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Violin buys ISE, X-IO splits off Axellio

Two storage companies on the comeback trail make moves -- Violin Systems buys X-IO's ISE platform, and X-IO rebrands as Axellio. Both have been in transition over the past few years.

Rebounding flash storage vendor Violin Systems today expanded by acquiring the X-IO Storage division of X-IO Technologies.

The deal brings the all-flash Violin storage portfolio together with the X-IO midmarket, self-contained Intelligent Storage Element (ISE) platform. Neither vendor would confirm the acquisition price. The deal is expected to close by late November.

X-IO split into the X-IO Storage and Axellio divisions in 2017. Now X-IO will rebrand as Axellio, keeping the edge computing and hyper-converged systems from that group. Axellio launched the FabricXpress Windows Server Software-Defined hyper-converged all-flash appliance built on Axellio FX-1000 hardware and Microsoft software in September.

Violin CEO Mark Lewis said his company will continue to sell the current Violin storage platform as well as the current ISE flash, hybrid and disk systems. He said the next generation of Violin storage products will combine technologies from ISE and Violin, with an expected launch date of late 2019. ISE technologies that will fit best with Violin storage include its deduplication process that requires fewer hardware resources than competitors.

"This helps Axellio with focus, and it helps Violin with scale and also with technology," Lewis said. "I believe there are incredible complementary markets. Violin's been focused on the enterprise and X-IO on the SME midmarket. So there's a good market combination, and we believe there's some good technology combinations with X-IO having a great price-performance-oriented product and Violin focusing on extreme performance."

Lewis said there would be no cuts at either company. Around 30 X-IO employees will join Violin, bringing Violin to about 100 full-time employees and leaving Axellio with around 20. Violin, based in San Jose, Calif., will take over part of X-IO's Colorado Springs, Colo., office.

Axellio remade

X-IO CEO Bill Miller said he knew there was a good chance that X-IO Storage would be sold off when he split X-IO into two groups. "I imagined we would separate them at some point," he said. "It made sense in the early days to incubate Axellio inside X-IO, but I've been trying to figure out how to achieve scale in the storage business at X-IO. It just made a lot of sense to put the storage business together with Violin and give Violin greater scale and strength and product breadth to compete in that market. You really need size and scale and some capital to compete in the storage market."

Miller said the edge and HCI market was still nascent although growing fast. "I think there's a good play for a startup there, and that's what Axellio is now, a startup," he said.

Miller will remain Axellio's CEO and take a position on the Violin board.

Violin Systems CEO Mark LewisMark Lewis

Lewis and Miller considered combining the two companies completely but decided the current deal would allow both vendors to focus better on their markets.

"We have in Violin's case robust and mature technology in existing large growth markets, and we need to focus there," Lewis said. "We want to focus on performance and price-performance areas of that market. We want to create a tier 0 performance play that extends down. Axellio is an emerging market -- it's IoT, it's edge computing. If you have companies trying to attack these diverse markets, it defocuses both entities."

ISE's data reduction capabilities are a good combination with Violin's advanced NAND memory management for low latency, Lewis added. "We're talking about being able to build a product that can be four to five times faster than any major AFA on the market, and be 40% less expensive," he said.

Companies face recent challenges

Violin and X-IO have both had a rough time in recent years.

Violin emerged from Chapter 11 bankruptcy in 2017 to take another shot at making it with its all-flash products. Violin was a flash SAN pioneer and used its early-to-market advantage to go public in 2013, but struggled to generate revenue after mainstream storage vendors brought out flash arrays. Violin focused on performance from the start, eschewing the storage management and data protection features that enterprise customers want. Sales dwindled to only a handful each quarter, and Violin filed for bankruptcy in December 2016 after unsuccessfully putting itself up for sale. Private investment firm Quantum Partners bought its assets to resurrect the company four months later.

Industry veteran Lewis took over as Violin CEO last June, claiming the vendor was "essentially a startup."

X-IO Technologies also hit hard times in the last few years. Following large operating losses, it reorganized in 2016 after receiving around $10 million in operating capital from selling shares to individual and institutional investors. That was a year after Miller's private investment company PV Ventures provided seed capital.

X-IO Technologies started as XIOtech in 1997. Seagate acquired XIOtech in 1999 and spun it out to a venture capital firm as Xiotech in 2002. The X-IO ISE arrays came from Seagate's Advanced Storage Architecture Group, which Xiotech acquired in 2007. Xiotech became X-IO in 2011.

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