SanDisk gobbles Pliant in $327m deal

Trousers with reinforced wallet pockets for VCs

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Embedded and Smart Card flash supplier SanDisk is buying enterprise SSD start-up Pliant Technology for $327m. The move could well signal the start of SSD supplier consolidation.

There are some equity-based incentives as well as the cash, and both company boards have approved the deal.

Pliant has developed single-level cell and multi-level cell (MLC), SAS-interface Lightning brand SSDs (solid state drive) that replace fast 3.5-inch Fibre Channel drives in storage arrays. Several OEMs are taking these up, including Dell, LSI and Terradata. It is thought that the Engenio part of LSI did the OEM deal and that this has probably been inherited by NetApp, which recently bought most of the Engenio operation.

Pliant is also developing PCIe-connected flash cards for servers, a market pioneered by Fusion-io and one set for fast growth with many suppliers piling in to sell product, including Seagate and Virident.

Pliant has just appointed a new CEO, Richard Wilmer. He will have a radically short CEO term but may end up running a Pliant business unit inside SanDisk. Neither company is talking about the resulting business organisation yet.

With the acqisition, SanDisk gets its entry into the enterprise flash memory market. Its CEO and president, Sanjay Mehrotra, said: "The combination of Pliant's innovative technology and enterprise-level system expertise with SanDisk's high-quality, large-scale MLC memory production is a winning value proposition for customers. Our advanced flash technology roadmap and flash management capability will complement Pliant's strengths and allow us to lead the way in reliability and performance in the Enterprise SSD market."

Joseph Unsworth, a Gartner research director, is quoted in SanDisk's release, saying: "The Enterprise SSD market is poised for considerable growth, with revenue projected to reach $4.2bn in 2015, up from $994m in 2010." MLC NAND is thought to be driving this because it is more affordable than SLC flash.

SanDisk shares flash fab facilities with Toshiba and has 4-bit MLC technology. The greater the number of bits in MLC flash, the lower the cost/GB of storing data in flash. However, productising 4-bit MLC will need advanced controller functionality to provide acceptable endurance and speed. Current MLC products use 2-bit MLC chips.

SanDisk expects the transaction to be dilutive to its non-GAAP earnings in the order of 2-3 per cent in fiscal 2011, but accretive in fiscal 2012. Pliant has pulled in $27.3m in funding, so its venture capitalist backers are laughing all the way to the bank, and on their way to buying trousers with very large pockets. ®

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