Flash Consolidation: NetApp to Acquire SolidFire

Amid much rumour, Monday finally saw the announcement that NetApp Inc intends to acquire SolidFire Inc, an all-flash storage startup. The agreement sees the company acquired for $870 million in cash, somewhat short of the $1.2 billion rumoured value. Those of you following my posts (and other work) will know I’ve talked about both companies many times before, so as you can imagine, I have few opinions on this transaction.

SolidFire

Acquisition is a great result for SolidFire. The all-flash market is becoming increasingly competitive, as the established players up their game, so both IPOs and exits are going to become increasingly hard to come by. The company took four funding rounds ($11, $25, $31 and $82 million) for a total of $150m and a return of just under 6x. You could look at this ratio in two ways; in some respects it is lower than VCs would want, but on the other hand, storage IPOs haven’t been setting the world alight, so this may represent fair value.

SolidFire now gains access to a strong and aggressive sales force, bigger customers (with the backing/credibility of NetApp) and hopefully a substantial amount of R&D funds to move the platform on from where it is today. The ability to sell hardware to customers is without doubt a NetApp strength that should see a lot more SF series out there in the future.

NetApp

This move is an interesting one from NetApp. The company already has a number of all-flash products, including the AFF, an all-flash version of FAS/Data ONTAP, EF-Series all-flash arrays and the legacy of FlashRay. These three products existed in the NetApp portfolio even as recently as June this year, as reported by Chris Mellor over at The Register, however FlashRay no longer appears on the company website (features/technology are alleged to have been rolled into AFF). Up until the acquisition was announced, it may be thought that NetApp had a wide enough ranging set of products to meet all requirements. AFF acts as the general purpose all-flash array (and appears 6th in the Storage Performance top 10); EF-Series provides the no-frills more cost conscious solution (7th in Storage Performance Price/Performance) and both integrate into the “data fabric” that allows the ONTAP solutions (for example) to replicate to a co-located or Cloud version of the software running with AWS.

So how does SolidFire’s SF Series fit into this portfolio? To all practical intents, FAS and EF are not scalable for cloud-based deployments. EF is not scale out and FAS scales in a very specific way, with paired failover nodes, up to a limit of eight (4 pairs) with Fibre Channel or 24 (12 pairs) in a NAS only configuration. SF Series by contrast is designed to scale out to hundreds of nodes (using iSCSI), very much suited to large-scale cloud deployments that NetApp would love to get into, as the legacy use of FAS slows down. This all being said, I think there are a few other benefits of this acquisition that haven’t yet been discussed including:

Software defined strategy – it’s still a cliche to use the software defined term, but in reality both NetApp and SolidFire have a strong SDS message. Data ONTAP is available as a Cloud version or as Edge (which I think still exists) and has been free for customers as an emulator for years. SolidFire have ElementX, a software release of the ElementOS platform operating system that allows customers to bring their own (certified) hardware. Both platforms are not 100% dependent on their hardware, which going forward will be a good thing.
Service defined strategy – both ONTAP and ElementOS have a strong service-defined strategy and can be driven buy either CLIs or APIs (or both). Both platforms offer features like multi-tenancy and quality of service, essential features for service provider and cloud-based environments.
Vision – This acquisition also brings NetApp some further credibility with OpenStack, an area that SolidFire have focused on for some time. It also brings some talented engineers and ideas people, who could help to re-invigorate NetApp as a company.

The Architect’s View®

From the perspective of both companies this acquisition seems like a win/win, but where are risks? First, I think NetApp’s flash strategy may appear a bit disjointed and the message could get confused. The marketing team will need to do a good job explaining how each platform fits into an overall customer architecture. The Data Fabric, for instance, doesn’t appear to be a thing, but rather a way of bringing features like SnapMirror into a cloud environment. Customers will need to know where AFF is best, where SF is best and where EF is best.

NetApp needs to realise that SF Series shouldn’t be subsumed into FAS/ONTAP as a single platform and should stand alone, albeit with integrated management. Then there’s the discussion around data mobility and the fabric; exactly how will data move between each platform type and the on/off cloud implementations? As NetApp starts to diverge from their single platform vision, then the management and reporting tools need to harmonise to create a joined up set of products – fortunately the API driven nature of both systems allows this to be done relatively easily.

Finally, we need to look to the 3PAR acquisition by HP(E) and see how to succeed in managing a startup. 3PAR existed within HP very much as it did when a separate company, with little change from an external perspective and I believe, little change internally. This allowed the 3PAR platform to grow and develop, expand into multiple model types and add many new features. NetApp needs to think of treating SolidFire in the same way; let the team continue to develop a great product and simply act as the financing and conduit to take future great products to market.

Flash Consolidation: NetApp to Acquire SolidFire

SolidFire

NetApp

The Architect’s View®

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