Is Violin Memory done?

by Robin Harris on Thursday, 13 March, 2014

Remember this sad story from StorageMojo:

They haven’t reported financials for almost 3 quarters. Their stock is trading at about 20% of its peak. They fired their CEO. . . . And NetApp was trying to strangle [them] (see NetApp filers for $1/GB?) in its crib.

Are they goners?

I don’t think so.

Was I foolishly optimistic? Maybe. And yet Isilon managed to hang on and succeed.

Why the history?
I tweeted Friday that

Violin Memory gets new CMO from EMC. Good move: why buy new XtremIO when mature flash offered?

This got a couple of responses, first from @ahl or Adam Leventhal, formerly of the ZFS team:

@StorageMojo do you really think that Violin can turn it around? Would you advise a customer to buy Violin over XtremIO?

And later from @StoragePro, who works for NetApp.

@StorageMojo Violin let go 20% of their people. That is the kiss of death.

Can Violin turn it around?
I think so. Look at their assets:

  • Revenue. Over $100m. That means customers who like the product.
  • Technology. The Violin architecture is unique – see StorageMojo’s Video White Paper – and, AFAIK, still offers the lowest and most predictable latency of any flash array.
  • Financial strength. Violin has over $130m in the bank and some strong backers such as Toshiba. Laying people off is painful, but that’s how you stretch the runway.
  • New management. The new team must have been promised investor support or they wouldn’t have signed on.

Second question
Would I recommend Violin over XtremeIO? Of course!

Why? Because a storage product that’s been out for 5 years is inherently more mature and stable than one that’s been out for a few months.

I’ve been through plenty of beta programs and try as they might they never catch most of the bugs. Only customers can do that, so more customers and more runtime equals more found and fixed bugs.

Violin’s 1st gen product was bare-bones, but it worked and got them lots of customer feedback. The 2nd gen 6000 series incorporated that feedback and has been much more successful.

The big knock on Violin has not been hardware but software. I’ve heard that they’ve been working on that and their new Maestro Suite is part of the software offensive. Expect to see more.

The StorageMojo take
Few companies get as far along as Violin Memory has. But Isilon’s problems were worse and they survived and prospered. But it wasn’t easy, especially with the big guys spreading FUD.

VMEM’s new team has its work cut out for them, but turning the company around is not an impossible dream. Stop the bleeding. Focus on sales and support. Show progress and profitability.

And then all this will be forgotten in 5 years.

Courteous comments welcome, of course. I’ve done work for Violin and I’ve liked the technology since the original team briefed me on it years ago. In fact, I bought some stock a while ago because of the analysis I’ve laid out here – but you’re welcome to believe I’m a supporter now because I bought them, but I’m not the only one who thinks they’re undervalued. And no, sadly, I didn’t buy Isilon back then.

{ 4 comments… read them below or add one }

John Schmidt March 15, 2014 at 1:07 pm

Looking more closely–the layoff, while easily spun as draconic, is the natural outcome of pruning management chains and product lines. The new CEO has brought in new talent in Marketing and Sales, is re-organizing away from “individual heroes”, and has cut the non-producing “science projects” (card, mainly.) The core technology is patented and relatively unique, and while it could be replicated Violin has an 8 year head start on anyone else. The Toshiba partnership is still strong, and having a supplier as a major partner, when flash memory demand is likely to outpace supply completely, is a strong positive.

Disclaimer: I was a Violin employee, who was laid off. I’m still strongly positive about Violin’s future, and holding on to my stock.

Non-producing-array March 21, 2014 at 3:53 pm

To be clear about Violin’s array and it’s future, is that future array products will be using part of the card technology going forward. Also ironic is that other “science projects” such as the card are used in currently deployed betas to help “accelerate” the array.

Given the future integral piece, Violin’s further success would be more enabled by what they have taken from the PCIe cards than without them. Let us also be clear, the PCIe cards have used all innovations and more than have come from the IP and patents of Violin Memory as a whole. More so than even the array itself. That is shown by lowly servers with cards outperforming the array at its own benchmarks and that of others.

The burn rate by the card group was less than $10m per year meaning that it was less than 5% of the companys quarterly expenses. I guess if 5% of an investment in a science project you would be right.

But in everything else you seem to be misinformed.

Dave Pignatelli March 21, 2014 at 4:54 pm

John Schmidt,
Too bad you know nothing about the PCIe cards your are classifying as “science projects”….You were a teacher once, do the math, check the (now public ) financials. Our group definitely “producing” for the last several quarters.
The cards work, they are complete; they just aren’t what Violin wants to sell now. You worked in customer support for the Array, but you have no contact with the customers who love our cards. In one recent letter we received, our PCIe cards reduced their server workloads from 36 minutes to 2 minutes. Our card’s unique architecture, low cost, and scalable performance led them to higher application performance. The Violin PCIe cards worked for them, they even ordered more before we get shut down. If that isn’t a testament to quality I don’t know what is. Science, indeed.
In your opinion, you think that a self sustained group of a few dozen people was crippling a company of nearly 400, to the point where selling us off will “set them free”.
The CEOs message was clear, it’s a matter of focus and disciplined execution. That’s required in ANY successful company.
Your representation of the facts about the PCIe card, is utterly wrong and is pretty funny!
I guess this blog gets what it pays for.

Disclaimer: I work in the Violin PCIe card group; we are for sale. Visit us and checkout our HW and SW products. Time is limited.

Robin Harris March 21, 2014 at 7:20 pm

I came to Casablanca for the waters.

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