NetApp To Make $1.2 Billion Bid For SolidFire: Sources

NetApp is negotiating to buy all-flash storage array vendor SolidFire in a possible $1.2 billion bid that could be announced as soon as this week, CRN has learned.

The acquisition of SolidFire would give NetApp -- which is in the process of rebuilding a storage business that has been declining over the past year or so -- access to one of the pioneering startups in the all-flash storage array business.

While NetApp has emerged as the front-runner, it is not alone in its pursuit of SolidFire. Cisco and EMC have also separately been in talks for a potential acquisition of SolidFire, industry sources told CRN. Cisco this year ended its own Invicta flash storage business, while EMC has already acquired a number of all-flash storage vendors.

[Related: Q&A: NetApp CEO Kurian Talks About New Competitors, Tech's Transition And Industry Consolidation]

NetApp, Cisco and EMC spokespeople all declined to comment, saying those companies do not discuss speculation, while SolidFire had not responded to a CRN request for more information as of publication time.

In addition to SolidFire's all-flash storage array line, an acquisition by NetApp would also bring new strategic partnerships with vendors such as Dell, a strong channel-focused storage business, and Element X, maker of a technology that allows SolidFire's all-flash storage software stack to be integrated with specific Dell and Cisco x86-based servers.

Privately held SolidFire has been expected to go through an IPO some time in the next year. However, the stock market has not been kind to rival all-flash storage vendors. Share prices of Mountain View, Calif.-based rival Pure Storage have been relatively flat since its October IPO, while shares of San Jose, Calif.-based hybrid storage vendor Nimble Storage have fallen significantly since its late 2014 IPO.

One NetApp solution provider told CRN under condition of anonymity that, should the acquisition happen, SolidFire would bring to NetApp's portfolio a platform that has received strong acceptance in the cloud services provider market.

"SolidFire has a very good record when it comes to quality of service," the solution provider said. "SolidFire also clusters easily and scales well."

NetApp provides a strong storage portfolio for cloud and hyperscale data center businesses, the solution provider said. "But for the large cloud solution providers and Web 2.0 companies, SolidFire has a better-priced offering," he said.

"SolidFire has some pretty cool technology, for sure," ​said Al Chien, executive vice president of sales and marketing at Dasher Technologies, a Campbell, Calif.-based solution provider and NetApp partner. "I can understand why everyone would want to jump on it."

Even without SolidFire, NetApp already has a strong flash storage array portfolio. Included in that portfolio is the NetApp AFF family of scalable all-flash arrays based on the company's Data Ontap operating system, as well as the company's E-series of high-performance all-flash arrays.

However, NetApp's flash storage technology development in terms of all-flash storage has stumbled as of late. The company in early 2013 unveiled a secret project called FlashRay aimed at developing a new generation of all-flash storage projects, but since then has delayed the project several times. The lead architect of NetApp's FlashRay project, Brian Pawlowski, this year left NetApp to join rival all-flash storage array developer Pure Storage.

SolidFire CEO Dave Wright, speaking at a Raymond James Technology Investors Conference panel last week, gave no indication that his company might be an acquisition target, but instead said he expects more independent companies in the market.

"I do think we are going to see more independent companies longer term than we have in recent years, because some of the ability to drive consolidation just isn’t there in the market today, and so that creates some real long-term opportunities and, I think, a number of public companies in the next couple of years," Wright said.

Enterprise storage has been a cash cow for legacy vendors for years, but those vendors will have to learn to deal with long-term declines in the market, Wright said during the conference.

"Some of them may think that can wait out some of the disruption that is happening here, but the reality is that their historical approach to this -- which is a whole round of acquisitions, wiping the new blood off the table -- they're not typically in a position to do these days," he said. "They are being pressured by activist investors, they are being asked to return whatever capital they have, they're splitting, they're going private, they're doing anything but actually acquiring new technology that can ultimately differentiate them."

Michael Novison contributed to this story.

PUBLISHED DEC. 14, 2015