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Why is SanDisk joining whip-round for Whiptail?

Storage players prepare for coming flash array wars

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USB and camera/phone flash chip vendor SanDisk has bought into flash array startup Whiptail. Now why exactly, and how, is SanDisk doing this?

A Wall Street Journal blog gave the game way. SanDisk is announcing a $75m venture fund to buy stock in companies that help SanDisk's strategic interests. The first buy is stock in Whiptail and the SanDisk fund has joined in the latest funding round for the Whippany, New Jersey, startup.

Whiptail has recently announced an expansion in the scalability of its Invicta scale-out all-flash array from six to 30 nodes, a 360TB capacity and a more than 4 million IOPS capability.

The new investment, a C-round we believe, is $31m and the investors include traditional venture capital (VC) firms, Ignition Partners, RRE Ventures and Spring Mountain Capital, as well as SanDisk and, intriguingly, "an unnamed Silicon Valley industry titan". Are we talking Larry Ellison or somebody of that ilk? Andy Grove perhaps?

Whiptail is soaking up VC funding at an impressive rate. In January it announced a $10m or greater B-round following an A-round in July 2011. That A-round amount was undisclosed. The WSJ blog says Whiptail's total funding is now $41m; El Reg thinks it's closer to $60m, but, whatever, it's not a huge amount for a hardware and software startup, but the rate of investing is good. Whiptail needs to build out its US and international sales, marketing, support and business operations infrastructure quickly for two reasons.

The cash will fund growth in Whiptail's engineering team and accelerate global expansion. CEO Dan Crain said: "This funding will ensure continued growth of Whiptail and accelerate our product roadmap through 2013, with groundbreaking products coming over the next 12 months that will leave our competition scrambling to catch up.”

Whiptail also announced a chief financial officer, Cathy Chandler.

Why fund Whiptail?

Firstly, the firm is one of a pack of thrusting all-flash array startups hot to hit the street and chase IPO glory or get acquired by one of the big guys with deep wallets. This pack includes Greenbytes, Kaminario, Nexgen, Nimbus Data, Pure Storage, Skyera, Solidfire, and Violin Memory, plus hybrid flash/disk array startups like Nimble Storage, Tegile and Tintri.

Secondly, the mainstream server/storage vendors are preparing their own all-flash arrays to be pumped out through their channel to existing customers, partially closing the door on competitive incursions by the all-flash array and hybrid flash/disk array startups.

At the moment, we see:

  • Dell developing its FluidCache DAS and then networked array products next year
  • EMC with its XtremIO box coming out next year
  • Fujitsu reselling Violin Memory arrays
  • Huawei with its Dorado all-flash arrays - with a new one just announced.
  • IBM buying TMS and its RamSan products and technology
  • NetApp with its MARS project
  • Oracle with its three Exa-boxes.

And HP? We understand 3PAR is its strategic flash platform, with Violin Memory as a tactical reselling deal, but the StoreServ is basically a disk drive array and HP needs its own ground-up flash technology. El Reg is convinced HP is doing something in this area - and may possibly have Memristor ambitions.

Greenbytes, Whiptail, Pure and the others know that a mainstream server/storage vendor flash array onslaught is coming, gathering pace next year and reaching its full strength in 2014. The mainstream vendor customer bases are wide open to their incursions at present as their all flash arrays bite the asses off disk drive arrays, even flash-accelerated ones; look at the VDI area.

These startups are in a frantic and full-throated customer land grab, needing to get customers and traction ready to withstand the coming tsunami of mainstream vendor competition. It's gonna get dirty. Both SanDisk and Whiptail know this.

Whiptail, growing like crazy, says it has seen triple digit year-over-year revenue growth and has more than 150 customers. Its headcount has increased by almost 500 per cent in 2012.

Why should investing in Whiptail help further SanDisk's strategic interests? SanDisk doesn't produce flash arrays but it has been moving into the enterprise server and PC flash markets, as we wrote in August "buying the Pliant controller business, the FlashSoft Windows and Linux PCIe caching business, Schooner Information Technology for its cacheing software, and launching server and client SSDs."

SanDisk also partners Toshiba in a flash foundry enterprise - so encouraging firms that could use its chips and, potentially, its SSDs and post-NAND technology, would advance its interests, as well as giving it information about flash array matters (how customers are using flash and so forth). We should expect to see SanDisk SSDs in Whiptail's arrays and this investment holds out the promise of Whiptail getting a more secure flash supply chain, the lack of which helped bugger up flash/SSD startup OCZ and lead to the ousting of its CEO.

"Next year will be a milestone for all-flash arrays. The big storage vendors will be out in force, announcing the fruits of acquisitions or the results of homegrown initiatives," NetApp senior veep of product Jay Kidd predicts.

Whiptail aims to be a survivor of the coming flash array wars and is building up its deck of product, sales, technology and funding cards so it can play at the same table as the big boys and be one of the last guys standing when the smoke clears in 2015/2016. Game on, guys. ®

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