Cisco, Western Digital Deals Throw Spotlight on Fusion-io

Big Data requires fast storage systems, and existing hard-disk storage technologies are nearing their performance limitations. This reality, in an age when cloud-based services are becoming mandatory in the enterprise world, has focused the spotlight on solid-state memory as the technology to take over high-performance storage arrays.

This week, Cisco (NASDAQ: CSCO  ) , the dominant player in data networking, announced its intention to acquire privately held WHIPTAIL Technologies, the New Jersey-based maker of flash memory storage systems, for $415 million in cash and retention-based incentives.

According to Cisco, WHIPTAIL's solid-state storage system will be used to evolve Cisco's data center environment, its Unified Computing System strategy, or UCS, by "integrating data acceleration capability into the compute layer." In other words, it should speed performance in a smaller physical footprint while simplifying system administration.

But Cisco is not the only big name with a strong interest in solid-state storage companies lately.

The day before Cisco announced its WHIPTAIL deal, hard-disk maker Western Digital (NASDAQ: WDC  ) entered into a merger agreement with flash storage maker Virident to acquire the company for $685 million in cash.

Western Digital had already announced its intent to acquire solid-state drive maker sTec (NASDAQ: STEC  ) for $340 million, has made a $51 million investment in solid-state storage system maker Skyera, and paid an undisclosed amount for solid-state software company Velobit.

In light of Western Digital's strong move into solid-state storage, that other hard disk maker, Seagate (NASDAQ: STX  ) , is now rumored to be looking at Fusion-io (NYSE: FIO  ) to fill holes in its offerings .

Analyst Andrew Nowinski of Piper Jaffray Cos. told Bloomberg that, with Western Digital "making all the right moves," and Seagate not making any, Fusion-io is "a prime candidate, and there's a good chance it could get taken out."

But, Shebly Seyrafi, an analyst at FBN Securities, speculated that EMC (NYSE: EMC  ) could also be interested in Fusion-io. "It's not like Seagate's the only one that would be interested," he said.

Fusion-io's share price peaked at just under $40 in November 2011. This week's Cisco and Western Digital deals sent Fusion-io's price up 28%, to $14.64, between the NYSE's open on Monday and Wednesday's close.

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