Another day another company for sale, or so it seems in the flash industry as of late. Texas Memory Systems has just announced that they are open to offers which is a bit unexpected for a company with 33 years in the field.
A string of recent mergers toughens the playing field for Texas Memory Systems and other vendors. The big news recently has been Sandisks buyout of Pliant, a major enterprise SSD manufacturer, creating a new division called Sandisk ESS (Enterprise Storage Solutions).
LSI was next to snap up the scrappy upstart SandForce, a company that has dominated the consumer SSD world since its public unveiling just over two years ago. Hot on the heels of that announcement we have acquisition of Anobit by Apple, and now Texas Memory Systems is announcing its intentions of looking for a buyer.
These types of mergers are providing smaller companies with a wealth of resources at their disposal as they gain the new parent companies’ resources in funding, research and development, customer service, and marketing. This can make competition for private companies much harder, as they simply do not have these resources at their disposal.
Texas Memory Systems, for instance, has great products in their Ramsan line, but getting those products to buyers isn’t an easy task as they are very expensive and access to corporate customer bases can help to move these products. Look for companies in the class of EMC, HP, IBM, Oracle or NetApp to be potential suitors.
For the large companies buying these SSD companies, the benefits are twofold. The battle for IP (Intellectual Property) is a huge concern. By purchasing, they gain patent portfolios which they can use in their new products. Much more interesting, however, is the fact that they can also block their competition from using that very same technology.
Many analysts are of the opinion that Apple has acquired Anobit more with the intention of blocking Android devices from capitalizing on the technology than their own desire to use the technology themselves. Look for Apple to use MSP and other IP from Anobit, but also do not expect to see a new line of Apple SSDs on the shelves any time soon. That simply isn’t Apples intentions!
‘Business is war’ is a common mantra, and there is a huge fight over the estimated 4 Billion dollars in SSD profits to be earned this year. This is a quadrupling of the market from last year so don’t expect any shortage of companies looking to merge not only for their own gain, but also simply to hamstring their competitors. With the pace of development and the penetration of SSDs into the consumer and enterprise markets, look for this number to grow significantly.
There is great value in these SSD start-up companies as well as companies with a longer track record which Texas Memory Systems definitely is. Venture Capitalists, including Intel and other multibillion dollar players, have been investing for years in this realm, and look for them to start cashing in their chips soon. The pace of mergers and acquisitions, and thus the practice of gaining, and denying others, access to patent portfolios, is only going to quicken this year.
Look for 2012 to be very interesting in this aspect, as the pace of consolidation quickens, with even the HDD suppliers getting into the act, this is sure to be a recurring theme for the rest of the year. For just a few hundred million dollars, someone is sure to be adding TMS and their wonderful products to their company very soon!