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June 16, 2014

Wheelings & Dealings: SanDisk Set To Buy Fusion-io

A data center backed up by flash storage isn't really a new concept, but in some sectors, it's comparatively new, sufficiently so that in some places it's really just getting started. But the idea of data centers that can hold most of the contents on much smaller-sized platforms is one that's got a lot of appeal in some fields, and to advance this concept, SanDisk is ready to buy Fusion-io (News - Alert) in what's reported to be an all-cash deal valued around $1.1 billion.

Word of the SanDisk purchase, meanwhile, sent shares shooting upward for Fusion-io, and appeared to do decent things for SanDisk (News - Alert) as well. While Fusion-io shares had been trading in the $8-$9 range for the last five days or so, word of the SanDisk purchase sent shares up around 22.9 percent, according to reports, giving a five-day stock chart a pronounced upward tick. SanDisk, meanwhile, got a bump up as well as of this writing, though not such an immediate bump as Fusion-io did. SanDisk expects to conclude the deal in the third quarter of its fiscal 2014, and starting in the second half of fiscal 2015, non-GAAP earnings should increase as a result.

As for what was behind the deal, SanDisk's CEO Sanjay Mehrotra offered up a statement saying in part “Fusion-io will accelerate our efforts to enable the flash-transformed data center, helping companies better manage increasingly heavy data workloads at a lower total cost of ownership.” Reports suggest that this was the fifth such acquisition for SanDisk in enterprise storage—the last one was last July's purchase of SMART Storage Systems—and the whole picture seems to be adding up in one crucial direction.

It's been widely known that when comparing flash drives to hard drives, some clear advantages become readily noticed on either side of the equation. Flash storage, for example, is more stable in the long term than hard drives, since no moving parts are involved. But hard drives are much less expensive than flash drives on average, and can often be found in much larger storage capacities. This is a gap that's been narrowing somewhat in recent years, but is still often present. However, despite the gap in costs, many data centers have begun looking to flash storage as a means to hold huge amounts of data and make it both easily and rapidly available. This has opened up opportunities for companies like SanDisk—not to mention companies like Fusion-io—to step into the field and offer up that desired flash storage, yielding a fairly valuable market for the companies in question. SanDisk's acquisition of Fusion-io gives it that much more of an edge in the field, and may allow SanDisk to be out in front of a growing trend in data centers, which also represent something of a growing trend as fields like big data and the like start to catch on.

Data storage is likely to always prove important. While cloud storage is making some major headway in the field, there will always be room for local storage, as companies and individuals alike want to keep at least some data near to hand and accessible even during an Internet outage. Improving methods for storage will commonly drive gains for companies, and SanDisk is likely to see some pretty big ones here as time goes on.

Edited by Maurice Nagle

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