Robison, already a director at Fusion, was also named its chairman. Rick White, the company’s chief marketing officer, also resigned.

Flynn, the company’s statement said, is resigning in order to pursue “entrepreneurial investment opportunities,” and White will be joining him.

Fusion shares are trading down by 16 percent in premarket trading. As of 8:43 am ET, the quoted price was $14.99, down more than $3 from Tuesday’s closing price of $18.

At HP, Robison was chief strategy officer, in charge of most of that company’s mergers and acquisition strategy. He led numerous deals, including, but not limited to, its 2002 acquisition of Compaq, as well as deals for Mercury Interactive, Opsware, EDS and 3Com.

But since he was the first senior exec to depart HP after Meg Whitman took over in the fall of 2011, Robison, along with former CEO Léo Apotheker, was seen as the one who took a fair amount of the blame for the ill-advised 2011 acquisition of the British software firm Autonomy. Some would argue, however, that HP chose to throw Robison under the bus.

Update: The fall in Fusion shares is continuing. With a minute to go before the opening of markets in New York, Fusion-io shares are indicating lower by nearly 25 percent. The current price quoted as of 9:29 am ET was $13.52.

Here’s the company’s press release:

Shane Robison Named Chairman and Chief Executive Officer

SALT LAKE CITY — May 8, 2013 — Fusion-io, Inc. (NYSE: FIO) today announced that Shane Robison has been named Chairman, Chief Executive Officer and President, effective immediately. Mr. Robison, who is a director of the Fusion-io Board of Directors, succeeds David Flynn, who has resigned as CEO and President to pursue entrepreneurial investing activities.

The company also announced that co-founder, Rick White, has resigned as Chief Marketing Officer to join Mr. Flynn in early stage investing activities. Messrs. Flynn and White will both remain members of the Board and will serve in advisory roles to the company for the next 12 months.

Mr. Robison, 59, has more than 30 years of experience in senior business management and product development roles with some of the world’s leading technology companies, including AT&T Labs, Cadence Design Systems and Apple. He most recently served as Executive Vice President and Chief Strategy and Technology Officer of Hewlett-Packard Company from May 2002 until November 1, 2011.

“Shane Robison is a proven executive with the experience and expertise to lead Fusion-io as we enter our next phase of growth and development,” said Scott Sandell, lead independent director of the Fusion-io Board. “Over the course of his career, Shane has demonstrated an ability to develop the critical corporate strategies to help innovative companies scale and grow globally. Shane’s understanding of our business, significant international experience, and deep industry and partner relationships make him ideally suited to lead Fusion-io as we seek to accelerate the company’s strategic and financial goals to enhance shareholder value.”

“I am honored to lead Fusion-io through its next chapter of growth,” said Mr. Robison. “Fusion-io has long been recognized for its visionary technology, and I look forward to working closely with the company’s talented team as we continue to develop the critical technology that we all rely on to deliver the world’s data faster. As the use of data grows, IT professionals need more effective and efficient ways to power their business-critical applications. Fusion-io has an incredible opportunity to continue to transform the software defined storage industry. Our customer relationships are strong, and working with the company’s exceptional management team, I am excited to lead Fusion-io.”

“On behalf of the Board and entire Fusion-io team, I want to thank David and Rick for their significant contributions to the creation, development and growth of the company,” said Mr. Sandell. “David and Rick’s vision as co-founders has redefined memory technology and had a profound impact on our industry. Under their leadership, Fusion-io has developed into one of the world’s leading technology companies, helping businesses increase datacenter efficiency. They played an important role in taking the company public and developing a strong framework from which Fusion-io can grow to the next level.”

Fusion-io noted that today’s announcements are not related to any issues regarding the integrity of the company’s financial statements or accounting policies and practices.

Business Outlook
Fusion-io reaffirmed the financial outlook it provided on April 24, 2013 for the fiscal fourth quarter of 2013, before giving effect to any costs associated with the departures of Messrs. Flynn and White.

The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Fourth quarter of fiscal year 2013:

· Revenue is expected to be approximately $110 million.

· Non-GAAP gross margin is expected to be 56 to 58%.

· Non-GAAP operating loss of approximately $5 million.

· Diluted shares outstanding are expected to be approximately 98 million shares.

Fiscal Year 2013 guidance:

· Revenue is expected to be approximately $435 million.

· Non-GAAP gross margin is expected to be in the range of 58 to 60%.

· Non-GAAP operating margin is expected to be approximately 9.5%.

· Diluted shares outstanding are expected to be approximately 109 million shares.

About Shane Robison
Shane Robison, 59, has served as a director of Fusion-io since December 2011. Mr. Robison served as Chief Strategy & Technology Officer and Executive Vice President of Hewlett-Packard Company from May 2002 to November 2011. From 2000 to May 2002, Mr. Robison served as Senior Vice President, Technology and Chief Technology Officer of Strategy and Technology of Compaq Computer Corporation. Prior to joining Compaq, Mr. Robison served as the President of Internet Technology and Development at AT&T Labs. Prior to AT&T Labs, Mr. Robison was Executive Vice President, Research and Development, and then served as President of the Design Productivity Group at Cadence Design Systems. Mr. Robison also spent seven years at Apple Inc., where he held a series of executive-level positions, leaving the company as Vice President and General Manager of the Personal interactive Electronics Division. Mr. Robison’s experience includes work at Schlumberger’s research groups in Silicon Valley, at Evans & Sutherland Computer Corporation and consulting for the University of Utah in the area of database systems architecture. Mr. Robison also serves as a director of Altera Corporation. Mr. Robison holds a B.S. and a M.S. in Computer Science from the University of Utah.

VMware is perhaps the best example of this phenomenon. No longer is the company positioning itself as simply a pioneer of server virtualization, but rather it is now betting its future on the broader software-defined data center. VMware dominates the server-virtualization market (its technology lets a company run hundreds of virtual servers on one physical server). It’s no surprise, then, to see VMware accelerate its R&D schedules and M&A activity to extend its technology portfolio to also seize the infrastructure and storage markets that are up for grabs in the new software-defined data center.

In a major bid to own the leading infrastructure play in the new software-defined data center, VMware last summer acquired software-defined networking pioneer Nicira for $1.26 billion. That is a staggering sum that becomes even more impressive when one considers that, by most estimates, Nicira was generating less than $10M in sales. As part of its strategy to bite off a small piece of the emerging software-defined storage space, VMware also recently acquired Virsto for an undisclosed sum.

The rationale behind these acquisitions comes into clearer focus when you consider the larger opportunity posed by the software-defined data center. As data center workloads increasingly become virtualized, it makes sense that VMware, which already enjoys a market cap of more than $30 billion, look for ways to increase its role in managing the broader data center infrastructure.

So, with all of this in mind, what actually makes up the Software-Defined Data Center — and which companies stand to gain the most in each area?

Components of the Software-Defined Data Center

The concept of the software-defined data center revolves around making the three major infrastructure components of a data center (compute/server, networking and storage) more flexible, more automated and less dependent on the underlying physical hardware. The idea is to create a pool of available resources that can automatically adapt to changing workloads and ensure that the right resources are available whenever and wherever needed. When you look at the compute/server space, virtualization forever changed the way applications are deployed, and the dominant force behind this is VMware. While VMware has established itself as the market leader in server virtualization, offerings from Microsoft, Citrix and Red Hat are beginning to carve out sizable market share, as well. With almost 70 percent of workloads today running on virtualized servers according to IDC, this is certainly the most evolved component of the software-defined data center to date.

Networking

In the wake of the Nicira deal, along with major announcements from Cisco, Juniper and other networking giants, software-defined networking has become perhaps the next focal point of the software-defined data center discussion today. While not as mature as the server/compute side, the software-defined networking market is expected to grow; IDC predicts from $360 million in 2013 annual sales to $3.7 billion by 2016.

Cisco, which has long dominated the networking market and has a valuation of over $111 billion, has started to face new competition from startup companies like Nicira and Big Switch Networks, which designed their products for today’s virtualized IT environment. To go after this market, Cisco has invested $100M in a “spin-in” company called Insieme Networks. Cisco clearly views software-defined networking as one of the most significant technologies to emerge in decades.

Storage

The last component of the software-defined data center is storage, which is not coincidentally the trickiest part of the equation. The storage layer has traditionally been the laggard of the data center, and most venture capital firms have feared investing in startup storage companies due to the stronghold on the market enjoyed by technology giants like EMC, NetApp, HP and IBM. This has changed in recent years, however. The rise of virtualization and, more recently, cost-effective flash technology, has spurred a storage renaissance — today, storage is one of the hottest markets for venture investors.

The increased investment sexiness of storage helps explain the success of Fusion-io, which created a new memory tier based on flash technology. The company went public in June 2011, and is valued at more than $1.5 billion. Because of the huge impact of flash technology, some of the big legacy storage vendors have been looking for acquisitions to help modernize their product portfolio. Last summer, EMC acquired XtremIO for $400 million dollars to add flash to its own storage portfolio. However, flash is just one component of software-defined storage.

Flash is a very disruptive technology that has paved the way for dozens of new entrants into the storage market, but flash by itself doesn’t address the complexity and data management issues created in virtual environments. Most major storage vendors created their product architectures before virtualization even existed, meaning they were originally built for a physical world where application workloads were discrete, known and predictable. Indeed, many of the new storage startups have continued using the same architectures, albeit with faster flash storage rather than spinning disks. The problem is that the software-defined data center is possible only with virtualization. And adding new layers of software on top of these legacy architectures is an inefficient way to deal with the problem.

The move to the software-defined data center is the major technology shift of this decade, just as virtualization was in the 2000s and the Internet was in the 1990s. Like those previous shifts, there is a wealth of new opportunities for companies both new and old. It will be interesting to see how everything plays out — and, rest assured, this race has a long way to go.

Dr. Kieran Harty is a co-founder of Tintri Inc. and serves as its chairman and chief executive officer. Harty served as an executive vice president of engineering and R&D at VMware, and has more than 15 years of engineering and management experience with high tech companies. Before VMware, he was vice president of R&D at Visigenic/Borland and chief scientist at TIBCO. Harty has a PhD in electrical engineering from Stanford University and a master’s degree in computer science from Trinity College Dublin.

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.

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.

Several analysts also cut their ratings on the company, sending the company’s shares as low as 18% before finishing the day at $17.48.

Late Wednesday, Fusion said it expects third-quarter sales of $80 million. Analysts surveyed by FactSet had forecast the company to report revenue of $137.1 million. For its entire fiscal year, Fusion now estimates is sales will be $420 million to $440 million, down from an earlier forecast of $521 million to $539 million.

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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.

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.

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.

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.

Why? The birthday boy is Steve Wozniak.

Fusion-io, where Woz is chief scientist, planned the party as a surprise for the Apple co-founder at San Francisco’s Yerba Buena Center for the Arts. Guests secretly invited to the museum received pink boas, noisemakers, and a chance to test their skills on Tetris — a Woz favorite.

The word from the party is that, despite the social-media-happy crowd, it remained a surprise. One drunk tweet or text message supposedly popped up last night, but Woz’s wife deleted it from all of her husband’s many phones and gadgets.

AllThingsD’s Ina Fried and Mike Isaac are there, and sent us these photos:

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.

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.

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.

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.

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.

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.

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.

Apple isn’t commenting and is officially treating all this as rumor and speculation (it rarely comments on acquisitions, anyway). But the deal is being reported in Israeli newspapers, and the office of Israeli Prime Minister Benjamin Netanyahu tweeted a welcome message to Apple today, which sure feels like confirmation. So I’ll proceed under the assumption that the reports of this acquisition are true.

Welcome to Israel, Apple Inc. on your 1st acquisition here. I’m certain that you’ll benefit from the fruit of the Israeli knowledge.

December 20, 2011 3:55 am via webReplyRetweetFavorite

@IsraeliPM

The PM of Israel

That makes this a cause for celebration. With the Anobit buy, Apple is now the latest member of the Flash Madness Club, which I created over the summer, in the wake of the Fusion-io IPO and other activities by notable flash-technology companies like Violin Memory, Pure Storage and Qwilt.

So why is Apple willing to throw down a reported half-billion dollars on this company? It’s because flash memory has a fundamental problem: As it ages, its ability to store data wears off. This problem is sometimes compared to the semiconductor equivalent of Alzheimer’s. Individual cells on the flash-memory chip lose their ability to store the individual ones and zeros that make up the pictures and music and other data they may be storing, especially after millions of read-and-write operations — the act of putting data on the chip and then loading it from the chip for use. After a lot of heavy use — this can vary depending on the chip — the chips begin to suffer problems with “endurance.”

As flash starts to show up in data centers and PCs and other places beyond consumer gear like iPhones and iPads, this becomes a more important problem. If your iPad gets old enough to suffer data-endurance problems, it’s a pretty simple matter to replace it. But in the more rigorous world of an enterprise data center, where millions of reads and writes will be done on a chip daily, data endurance is a potentially very expensive problem. In the enterprise, a solid-state drive is considered suitable only if it can stand up to five full-drive write cycles, where the drive is filled to capacity and then erased every day for five years.

Anobit’s solution to these problems involves techniques known as memory-signal processing and the use of some secret-sauce memory-processing error-correction algorithms, plus some management tricks for moving data around a flash chip in more efficient ways, in order to make them last longer.

It’s also the sort of problem that a company like Apple — which is the world’s largest consumer of flash memory, and has been for several years — would want to solve. Think of the many places where Apple uses flash — the iPad, iPhone, iPod, MacBook Air and Apple TV. And those are just the products we know about, so far. Flash can’t help but appear in many more products.

On top of that, flash technology plays a significant role in Apple’s data centers. Fusion-io, the company that builds flash-based insert cards that speed up garden-variety servers, has named Apple as a significant customer, so there’s plenty of flash inside Apple’s facilities in North Carolina. Flash endurance can’t help but be a problem Apple might face with its iCloud service, for example.

Israel has a big connection to the flash industry. SanDisk’s founder, Eli Harari, is Israeli; a few years back SanDisk acquired an Israeli company called Msystems, which, if my memory serves, was the first to popularize what we now call a thumb or keychain drive. So, historically, there have been a lot of useful innovations on flash memory that have come out of that country. Supposedly, the deal calls for Apple to open a research center there, so it will get the benefit of ongoing innovations on flash. Chances are it’s going to need a few.

Fusion-io shares closed at $38.10 — up 9.17 percent — during the regular session, and continued to climb by an additional 1 percent in after-hours trading. The shares have increased by more than 100 percent since they debuted on the New York Stock Exchange at $19 early this summer.

The main news came in the form of a new product, and the publication of news that Fusion-io technology was used in a high-performance computing project at the Lawrence Livermore National Lab.

People tend to think of Fusion-io as building traditional storage, but its main mission is to get data closer to the processor in a server, so that that processor doesn’t have to sit around waiting. Processors are super speedy and super impatient. Think of the processor as the impatient Miranda Priestly — played by Meryl Streep in “The Devil Wears Prada” — and how Anne Hathaway’s character, Andy Sachs, is never fast enough for Priestly about handing her something she needs right away. Microprocessors hate nothing more than waiting for a hard drive to serve up the data they need.

Fusion-io’s drives try to speed that process up — and make microprocessors happier — by using flash memory built into an insert card and installing it close to the processor in a system. The news, announced at the Supercomputing conference in Seattle today, is that Fusion-io debuted a 10 terabyte version of its high-end ioDrive Octal product. You can now pack four of these into a single server, and have 40 terabytes of data right up close to those impatient processors. Companies like Hewlett-Packard, IBM, Dell and Supermicro build Fusion-io’s products into their own products.

The other news also had a supercomputing wrinkle to it. A machine that Lawrence Livermore called “Leviathan,” packed with Fusion-io cards and Intel processors, broke a record in processing a graph with more than 68 billion nodes. Well, it didn’t just break the record, it shattered it, as that number of nodes in a graph is four times the prior record. What that means, in English, is that the computer plotted a mathematical graph with more than 68 billion points of data.

Apparently — and I’m just learning this now — there’s a separate version of the Top 500 list called the Graph 500 which focuses on simulating 3-D problems.

It’s a lot to take in, but the main point is that Fusion-io seems to be showing that it has a going business. Critics of the company have argued that it relies too heavily upon its biggest data-center customers like Facebook and Apple, and that it will be vulnerable to slowing sales when those companies are through building their infrastructure. The problem with that argument is that there’s always another impatient processor throwing an impatient diva fit while waiting for data.

Also, I should note that today’s 9 percent move comes after Fusion shares fell about the same amount on word last week that the company is planning a $350 million secondary offering. When investors heard about that last week, they sent the shares plunging by more than 8 percent, territory it has since reclaimed. It has been a bumpy, volatile ride for Fusion-io, no doubt. In the five months since the debut, the stock has traded as low as $15, and almost as high as $40. That’s IPO investing for you.

If you’ve ever wished you could clone yourself into two or more people to get more work done, you can be jealous of computers, which can do exactly that. Virtualization allows one physical computer to split itself up into many virtual computers by sharing the computer’s hardware. Chips are now so fast that it makes economic sense to do this, so you can squeeze more work out of each machine. Cloud companies — like, say, Amazon — love it, because it allows them to act a little like a very happy Manhattan real estate developer, and subdivide and rent out a single computer many times over.

Until now, Fusion-io flash memory technology has worked only in cases in which there was no virtualization going on. In big-iron machines that tend to be used for one intensive application at a time, add-in cards are put in servers in order to put data that the process is working on closer to the processor — thus preventing the processor from waiting around, impatiently tapping its foot, for the poky little hard drive that just can’t deliver the data fast enough.

Fusion-io will today announce — at the VMWorld conference in Las Vegas, put on by the virtualization outfit VMware — its ioCache bundle, which is built specifically for virtualized computing environments. Which is pretty much any cloud computing service you’ve ever heard of.

I talked with Fusion-io CEO David Flynn last week, and he told me that the addition of flash speeds gives the physical machine the ability to run as many as three to five times more virtual machines. The benefit, of course, is that you get more work done on a single machine. More work per machine means either higher productivity overall, or savings on the hardware budget — both of which help CIOs score points with the boss.

The ioCache product was created in cooperation with IO Turbine, a company that Fusion-io acquired for $95 million earlier this month.

The company has thus far seen its shares waggle all over the map since its IPO on the New York Stock Exchange in June. Having debuted at $25 a share that day, its stock has traded as high as $36.98 and as low as $19.28. Today, Fusion-io shares closed up $1.05, or more than four percent, to $23.32.

Revenue in the three months ended in June rose almost 600% to $71.7 million, yielding EPS of 15 cents per share. Analysts on average were modeling $70.6 million and 14 cents a share.

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That was around that time of the initial public offering of Fusion-io, the Utah-based start-up that speeds up servers and storage networks. Having opened trading at $25.30 a share on June 9, its first day of trading, its share price has held steady since, and it closed Tuesday at $28.35. It will report quarterly earnings for the first time as a public company on Thursday.

The summer is proving equally interesting for Violin Memory, another company with flash memory based technology that is intended to replace the traditional hard drive based storage arrays that allow enterprise applications like those made by Oracle to run fast. Having raised a $40 million Series C funding round from Toshiba and Juniper Networks at an implied valuation of $440 million in June, the company has been bulking up its staff.

Today Violin will announce that it has named Jonathan Goldick — the former CTO of OnStor, now a unit of chipmaker LSI — as its CTO of Software. Goldick has been knocking around the computing industry for about two decades as an expert on file systems and storage, and his resume includes stints at IBM and Microsoft.

So what does it mean to be CTO of Software at a chip company? Goldick’s job will focus on solving problems related to data management that go beyond the speeding-up that Violin’s technology offers. Once hard drives (which, for all the progress they’ve made in five decades, are still essentially platters of glass; even when spinning at the speed of sound, they are subject to errors and inefficiencies that make them still too slow for the fastest computers) are out of the picture, new problems arise.

“The early adopters, they care about speed because they’re in application hell. But once you get past that, the problem becomes one of data management,” Goldick told me. “Once you make anything 100 times faster or cheaper, you have to revisit how you manage data.”

It’s a big enough problem that Goldick was being heavily recruited by other companies working on bringing flash technology to their own hardware. Goldick wouldn’t name the companies directly, but the hints he dropped suggest he turned down offers from both EMC and Oracle.

Goldick is Violin’s second recent hire. Last month it quietly hired Garry Veale, a former vice president at Hewlett-Packard’s StorageWorks division, as its new managing director for the EMEA region.

There’s a reason that Violin is bulking up its team: The opportunity is potentially huge. Remember, if you will, the December day that Oracle CEO declared that its SPARC T3-4 Supercluster had achieved something of a land speed record of more than 30 million transactions per minute. This was the same speech in which Ellison, in one of his numerous bits of trash-talking, likened HP’s competing product to a turtle. It’s often called “the turtle speech.”

That speech got Violin CEO Don Basile all excited. One of the things that made that Oracle machine so fast was that it was packed with a couple hundred terabytes worth of flash memory. As Basile told me last week: “We loved that speech because they proved us right. It was a big validation for what we want to do.” It also means there’s no end in sight to the flash madness.