IBM’s acquisition today of Texas Memory Systems (TMS) is more proof that customer data demands will fuel a new wave of flash technologies to replace the hard drive systems that have dominated the market for the past 30 years.
The acquisition points to a number of shifts in the flash market. Alliances are changing, private companies face threats from publicly traded companies and the giants themselves now have to prove they have the chops to compete with the feisty startups.
In particular, eyes are on Fusion-io, which has had a cozy relationship with IBM. But now Texas Memory is IBM’s new darling so it raises questions about the impacts on the market.
Fusion-io has been tearing up the flash market with its PCI-flash card technology. IBM has made it the centerpiece of its high-end solid state storage offerings. Texas Memory competes with its RamSan family of caching cards. But TMS is privately held and that makes it difficult to compete with Fusion-io, which had its IPO last year and now has revenues approaching $700 million.
With that in mind, here are five considerations, based upon rumbles in the market and research I received from investment firm Sterns-Agee, which follows the flash market and Fusion-io:
- IBM had to ask itself: Why are we not developing this IP ourselves? Now it can do that with Texas Memory in-house.
- Privately held companies will get snapped up as it will be increasingly difficult to compete with publicly traded companies such as IBM, Fusion-io and EMC.
- The Fusion-io team is an ambitious lot. And it has been making rumbles about developing to what amounts to an operating system for the storage system. Expect to hear more about this move at VMworld later this month. IBM saw these moves and said it is time to make a split.
- The pressure is on EMC that has to see some better results from VFCache, its flash equivalent, if it does not show better results in the first half of 2013. Will it have to make a bid for Fusion-io? That’s the big question.
- Look out for NetApp – they are the dark horse and could make a resurgence if EMC does not make the strides that the market expects from it. NetApp also now has a partnership with Fusion-io which spells more trouble for EMC.
The demand for SSD is a huge shift and proof that the storage and service providers will go through a major overhaul of their infrastructure to keep up with the massive scale that we will see as almost everything we can imagine begins to generate data of some kind.
There are billions, if not trillions at stake here. This should be a fun one to watch.