Flash storage vendor Violin falls on IPO
Shares in the maker of fast solid-state arrays closed down more than 17 percent on opening day
IDG News Service - Shares of solid-state storage vendor Violin Memory plunged more than 17 percent on the company's first day of trading Friday, but analysts said the market for flash storage remains hot.
Violin raised just over $160 million in an initial public offering (IPO) on the New York Stock Exchange, which the company will use primarily to expand its global sales and marketing capabilities. But the shares, which the company had priced at $9 per share, started trading far below that and closed at $7.11, down $1.89, or 21 percent. The weak result came on a gloomy day overall, with the Dow Jones Industrial Average and the tech-heavy Nasdaq both down.
The market's lukewarm response to Violin's IPO doesn't spell gloom for flash storage, which is still a young and fast-growing technology, industry analysts said. Enterprises are buying flash to speed up access to their data, and the price premium for the solid-state media versus spinning disks is shrinking.
Violin makes all-flash arrays for enterprises, designed to accelerate applications such as databases and online transaction processing. The market for those products is growing by about 60 percent per year, IDC analyst Jeff Janukowicz said.
"The flash market's still very hot," Janukowicz said. "Flash hasn't really gone mainstream in the enterprise."
Violin CEO Donald Basile said the company is focused on the long term.
"What the market does in a given day, whether the market trades up or down, is certainly something we don't have control over," Basile said.
Violin's IPO comes under very different conditions than another flash vendor, Fusion-io, faced when it had a strong opening day in 2011, said Taneja Group analyst Arun Taneja. Fusion-io started with essentially no competition, and Violin is up against the largest storage vendors, he said. Giants including EMC, NetApp, IBM, Hewlett-Packard, Dell and Hitachi Data Systems have already developed all-flash technology or bought startups, he said.
"All the major players have been placing their bets," Taneja said. "Violin was not one of the ones that got picked up through an acquisition." That leaves Violin as a stand-alone rival to the companies that sell most of the storage gear in enterprises, he said. "I think people perceive that as a greater risk, and no question, it is a greater risk," Taneja said.
Violin is focused on competing as a stand-alone public company, with its main rival being EMC, though its board would have to consider any buyout offer, CEO Basile said. The company, based in Mountain View, California, was formed in 2005 and released its first products in 2009.
Violin formed a distribution partnership with HP in 2011, but HP switched to an internal strategy after CEO Leo Apotheker left the company less than a year later, Basile said. Violin has since signed on Dell and Fujitsu as partners and is selling joint solutions with SAP and Microsoft, he said.
- Silicon Valley's 19 Coolest Places to Work
- Is Windows 8 Development Worth the Trouble?
- 8 Books Every IT Leader Should Read This Year
- 10 Hot Hadoop Startups to Watch
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Acxiom Case Study This case study, which focuses on Acxiom, explores how the company was able to secure employee data, reduce migration costs and boost productivity...
- Windows® XP Migration: Protect and Secure Critical Data With the end of the Microsoft Windows XP operating system's lifecycle on April 8, 2014, businesses are faced with the decision to migrate...
- Exponentially Accelerate Data Protection and Recovery with Simpana 10 IntelliSnap® Snapshot Management Technology Are you making the best use of your storage array snapshot functionality? CommVault Simpana 10 IntelliSnap technology manages hardware-based snapshots across multiple vendor...
- Simpana IntelliSnap Technology Datasheet With IntelliSnap you can maximize the value of your snapshot technology while dramatically reducing management overhead and complexity.
- Top 4 Digital Signage Fails Join RMG Networks for a look at four of the most common reasons digital signage fails in corporate businesses. Learn about strategies to...
- Building Tomorrow's Infrastructure Listen to this podcast to discover how Crider Foods worked with PC Connection to update their IT infrastructure, while maintaining compliance and control. All SSD White Papers | Webcasts