Violin Memory Inc released their 3Q 2014 financial results last week, which showed both an increase in revenue for the quarter and an increase in their losses for the same period. At the same time they increased their customer base by only 32. The markets reacted badly to the news, with Violin’s stock price falling by 48% on Friday 22nd November. There was also talk of Violin being investigated by a shareholder rights company, as the loss guidance provided was double what was expected at $0.85c per share, which may also have had an impact on the share price. It’s a tough time for Violin, irrespective of whether the investigation has any merit. Why are they in this position?
Clearly there are some who see the attitude of the Violin leadership as a problem. I would admit that my meeting with the CEO at a previous IP Expo was less than positive. I’ve also been involved on calls via other channels where the feedback on Violin’s sales team has been described simply as “arrogant”. That aside, is it all about the selling process?
Let’s look at the market since flash became a mainstream platform. Initially flash was added to traditional storage arrays as a way of speeding up certain workloads. In particular this solution was targeted at systems that would otherwise require re-engineering. Those systems had one of two problems; high latency or low IOPS density. The IOPS density (or throughput per GB of storage) was previously being solved by simply deploying more hard drives and wide striping the data. This doesn’t work where latency needs to be reduced; the sweet spot for technology like that from Violin. However it wasn’t always easy to quantify whether the problem was IOPS or latency and what the benefit would be, so mostly implementing flash like this is a suck it and see process.
As we look forward, the question to ask is how many of these truly high-end performance constrained applications exist? I’d suggest they are in only the larger enterprises and comprise at best 5-10% of their workload. Outside of that, other systems may benefit from being moved to flash and certainly going forward as applications are rewritten or placed on faster servers, flash may be a better choice for the storage medium. However, most of these don’t need hyper-fast ultra-low latency solutions. Many will see significant benefit from being on any flash solution. This means customers can look at more mature offerings out there. By more mature, I mean those which are scalable, have integration into existing processes or technology platforms and offer advanced features like de-duplication, replication, snapshots and so on. Those solutions from the likes of HP and HDS didn’t exist when Violin first came to market. We should also remember that application performance in servers can also be fixed by using PCIe SSD/Flash, which is a great fit for latency constrained applications.
The Architect’s View
So, this is the problem I see for Violin. Their technology was great at solving a specific issue in the data centre but isn’t widely applicable to the entire market as there are other solutions out there that are better and cheaper. Somehow they are going to have to re-engineer their business pretty quickly, otherwise this won’t be the last Black Friday news for Violin.
- Violin Memory Announces Third Fiscal Quarter 2014 Financial Results (Violin Memory, 21 November 2013)
- Violin Memory Investigation Initiated by Former Louisiana Attorney General (Business Wire, 22 November 2013)
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