Western Digital (WD) is buying server-side flash storage solutions provider Virident, for $685 million, as hard drive makers increasingly look to the solid state drive (SSD) market amid slowing PC sales.
Virident plays in one of the fastest-growing segments in enterprise and cloud computing, says WD. It was backed by strategic investors including Intel, Cisco Systems and WD competitor Seagate.
The deal is expected to boost WD subsidiary HGST's presence in enterprise SSDs, it says in a statement. The IDC predicts this market will grow from $2.5 billion in revenue in 2012 to $7 billion in revenue by 2017.
CEO and president Steve Milligan says WD's purchase of Virident, expected to be wrapped up in the last three months of the year, increases its commitment to become an "even more significant player" in the high-growth SSD segment.
HGST (formerly known as Hitachi Global Storage Technologies, or Hitachi GST), develops advanced hard disk drives, enterprise-class SSDs, external storage solutions, and services used to store, preserve and manage data.
"The acquisition further enhances the value of HGST solutions through Virident's intelligent storage software. The integration with HGST will enable Virident to accelerate its go-to-market efforts by leveraging HGST's strong brand, extensive channel relationships and global customer reach," WD notes.
Growing demand
In the conference call for WD's fourth-quarter results, Milligan said, for the year to June, about half of its revenue came from applications and markets that are powering the public and personal clouds.
WD expects the demand for exabytes of storage will grow by at least 34% a year through to 2020. "With advancements in storage, processing power, software and big data analytics, storage requirements are increasing significantly. There are thousands of new applications that are emerging based on new capabilities," said Milligan.
"The storage industry is experiencing dramatic change and we are participating in the high-growth markets of the future, investing in innovation and strategic acquisitions."
WD ended the fourth quarter with total cash and cash equivalents of $4.3 billion, of which $1.5 billion was in the US. In the full year, it turned over $15.4 billion, with $3.7 billion of that coming from the fourth quarter.
It said, at the time, that its broad-based participation in the secular growth of digital data is resulting in a more diversified mix of revenue. "Over the last five years, our non-PC-related business has grown from 35% to 50% of our revenue." Non-PC includes enterprise, branded and consumer electronics.
According to the IDC, worldwide PC shipments are now expected to fall by 9.7% in 2013, further deepening what is already the longest market contraction on record.
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