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Analysis: Dell's Alleged Bid for Fusion-IO

Dell may have put in a speculative bid for Fusion-IO; at $33/share the offer may end up looking pretty good

Last Friday Eric Savitz over at Forbes reported that Dell may have put in a speculative bid for Fusion-IO (thanks to Don Jennings for spotting the article).  The rumoured price was $33 a share, which is approximately a 50% markup on the share price at the time – we can only assume the offer was rejected.

As Chris Mellor recently reported, Fusion-IO have been increasing revenue but making a loss and Eric Savitz also noted that 55% of their revenue comes from just two companies – Apple and Facebook.  From what I understand there are also other storage companies that also contributed heavily to Fusion-IO’s revenue numbers.

Remember STEC?  They rode high on the back of the SSD boom until their major supplier, EMC, decided they had a stockpile and didn’t need to keep on buying.  Fusion-IO revenue for Q4 is anticpated to be flat.  Does that mean Apple and Facebook and slowing their purchases?

The Storage Architect Take

During a limo journey with Howard Marks and Stephen Foskett at SFD#1, the subject of Fusion-IO was raised; the consensus was Fusion-IO will live or die depending whether application developers decide to write to their SDK.  I happen to agree with this sentiment.  Application integration is the secret sauce that makes server side flash (SSF) disruptive, BUT there needs to be more.  We also need the ability to deliver cache consistency outside and therefore between servers.  Dell’s acquisition would make perfect sense as it would enable SSF to be placed in the server or shared and expanded between servers with something like Infiniband; a process that needs to be driven by the server vendors themselves as part of their architecture.

Fusion-IO need the SDK to work but they also need server inter-connect for scale and availability.  At $33/share and with increased competition, Dell’s offer may end up looking a pretty good one.


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