WD Enters SSD Market With SiliconSystems Buy
Page 1 of 1
Western Digital today is taking its first steps into the solid-state drive (SSD) market, announcing that it's acquired SiliconSystems, a maker of SSDs for embedded and specialty markets, for $65 million in cash.
SiliconSystems manufacturers SSD drives under the SiliconDrive brand name, with SATA, EIDE, PC Card, USB and CF interfaces in 2.5-inch, 1.8-inch, CF and other form factors. Notably absent are enterprise interfaces, like SAS and Fibre Channel. Its target markets are embedded systems, such as automobiles, networking equipment, military equipment and medical systems.
As a result, it has no retail presence. But Western Digital (NYSE: WDC) sure does, although it won't be rushing an SSD drive to market any time soon.
Instead, SiliconSystems may have something else that could prove very valuable in the interim. The firm developed two utilities, LifeEST and SiSMART, that can measure how long an SSD will last. SSD's adoption in the enterprise has been slow because the technology is so new compared to disk-based storage, and its life span is something of an unknown quantity.
LifeEST is an endurance calculation methodology while SiSMART is a patented technology that actively monitors SSD performance and measures usage in real time. Together, they can determine an SSD's usable life, according to the company.
SiliconSystems will be integrated into WD immediately as the WD Solid-State Storage business unit, according to Western Digital. There, it will complement WD's existing Branded Products, Client Storage, Consumer Storage and Enterprise Storage business units.
Both firms are based in southern Orange County, California, and WD plans to retain all of SiliconSystems' staff. Michael Hajeck, founder and CEO of SiliconSystems, becomes senior vice president and general manager of the business unit through the transaction.
WD's Shattuck said that Western Digital will continue to supply all of SiliconSystems' existing customers and not change any existing contracts.
"They have a profitable and successful business in the markets they serve and we think we can help them grow those markets as well," he said.
Krishna Chander, senior analyst for storage systems at iSuppli, admits this acquisition caught him off guard. "We were not sure because things were very quiet [from WD], but we were expecting some kind of acquisition to take place," he said.
"WD was also shrugging it off, saying they were not interested in SSDs for some time," he added. "But I think their board might have told management it's time to get on board and make that change."
The purchase also makes it possible for WD to compete in both disk-based and SSD products with Hitachi and Seagate, its two biggest competitors.
"Eventually, when SSD starts creeping into the enterprise space and notebook space, they are not left holding the bag with only one technology to offer -- they can offer both," Chander said.
SSD had started in the notebook space but has suffered with the slowdown in the economy as consumers have moved toward lower-cost notebooks. SSD prices have come down significantly but still carry a premium over a standard hard disk.