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LSI Purchase of SandForce – Our Discussion With VP Gary Smerdon

LSI has announced their purchase of SandForce Technology for approximately $400 million, a number which is oddly close to their sale of their Engenio Storage Business Unit. After removing itself from the external storage systems business which was primarily based on hard drives earlier this year, LSI has just put in place what they believe to be the main component of a very successful future, a future covered in flash.  I just got off the phone with LSI VP & GM Gary Smerdon who was very candid in speaking of the new LSI model.


In March this year, LSI sold their external storage systems business to NetApp Inc for $480 million.  The main component of this purchase was Engenio Storage Group.  Engenio designs and manufactures ‘modular storage solutions’ that are then delivered to end users through strategic partners.

In today’s world, this was a very risky move for LSI  as their external storage interests generated revenues of $705 million in 2010 alone.  To be blunt, it was a risk that could have damaged company confidence beyond repair and cost LSI much more than anyone imagined. Comments such as, “Why would anyone sell a business that generated $700 million last year alone for $450 million in total?! Is LSI that badly cash strapped and that is why the fire sale?! ” were rampant.

The key factor overlooked by most was that LSI sold their external storage business, however, retained their internal storage business which comprises mainly of PCIe host bus and RAID adapter cards and internal storage solutions.  That should have been what some might call ‘an indicator’ of things to come.

Fast forward a few months and unofficial word started circulating that SandForce was open to offers.  Some initially guesstimated that Intel would be wise to jump in and, in fact, OCZ’s Ryan Petersen openly stated that they had contemplated such a scenario with SandForce in his congratulatory response to LSI and SandForce.

LSI’s announcement of their purchase of SandForce on 26 October 2011 simply put the icing on the cake.  It sealed the deal.  LSI was out of the external storage systems business and investing heavily in solid state drives.


My conversation with Mr. Smerdon was our first introduction and his opening line of, ” It’s really fun to come to work with things like this happening” was definitely not a tag line.  To be in his position, one needs to be quick on their feet and able to answer questions in just the right context.  As much as I realized that there were questions that could not be answered just yet, I was surprised and impressed with his candid nature and honesty in his opinions as well as the LSI perspective.

To start, both SandForce and LSI are located in Milpitas, California and both have factories in China.  All SandForce employees are moving over to LSI and will start a new division being led by SandForces own Michael Raam.  LSI believes this to be 185 employees whom will experience very little disruption from their normal course of work.  Mr. Smerdon believes that the main business benefit, right off, is that SandForce will shed the skin of being a ‘startup’ business and the umbrella of LSI’s reputation and success will inspire confidence for business to step forward.

He carried on by crediting Michael Raam and SandForce on their growth and success in the past few years which could only be expected.  Although being founded in 2006, SandForce officially moved from ‘stealth mode’ and were first seen in consumer SSDs in 2009.  Their funding totaled $60 million in four rounds of activity and was on track to generate that right back in 2011 revenue alone.  In consideration that their initial value was most likely that of $20 million at startup, SandForce has just seen a 20x valuation which is virtually unheard of.


When asked whether SandForce would retain its present name along with such marketing ideas as the ‘SandForce Driven’ designation, Mr. Smerdon stated that this would be one of the most difficult decisions for LSI.

He carried on to state that SandForce will become part of LSIs newly formed Flash Components Division, with Michael Raam as GM and, further,  that the SandForce name and their marketing of such has been very successful.  At this point, however, much still needed to be worked out with respect to product branding.


PCIe-based solid state storage is Gary Smerdon’s bread and butter as VP & GM of the recently formed Accelerated Solutions Division of LSI.  He was quick to point out the already successful relationship that has already transpired through production of the LSI WarpDrive, a PCIe SSD card which utilizes the SandForce SF-1500 processor.

When asked about LSI’s roadmap, Mr Smerdon stated that they are very excited about ‘additional announcements in the near future”  Does this mean we will see a PCIe SSD card available at the enthusiast level in the near future?  I doubt it.

It did raise an interesting issue though which was that of direct competition in the form of the newly release OCZ Z-Drive family.  Mr. Smerdon was quick to confirm that he felt the Warp Drive and Z-Drive were designed for different classes of users and that LSI did not feel that either company were direct competition in any way.  With this, he carried on to state that all present SandForce partners would continue to enjoy the present relationship that they do with SandForce, only with added LSI expertise.

From a personal perspective, having published several reports evaluating LSI hardware and it’s CacheCade SSD caching software,  I believe that their mixture of qualities seen in CacheCade, RAID stacks and their ability to customize drivers, will enable LSI to take performance to the next level when mixed with SandForce flash storage processors. In fact, if anybody has the ability to make TRIM work in RAID, LSI can and even Mr. Smerdon related that this was something that would be examined very closely in the near future.


I asked Mr. Smerdon if LSI had any intention of producing solid state drives at the consumer level in the near future.  His response was a definitive “No” which did make sense as LSI has perfected catering to the business and enterprise level and adding the consumer element at this point and time would be pointless.

Although I believe this just may be revisited by LSI down the road, let’s be honest here.  Consumers are the most difficult bunch to please.  We truly are.  It just seems so much more convenient to sell the LSI product to partners that are already established and leave them with the headaches of customer service at the end of the day.


From an outside perspective, the competitive nature of LSI and SandForce seem to be at totally opposite ends of the spectrum.  LSI has built a very solid foundation in a manner that is ‘slow and steady’ while SandForce has been the racehorse breaking the gate, some may believe even prematurely.  Just how would LSI break SandForce to fit into their business model and competitive style?  Gary Smerdon’s answer surprised me completely.

He mentioned something that we started this report with, and that’s the fact that LSI has been rebuilt from the foundation up.  Mr. Smerdon believes that, now that the foundation is intact, we just may see the same competitive edge in LSI as we saw from SandForce.


LSI started out as a microprocessor company over 30 years ago, known as LSI Logic, who made custom processors for other companies. Over the years they have evolved into a storage powerhouse and storage today accounts for over 70% of LSI’s income.

This success can be attributed to the performance of their microprocessors, such as  the LSISAS2208 Dual- core 6Gb/s ROC- x2 800MHz PowerPC Processor used on their LSI MegaRAID SAS/SATA 9265-8i 6Gb/s PCIe RAID Card. Their history with microprocessor development, design, and production give them a unique skill set to further their storage centric ambitions, not only with RAID ROC controllers, but also with the new acquisition of SandForce.  After all, SandForce is primarily a processor developer.


I believe that the LSI purchase of SandForce was not only a very business wise decision on behalf of LSI, but also, we should be seeing great things as a result.  To some it may appear that enterprise interests in storage will benefit much more than consumer but that is not entirely correct.

LSI’s expertise in software alone combined with the SandForce processor will provide consumers with new levels of performance as well confidence in a product that is deserving of LSI.

This filters down to pricing of the ‘LSI Enabled’ SSD which just may inspire healthy competition and lower consumer SSD prices.  If we were to gamble on the first to mention ‘next gen’ solid state drive technology once again, LSI just seems like the most likely candidate.  If I were to also gamble on TRIM in RAID, yup….LSI again.

LSI is hosting the Accelerating Innovation Summit in Milpitas in two weeks and The SSD Review has been requested to attend.  Coincidentally, SandForce is a sponsor so this is an event I am sincerely looking forward to.  A large portion of the event will discuss LSI’s vision for flash technology in the future, however, they are clear to point out that specifics with any partners, present or future, will not be identified. Stay tuned as we report back on the event as well as any hardware demonstrations that are a common part of such events.

Oh… Did I mention that I have a PCIE SSD card in my hands right now that has both SandForce and LSI components on it’s face and it is NOT a WarpDrive or LSI product?  Lets just see if we can get that up in the next day or so!

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