Fusion-io to buy IO Turbine to reach virtualised servers

Flash storage vendor Fusion-io has agreed to buy IO Turbine for up to US$95 million to extend its on-server cache products to virtualised environments, the company said.

IO Turbine provides software that allows cache storage on servers to be shared across multiple virtual machines. According to the company, the software will complement Fusion-io’s flash products, which use solid-state storage media as a cache for heavily used data in order to minimise the amount of data that has to travel over storage networks. “Fusion-io’s components have so far been limited to use with data-intensive applications in non-virtualised environments,” Fusion-io Chairman and CEO David Flynn said.

“It doubles the addressable market for server-attached flash,” Flynn said. “Now, there’s not an application out there that can’t benefit from Fusion-io.”

Fusion-io will pay as much as $95 million in cash and stock for IO Turbine, subject to purchase price adjustments, with the cash portion not to exceed $35 million. The deal is expected to close by the end of this month, as per reports.

Fusion-io, based in Salt Lake City, will add about 20 employees from IO Turbine to its engineering team and about five other employees across the rest of the company. IO Turbine is based in San Jose, California.

It’s a hefty purchase for Fusion-io, which went public in June, raising $218.9 million. But it should help the company tap into one of the biggest trends in enterprise computing and could help to expand use of the data acceleration technique that Fusion-io pioneered, analysts said. At the same time, competition is starting to heat up in this category. Also on Thursday, SSD (solid-state disk) vendor STEC announced server-attached flash products and a related software platform that it said can be used with any vendor’s SSD. On Tuesday, OCZ introduced its latest line of server-attached flash components.

Fusion-io’s Flynn downplayed the significance of STEC’s introduction, saying that Fusion-io’s products benefit from vertical integration of software, hardware and other elements. The effect is similar to that achieved by Apple, he said. Apple co-founder Steve Wozniak is chief scientist and a board member at Fusion-io.

In its first quarterly financial report since going public, Fusion-io reported revenue of $71.7 million in its fiscal fourth quarter ended June 30, up 556% from $10.9 million a year earlier. “Net income was $5.8 million or $0.06 per share, compared with a net loss of $11.9 million or $1.00 per share a year earlier. For the current quarter, the company forecast revenue of $60 million to $65 million, down from the previous quarter because of the timing of a few large deals,” Flynn said. “The latest forecast was adjusted up from the company’s earlier estimate for the quarter,” he said.