There’s near universal agreement that flash will replace hard disk drives in enterprise storage, but it’s not clear if it’s a new feature for established vendors or a disruptive opportunity to build a new, lasting company.

Several start-ups are betting on the latter. The latest to enter the space is Pure Storage Inc., which announced that it raised $30 million in new capital to build a storage system that uses only flash memory.

It enters a market that includes several other start-ups building all-flash appliances, well-established storage companies that have embraced the change, and a variety of competing visions among investors and entrepreneurs for the best way to play the transition.

Among Pure Storage’s direct competitors, Violin Memory Inc. has come out with an early lead. The company, which has raised $150 million in debt and $160 million in equity financing, expects to finish the year with more than $100 million in sales, according to Don Basile, its chief executive.

Bootstrapped start-up Nimbus Data Systems Inc. doesn’t have those kind of revenue yet — it’s on pace to get to that level around 2013 — but it’s profitable and has landed over 200 deployments at customers including eBay Inc. for its all-flash storage array, said Tom Isakovich, its CEO and founder.

Another company, Whiptail Technologies Inc., has been selling flash-based storage systems in some form since mid-2008 and has raised funding from RRE Ventures and Spring Mountain Capital. The bulk of its sales come from the burgeoning market for virtual desktop storage, but it plans on pursuing broader parts of the storage market.

Like Pure Storage, SolidFire Inc. has yet to make its flash storage array generally available. That company, whose backers include New Enterprise Associates, Novak Biddle General Partners and Valhalla Partners, is specifically targeting the market for cloud computing service providers.

The performance of computer processors and memory have soared over the last decade, but hard drives have run out of gas. Flash memory doesn’t have the physical limitations of hard drives and can make performance advancements that keep pace with processors.

The world’s biggest storage companies like EMC Corp. and NetApp Inc. have acknowledged that flash will play a role in the data center. Both have started selling products that sprinkle flash memory into their systems and last spring EMC announced the creation of a dedicated business unit to focus on flash.

Venture investors are watching the transition closely but many have remained cautious about investing in any particular company because these start-ups will have a limited amount of time to establish their value before bigger companies fully embrace flash. That means it’s not clear whether this transition will create another big storage company.

“Do one or two emerge as a competitive storage companies or does a component or other part emerge to supply existing vendors?” said Paul Madera, a managing director with Meritech Capital Partners.

Many investors have gotten behind software companies, such as FlashSoft Corp., VeloBit Inc., and component companies like SandForce Inc. and Anobit Technologies Ltd., that could help incumbent storage companies adopt to the transition.

The investors and entrepreneurs behind all-flash storage systems say that’s the wrong approach. Flash is so different from hard disks that every aspect of the storage system has to be redesigned.

“By rethinking everything that’s possible from the ground up, it’s amazing what’s possible,” said Mike Speiser, a managing director with Sutter Hill Ventures, one of Pure Storage’s early backers. “It’s really hard to take the wrong approach [by cramming flash into appliances built for hard disk] and catch up with people who have done things the right way.”

By: DocMemory
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