Updated: Flash-storage component manufacturer Fusion-io is trading well above its initial public offering price, signaling that investors believe solid-state drives might actually live up to their promise to displace large quantities of spinning disks in enterprise data centers. Fusion-io’s IPO has been characterized by mostly increasing prices — the company suggested an opening range of $12–$13 on Tuesday, actually priced at $19 (it opened at $25) this morning and has been trading between $23 and $25 all morning.
If Fusion-io can maintain its opening stock price and current volume (storage leader EMC, by comparison, has been trading at just under $27 today) despite a relative lack of reliable recurring revenue, it should mean even bigger things for the greater solid-state ecosystem. Fusion-io presently plays in a relatively small segment of the addressable market for flash, in that it sells flash-packed components that plug into servers and act as a high-performance cache to spare applications the need to call the back-end storage array. It currently has OEM deals with IBM, HP and Dell to include its components in their servers.
But greater demand for and excitement around flash also means big things for startups such as Violin Memory, which sells flash-packed storage arrays meant to replace hard disk drives for primary storage. Violin has raised a boatload of cash thus far, including $40 million just this week, and CEO Don Basile thinks it can hit the $100 million revenue mark this year, thanks to a perfect storm of price-performance improvements and overall SSD excitement. The key to selling more flash storage is a lower price, Basile told me earlier this week. That will come as Fusion-io’s and Violin’s big-time server-and-storage-vendor partners solidify their dedication to flash and start selling flash-optimized systems at scale.
Fusion-io’s success also should be good news for a handful of startups selling software designed to optimize solid-state deployments. These include the still stealth-mode SolidFire, which raised $11 million in February, and the just-emerged VeloBit. These companies can’t sell their software until companies have invested in flash hardware. Speaking of hardware, NAND flash manufacturers such as Samsung, Toshiba and Micron have to be happy about the appetite for Fusion-io stock, too, as they’re the key to the whole supply chain.
Presumably, Fusion-io’s shareholders are happy about the IPO price, too. At the opening price of $19 a share, as of the company’s S-1 filing:
- CEO David Flynn beneficially owns 6,619,836 shares, worth $125.8 million.
- CMO and EVP Rick White beneficially owns 5,151,174 shares, worth $97.9 million.
- New Enterprise Associates, which invested $38.7 million in Fusion-io, beneficially owns 25,935,930 shares, worth $4,928 million.
- Lightspeed Venture Partners, which invested $20 million in Fusion-io, beneficially owns 8,823,741 shares, worth $167.7 million.