42.8 percent.

In this case, the firm acquired five iPhones and disassembled them all. One thing the firm’s analysts were looking for was any variance in the identity of the memory supplier. Historically, Samsung, the world’s largest supplier of flash memory chips, has been a significant supplier — one of many — to Apple across its mobile product lines.

The Apple-Samsung relationship has been complicated by the epic series of smart phone patent lawsuits between them. Apple won a key round in the U.S. last month, winning a $1 billion judgment against Samsung in a federal court in San Jose, Calif.

Samsung still manufactures the A6 processor for Apple, continuing a relationship that dates back several years. Apple designs the chip. Early iPhone models contained processors designed and built by Samsung. IHS estimates the per-ship cost of the A6 to be $17.50 versus $15 for the previous generation’s A5.

IHS has also recently taken apart Nokia’s Lumia 900 and estimated its build cost at $209. Meanwhile, Google’s Nexus 7 tablet cost $152 to build.

]]> http://allthingsd.com/20120921/apples-iphone-5-is-pried-open-its-profitable-secrets-start-bursting-out/feed/ 0 http://allthingsd.com/20120817/as-ibm-joins-flash-madness-club-deal-chatter-turns-to-fusion-io/ http://allthingsd.com/20120817/as-ibm-joins-flash-madness-club-deal-chatter-turns-to-fusion-io/#comments Fri, 17 Aug 2012 14:59:13 +0000 Arik Hesseldahl http://allthingsd.com/?p=242570 When IBM bought small, Houston-based Texas Memory Systems for an undisclosed amount yesterday, a lot of people thought it signified the starting gun to a new round of acquisitions.

It has been only two years since the enterprise storage wars. In fact, it was two years ago this month that Dell and Hewlett-Packard bitterly battled over 3Par. HP won that fight, paying $2.4 billion for the storage concern. Dell bought Compellent instead, while IBM took out Netezza. All told, it was a $5 billion M&A bonanza that ended just as suddenly as it started.

By joining the loose collection of companies I’ve dubbed the Flash Madness Club — companies that have tossed their hats in the ring, either selling or relying on flash memory in a big way — IBM, a lot of people are speculating, will force rivals like HP, Dell and maybe Oracle to start rolling up the other flash-technology players. Nor is IBM done buying in this area.

The main target of all this is Fusion-io, the Utah-based flash-technology company that first went public last year, and which is remembered mostly for its data-center supply relationships with Facebook and Apple.

Fusion’s primary product is the ioDrive, an insert card that essentially speeds up conventional servers by feeding data to the main processor faster than the relatively poky hard drive. Fusion shares rose 7 percent on the speculation, closing yesterday at $28.23.

At that price, it trades at a market cap of about $2.6 billion. Assuming a 50 percent premium, it would, in a hypothetical deal, probably go for about $4 billion, assuming there wasn’t a crazy bidding war.

But there would be. Fusion’s primary strength is its OEM relationships. (OEM is industry lingo for Original Equipment Manufacturer.) In these relationships, Fusion sells its products like the ioDrive to such companies as HP, Dell and IBM, which then offer them as part of their own distinct servers.

The product is considered strategic enough that if one big IT player were to try and buy it, the others would put up a fight and offer competing bids to prevent Fusion from falling into the hands of a competitor. Fusion would become a much more expensive target rather quickly.

But, at the same time, the winning bidder would own an asset that would instantly lose value. If, for example, HP closed a Fusion-io acquisition, can you realistically see Dell and IBM continuing to do business with it? Future growth of Fusion’s products would have to offset that lost revenue. And given the concentration, the loss of one partner would be a big blow: 82 percent of Fusion’s revenue in its most recent quarter was made up of individual companies, each accounting for 10 percent of sales or more. A target that would get progressively more expensive in a bidding war and then lose value right away doesn’t look like a good deal.

Longer-term, there’s a lot of value in Fusion’s relationship with the end customers. Even when an OEM sells a server with Fusion’s technology inside it, it is usually Fusion and not the OEM that supports the product with software upgrades and maintenance. As more companies begin running hardware with Fusion’s technology inside them — banks and financial institutions are big fans of it, for one thing — owning Fusion would make sense for one of the big IT companies.

But here’s another thought: If Fusion is to be acquired, the thinking goes that it would have to acquired by either a traditional IT company or a dedicated storage player. HP and EMC are the ones being mentioned as possible buyers in the analyst notes today. But why not Intel?

The world’s biggest chipmaker has the cash — $13.7 billion, as of its most recent quarter — and is constantly looking for ways to expand its relationships with the hardware vendors. And since Intel already does business with all the OEMs that Fusion does, none would lose access to its technology. There are probably a lot more things to consider, but I just don’t see why Intel is not part of this conversation.

]]> http://allthingsd.com/20120817/as-ibm-joins-flash-madness-club-deal-chatter-turns-to-fusion-io/feed/ 0 http://allthingsd.com/20120809/fusion-io-looks-ahead-sees-streets-paved-with-golden-flash-chips/ http://allthingsd.com/20120809/fusion-io-looks-ahead-sees-streets-paved-with-golden-flash-chips/#comments Thu, 09 Aug 2012 23:45:11 +0000 Arik Hesseldahl http://allthingsd.com/?p=239893 Shares of Fusion-io, the company that uses flash memory to speed up servers in data centers and also a founding member of the year-old Flash Madness Club, just reported its quarterly earnings, and, well, they’re flashy.

Sales were $106.6 million, and per-share earnings were 9 cents, easily besting the consensus of $96 million and 3 cents. Great, but that’s not what got investors so excited that they kicked Fusion shares up by 26 percent in the after-hours session. The company said it expects sales in its fiscal year 2013 to grow 45 percent to 50 percent, well ahead of the 37 percent analysts had been expecting.

At least part of that outlook stems from things like the super-secret deal Fusion did with enterprise storage concern NetApp last week, and also the trend of servers going all flash, thanks in part to Fusion’s software.

“We got new products and new opportunities within existing markets, so we feel pretty good,” CEO David Flynn told me in a brief conference call after Fusion reported earnings today. All the new stuff going on is offsetting what has been the traditional criticism against Fusion since its IPO last summer: That it relies too heavily on large purchase orders from a small number of customers, specifically Apple and Facebook, who buy a lot of Fusion’s technology for use in their data centers.

“They’re representing a smaller overall portion of our business as these new opportunities develop,” Flynn told me.

One other thing he said: Some of those big customers have some pretty aggressive plans to scale out their data centers. “These relationships have afforded us some visibility on their plans, and we’ve factored that into our guidance with high confidence.” It looks to me like Fusion-io’s guidance is quickly becoming a pretty good barometer for the overall state of the data center business.

]]> http://allthingsd.com/20120809/fusion-io-looks-ahead-sees-streets-paved-with-golden-flash-chips/feed/ 0 http://allthingsd.com/20120801/fusion-io-has-a-big-present-for-wozs-birthday/ http://allthingsd.com/20120801/fusion-io-has-a-big-present-for-wozs-birthday/#comments Thu, 02 Aug 2012 02:29:55 +0000 Arik Hesseldahl http://allthingsd.com/?p=236938 Tonight, flash memory technology concern Fusion-io is throwing a big birthday bash in San Francisco for Steve Wozniak, the legendary Apple co-founder, who’s both a Fusion investor and its chief scientist.

The company won’t just be partying for Woz, but celebrating an important technology advance. And while the press release it has put out doesn’t exactly make it accessible to the layman, it comes down to this: Servers that run in the cloud are going all flash.

Up to now, more often than not you’d see flash memory added as a supplement to a standard server to speed things up. The example I always use is pretty straightforward: The main microprocessors in a server that are doing the heavy computing lifting of processing data are constantly — and by constantly I mean a few million times a second — waiting around for the rest of the system to catch up and hand off more data to it. Conventional hard drives and all the pipes in the system that connect them to the processor are too slow to keep the processor running at full capacity, and so having spent the money for all that computing horsepower, you never quite get all the potential out it. Multiply this condition across thousands of servers in a data center, each with several processors in the box, and you can see how this becomes an irritating economic problem.

Fusion-io’s stock in trade has from the start been about keeping those impatient processors busy. You put flash memory chips up close to the processor, let them grab a lot of data out of the hard drive and stuff their pockets full of it and then shovel it off by the armload to the processor. More computing work gets done, and in the long run, you get more computing oomph for your dollar, or spend less on computing hardware to get the same level of work done. Got all that?

It’s because of this that companies like Facebook and Apple have loaded the servers in their data centers with Fusion-io’s memory cards. But the flash has always existed in a combined environment. Facebook, for example, treated the flash as a cache, pretty much as I described it above.

But now, using this new technology that Fusion is announcing tonight, the boxes in Facebook’s data centers are going all flash. As David Flynn, Fusion’s CEO, put it to me last week when he came to New York: “Most recently, because flash has become higher capacity and has a lower cost point, Facebook has gone to an all-flash architecture. The systems are all flash and no longer blended with hard disks.”

Typically, data centers have these big hulking storage arrays that store all the live data that’s being used, and they perform essentially the same function that the hard drive does in your PC: They hold everything, waiting for the moment when they’re called upon to be used. Yes, I’m simplifying it greatly.

You should also know that storage arrays are what companies like EMC and NetApp specialize in, and they’re generally still based on hard drives. Start-ups like XtremIO — which EMC bought — and Violin Memory are working on ways to use flash to blow up the old-school storage array business, but it hasn’t happened yet.

Today’s new product is Fusion’s play to deal its own blow to the established business for storage arrays. It’s called the ION Data Accelerator, and it’s software that the company says can transform any industry standard server into a wicked-fast “data acceleration device.”

What does that mean? Well, Fusion says a media company deployed the Data Accelerator technology on its servers and saw a 25x improvement in the performance of its SQL database, and media transcoding — a pretty data-intensive process if ever there was one — improved 8x. A dozen early customers are putting it through its paces, and yes, naturally, Facebook is one of them.

If you want to try it, you can do so in one of two ways: You can get a server with Fusion’s ioMemory added to it from one of the company’s partners, including Hewlett-Packard, Dell or IBM, and buy the accelerator software directly. Fusion will provide you with the service and support you need to get it up and running. The other way to get it is to deal with a value-added reseller who can add it and integrate it into a white box server. Basically, the technology will be pretty accessible and not just available to the big data center companies.

It also marks a potentially big step in the evolution of the use of flash in the data center generally. As Flynn put it: “We first came out to the world saying that flash belonged in the server.” As fundamental shifts go, that was a pretty big shift by itself. “Now we’re saying that the server itself can, with flash in it, replace your storage array.”

It’s the second bit of news this week from Fusion-io. Earlier this week it said, without elaborating, that it is teaming up with storage concern NetApp. And, next week, it will report quarterly earnings. Fusion has had a pretty busy time since its IPO last year.

]]> http://allthingsd.com/20120801/fusion-io-has-a-big-present-for-wozs-birthday/feed/ 0 http://allthingsd.com/20120730/netapp-catches-flash-madness-in-mysterious-partnership-with-fusion-io/ http://allthingsd.com/20120730/netapp-catches-flash-madness-in-mysterious-partnership-with-fusion-io/#comments Mon, 30 Jul 2012 12:37:49 +0000 Arik Hesseldahl http://allthingsd.com/?p=235345 Fusion-io, the company that uses flash memory to make conventional servers faster, just announced a mysterious partnership with enterprise storage player NetApp.

It’s kind of a weird announcement, where neither company is disclosing what it’s all about. The only hints we get are from the press release, saying they are:

… working closely with storage industry leader NetApp to provide solutions using server-side flash and caching software products when used in conjunction with the NetApp Virtual Storage Tier. The two companies are collaborating on low-latency, high-performance solutions for compatibility between the Fusion ioMemory platform and NetApp’s Data ONTAP operating system, as well as key caching solutions, including NetApp Flash Cache, NetApp Flash Pool and Fusion-io caching software.

Basically, we’re going to see Fusion’s technology in NetApp products, coming soon to a data center near you.

The news can’t help but be seen as a reaction to EMC’s acquisition of Israeli flash technology concern XtremeIO in May. EMC paid somewhere between $430 million and $450 million for that company, and the combination was seen at the time as a blow to Fusion-io and NetApp. Shares of both have been trading in lower ranges since that deal. Fusion, which first went public last summer, has been the subject of persistent speculation as an acquisition target. EMC’s deal was expected to kick off a round of acquisitions.

The collaboration should also affect the outlooks of Violin Memory and Pure Storage. Violin raised $80 million in a Series D round of venture capital funding in April, at an implied valuation of $800 million, and has been marching steadily toward an IPO no later than October.

Pure Storage is the other flash player worth watching here. It came out of stealth last summer with a $30 million Series C investment and a plan to use flash to disrupt the business of storage arrays.

Fusion, you’ll recall, is a founding member of the Flash Madness Club. Its flash memory insert cards for servers are widely used in data centers of companies like Apple, Salesforce.com and Facebook, speeding up the ability of servers to process data by eliminating bottlenecks created by conventional hard drives. Its customers also include Hewlett-Packard, Dell and IBM, among other server manufacturers who offer Fusion’s products, like its ioDrive inserts as a build-to-order option.

The markets don’t quite seem to know what to make of it, either, as all three are falling in premarket trading in New York. NetApp shares fell by 33 cents, or 1 percent, to $32.58, while Fusion shares fell by 13 cents to $19.50. EMC shares fell by 18 cents to $26.38.

]]> http://allthingsd.com/20120730/netapp-catches-flash-madness-in-mysterious-partnership-with-fusion-io/feed/ 0 http://allthingsd.com/20120510/emc-joins-the-flash-madness-club-by-acquiring-israels-xtremio/ http://allthingsd.com/20120510/emc-joins-the-flash-madness-club-by-acquiring-israels-xtremio/#comments Thu, 10 May 2012 13:35:46 +0000 Arik Hesseldahl http://allthingsd.com/?p=206534 Storage technology giant EMC said today that it has reached a deal to acquire the Israeli start-up XtremIO. The price was reported by the Israeli newspaper Globes to be $430 million, but EMC didn’t confirm that in a statement. EMC said the all-cash deal won’t have a material effect on its results this year.

XtremIO makes storage arrays based on flash memory chips, and is a would-be rival to Violin Memory, the Silicon Valley start-up that’s revving its engine for an IPO later this year, following an $80 million Series D funding round which AllThingsD reported exclusively last month.

Another player in the all-flash storage array business is Pure Storage, which came out of stealth mode last August with a $30 million Series C led by Redpoint Ventures.

News of the deal gave shares of Fusion-IO a jolt. Fusion-IO rose 50 cents, more than 2 percent, to $21.63, just as the markets opened for trading in New York. As of yesterday’s close, Fusion shares have fallen by more than 6 percent since its IPO debut last June.

Fusion is a founding member of the Flash Madness Club. Its flash memory insert cards for servers are widely used in data centers of companies like Apple, Salesforce.com and Facebook, speeding up the ability of servers to process data by eliminating bottlenecks created by conventional hard drives. Its customers also include Hewlett-Packard, Dell and IBM among other server manufacturers.

]]> http://allthingsd.com/20120510/emc-joins-the-flash-madness-club-by-acquiring-israels-xtremio/feed/ 0 http://allthingsd.com/20120430/exclusive-violin-memory-boosts-latest-funding-round-to-80-million/ http://allthingsd.com/20120430/exclusive-violin-memory-boosts-latest-funding-round-to-80-million/#comments Mon, 30 Apr 2012 22:25:55 +0000 Arik Hesseldahl http://allthingsd.com/?p=201580 Last month AllThingsD reported that Violin Memory, the flash memory technology start-up, had raised $50 million in a Series D round at an implied valuation of more than $800 million.

That funding round, I’ve since learned, was so oversubscribed that it reached $80 million and now includes a significant new investor: GE Asset Management. A filing is expected with the U.S. Securities and Exchange Commission Tuesday.

GE Asset Management is joining a funding round that includes strategic stakes from Toshiba, the Japanese chip and electronics maker, and networking gear player Juniper Networks as well as Highland Capital and SAP Ventures, the investment arm of German software giant SAP.

The funding is Violin’s latest step toward filing for an initial public offering. Violin CEO Don Basile told me that the company has selected four banks to work with on the offering, following the bake-off process we mentioned last month: J.P. Morgan, Deutsche Bank, Bank of America Merrill-Lynch and Barclay’s, confirming a report from Bloomberg News last month.

Basile told me that he expects Violin’s road show will take place during the summer and that the company is now well within what he says is a 180-day window during which it will go public. That would place the offering no later than October 27.

It would make Violin the second company using flash memory in the data center to go public within roughly a year. Fusion-IO went public last June in a successful offering that boosted the company’s valuation above $2 billion.

And if the interest of pre-IPO investors is any indication, and it often is, Violin’s public offering, whenever it finally does occur, should prove popular.

]]> http://allthingsd.com/20120430/exclusive-violin-memory-boosts-latest-funding-round-to-80-million/feed/ 0 http://allthingsd.com/20120412/fusion-io-brings-flash-madness-to-workstations-and-movies-like-hugo/ http://allthingsd.com/20120412/fusion-io-brings-flash-madness-to-workstations-and-movies-like-hugo/#comments Thu, 12 Apr 2012 14:35:02 +0000 Arik Hesseldahl http://allthingsd.com/?p=195840 After working mostly in the realm of servers, Fusion-io — the founding member of the AllThingsD Flash Madness Club and last summer’s hot IPO — said today that it is bringing its flash technology to workstations. It is calling the product ioFX.

One early customer is Rob Legato, the visual effects supervisor who won an Academy Award for his work on the Martin Scorsese-directed hit motion picture “Hugo.” Legato will be talking about ioFX with Fusion-io chief scientist and Apple co-founder Steve Wozniak at a conference in Las Vegas next week.

Fusion does some cool stuff with flash memory. Here’s the part where I roll out the old metaphor that has served me so well: In pretty much any computer, you can think of the processor as a fast-moving, highly efficient, type-A personality, constantly in a hurry, and always waiting impatiently for the rest of the system to give it more work to do. The slowpoke in the deal is the hard drive, which, though it’s already spinning at a super fast rate, just can’t get data to the processor fast enough. So the processor sits around, tapping its foot and looking at its watch, waiting for the other parts of the system that feed it data to work to keep up.

In high-performance computing, where there’s more data to be crunched than in most average computing situations, this is sort of a big deal. You want the processor to be as busy as possible — mainly because the systems are so expensive, and you want to get your money’s worth out of them — but also because jobs get done faster.

So Fusion-io’s stock in trade is a series of insert cards that bring flash memory right up next to the processor. The flash chips grab great big armloads of data and hold on to it, handing it off to the processor in a way that keeps it happy and busy and not impatiently waiting — at least not so much.

We’ve seen the technology brought to bear at places like Credit Suisse, which added Fusion’s flash cards to its trading systems. And its technology is also used in data centers belonging to Facebook and Apple.

On top of that, Fusion has relationships with all the big server vendors: Hewlett-Packard, IBM, Dell and SuperMicro all sell systems with Fusion-io on board.

Workstations are essentially heavily tricked-out PCs that are used primarily in two professions: Animation and special-effects work for movies and TV and computer-assisted design and modeling, used by folks who design buildings and cars and planes and pretty much anything else you can think of. They have the same problem that servers have — agitated processors constantly waiting for the rest of the system to catch up with them.

At this point, none of the workstation vendors are offering the card as an option, but if you’ve got a professional workstation — like, say, an Apple Mac Pro, which has three PCI Express slots — you might add one of these cards and speed up your work. In the meantime, the company is working with workstation vendors to get the ioFX insert cards certified. My guess is there will be more than a few visual artists who won’t bother to wait.

Fusion-io shares are up almost 11 percent — or $2.64 — to $27.30, as of 11 am ET; not so much on this news — workstations are kind of a low-volume market — but on an analyst report from Piper Jaffray suggesting that Cisco Systems may be close to a deal to add Fusion-io’s flash technology to its Unified Computing System platform.

The report goes on to suggest that Cisco could, over the next three or four quarters, become one of Fusion’s bigger customers, along with Facebook and Apple, and could account for more than 10 percent of Fusion’s business — which could, in turn, lead to a doubling of revenue this year. For the record, sales were $197.2 million in Fusion’s fiscal 2011. Do the math.

]]> http://allthingsd.com/20120412/fusion-io-brings-flash-madness-to-workstations-and-movies-like-hugo/feed/ 0 http://allthingsd.com/20120330/violin-memory-raises-50-million-at-800-million-valuation-may-ipo-this-year/ http://allthingsd.com/20120330/violin-memory-raises-50-million-at-800-million-valuation-may-ipo-this-year/#comments Fri, 30 Mar 2012 16:26:25 +0000 Arik Hesseldahl http://allthingsd.com/?p=191656 Violin Memory, the company that builds storage arrays based on flash memory technology, will on Monday announce that it has raised a $50 million Series D round of funding at an implied valuation of $800 million.

The funding round includes strategic stakes from Toshiba, the Japanese chip and electronics maker; networking concern Juniper Networks; and funding from new investors, including Highland Capital and SAP Ventures, the investment arm of German software giant SAP.

Violin CEO Don Basile also told me today that the company is in the process of picking bankers that will likely lead it to an initial public offering before the end of 2012. “We had our final bake-off last week,” he told me, though he didn’t disclose who had won it.

That Violin was raising capital was disclosed in a filing with the US Securities and Exchange Commission. A formal announcement on the funding will come Monday.

Violin has been growing pretty aggressively in recent months. Basile told me that the company now has 320 employees, up from 50 in the last six months. It has been building up a global sales force with 40 people working in Europe and the Middle east. That team is run by Garry Veale, the former head of HP’s Storageworks operation in Europe. Earlier this month it hired Martin Darling, a former EMC sales exec to run its sales team in Asia.

Basile says the investment will be used press down on the gas pedal and keep growing, but also to look seriously at an IPO before the end of 2012. “The funding gives us the means to grow as a private company, but also to look at the public markets if the conditions are right,” he said. “It’s more likely than not that we’ll be a public company by the end of the calendar year.”

]]> http://allthingsd.com/20120330/violin-memory-raises-50-million-at-800-million-valuation-may-ipo-this-year/feed/ 0 http://allthingsd.com/20120327/flash-start-up-violin-poaches-vp-from-vmware/ http://allthingsd.com/20120327/flash-start-up-violin-poaches-vp-from-vmware/#comments Tue, 27 Mar 2012 23:10:25 +0000 Arik Hesseldahl http://allthingsd.com/?p=190550 Remember the Flash Madness club? One of its members, Violin Memory, just hired a new vice president away from virtualization software company VMware.

Narayan Venkat has joined Violin as VP of product management. He spent just a bit more than a year at VMware, where he led its storage initiatives. His resume includes time at chip companies including LSI and Intel.

At Violin, he’ll be in charge of pushing Violin’s flash technology into the data center. As I told you last summer, when Violin raised $40 million from Toshiba and Juniper Networks and several individuals, its flash arrays run faster than old-school storage arrays, while reducing both the physical footprint needed for the hardware and the power consumption. Hewlett-Packard resells its gear, and AOL is a big customer.

“Flash is the biggest disruption in the data center to come along in years,” Venkat told me. Violin’s last big hire was its CTO, Jonathan Goldick, who also came from LSI.

]]> http://allthingsd.com/20120327/flash-start-up-violin-poaches-vp-from-vmware/feed/ 0 http://allthingsd.com/20120124/fusion-io-shares-whacked-but-the-flash-madness-club-has-a-new-member/ http://allthingsd.com/20120124/fusion-io-shares-whacked-but-the-flash-madness-club-has-a-new-member/#comments Wed, 25 Jan 2012 00:37:51 +0000 Arik Hesseldahl http://allthingsd.com/?p=167175 Shares of Fusion-io, the newly public company whose flash memory technology transforms typical servers into super-fast ones that get more work done, are getting hammered in after-hours trading following an earnings report that appears to have freaked investors out.

Shares are down more than $4, or about 13 percent. The freakout appears to be coming from gross margins that shrank to 51 percent from almost 59 percent in the prior quarter, and despite the fact that sales more than doubled sequentially to $84 million from $31 million before.

CEO David Flynn called me up a little while ago to talk about the results, and he reminded me that Fusion launched its new IO Drive 2. It’s a transition to a new product line that’s proving tricky. New products built on new technologies are always a little more costly to build up front, and that’s compounded by the fact that early adopters, when they buy the new stuff, take the lower-end version and not the more expensive and more profitable one.

Also, enterprise customers who buy the new stuff are always conservative and take longer to decide whether they want to buy it or not, he says. Even so, the company has sold 10,000 of the new drives.

But? There’s a new customer of record: Salesforce.com is now a Fusion-io customer, and has joined the likes of Apple and Facebook, which is using the flash-based chips in the servers running in its data centers around the world.

And Salesforce isn’t buying it directly from Fusion, but rather through one its OEM partners, which include Hewlett-Packard, IBM and Dell, though Flynn wouldn’t tell me which one it is.

Salesforce is one of six customers who bought more than a million dollars worth of Fusion’s stuff this quarter and of those, four were repeat customers, Flynn told me.

The Salesforce win is also important, Flynn says, because some have wondered whether Fusion’s technology, while popular with high-end enterprises like banks and Facebook, would make sense for applications that tend to be used in mid-tier businesses, which Salesforce’s mainline CRM application often is. The lower end of the enterprise software market is moving toward cloud-based software, which is often referred to as Software as a Service, or SAAS. “By helping those companies, we are indirectly driving business in the mid-range of the market. Apple and Facebook are in the SAAS business too, it’s just that their customers are consumers.”

One interesting fact that Flynn shared with me: His first job out of college was working for Oracle. His boss at the time? One-time Oracle exec and now Salesforce CEO Marc Benioff. A small world it is, indeed.

]]> http://allthingsd.com/20120124/fusion-io-shares-whacked-but-the-flash-madness-club-has-a-new-member/feed/ 0 http://allthingsd.com/20120104/woz-plus-spock-equals-a-geek-swarm/ http://allthingsd.com/20120104/woz-plus-spock-equals-a-geek-swarm/#comments Wed, 04 Jan 2012 23:20:23 +0000 Arik Hesseldahl http://allthingsd.com/?p=160143

In what can only be described as a strange collision of two distinct yet oddly similar universes of the geek canon, Steve Wozniak — Apple co-founder, friend of Steve Jobs, and chief scientist of chip memory concern Fusion-io — will have a conversation at Thursday’s DEMO conference with Leonard Nimoy, the actor famous for playing Spock in the “Star Trek” TV and film series.

Fusion just announced the pairing on its corporate blog. The company says the two will “share their thoughts on technology’s past, present and future.”

It’s probably no surprise that Wozniak was a fan of the original 1960s vintage TV show in his early adulthood. In a speech he delivered at a conference earlier this year he said that during his days working at Hewlett-Packard designing calculators, he’d come home from work “watch ‘Star Trek,’ eat a TV dinner, and do electronics projects.” So Woz will probably be thrilled to hang out with Nimoy, who’s always been a favorite among the “Star Trek” fan community.

It’s a little hard to guess precisely what all this will have to do with Fusion-io’s flash memory technology, which essentially speeds up conventional servers by adding an extra layer of memory to keep data close by the processor so it doesn’t stand around waiting for the hard drive to catch up. Nimoy is, however, an old hand at talking about how consumer technology that was science fiction on the TV show — mobile phones are essentially “Star Trek” communicators, for example — is now a reality. (See the video below for an example of that.) I’m sure it will be fun to see regardless.

One thing that will happen: A geek swarm on Foursquare. Woz is active on Foursquare, so expect lots of his followers to check in all at once and maybe trigger a swarm.

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