Violin Memory: From Flash Storage Pioneer To Chapter 11

Violin Memory, a pioneer in the flash storage industry which was never able to capitalize on its early market lead, has filed for Chapter 11 bankruptcy and unveiled plans to hold an auction for its assets.

The move to file for Chapter 11 comes a year after Santa Clara, Calif.-based Violin Memory first said it is exploring strategic alternatives.

Violin Memory on Wednesday said that, in additional to the Chapter 11 filing, the company plans to hold an auction early next month to sell its assets, which include 58 U.S. and 64 foreign patents and multiple pending patents. It also has a recurring revenue business at $20 million per year.

[Related: Violin Memory Reports Disappointing Quarter, Is Exploring 'Strategic Alternatives']

Violin Memory was founded in 2005, and developed its own flash storage modules instead of using standard SSDs to coax better performance from its solutions. For a time, the company was known for the performance of its all-flash storage solutions. By 2011, it had already introduced all-flash arrays targeted at tier-one, mission-critical applications.

However, over the years, intensifying competition, at first from a large number of startups using standard SSDs to develop high-performance all-flash storage arrays at a lower cost, and later from established storage vendors who were able to easily slot all-flash storage into their existing storage ecosystems, took its toll on the company.

The company in early 2014 made the decision to exit the PCIe flash memory card business and focus on the arrays. It sold that business in June of 2014 to South Korea-based semiconductor company SK Hynix.

Violin Memory in December unveiled a new entry-level all-flash array and a new high-density flash storage array into its Flash Storage Platform (FSP) family, in effect transforming from its focus on high-end, Tier 0 flash storage solutions to more of a primary storage play.

Jeff Nollete, vice president of channel sales at Violin Memory, told CRN at the time that the company had cornered itself in regarding its total addressable market. "It was a one-trick pony in focusing on the high end of the market. So now we've expanded to primary storage. We are a high-end data storage solution provider rather than a provider of database acceleration solutions," Nollete told CRN then.

Violin Memory in September of 2013 held its IPO, selling about 18 million shares at $9 each, giving it a total IPO of $162 million. However, share prices closed that day at $7.02, and have continued to fall since. Shares on Thursday for the company, which are available via over-the-counter markets, fell 68 percent to just over 5 cents per share.

One never likes to see a company like Violin Memory, with good technology and people, fail, said John Woodall, vice president of engineering at Integrated Archive Systems, a Palo Alto, Calif.-based solution provider and Violin channel partner.

"But they've clearly struggled," Woodall told CRN. "I've watched their earnings. They never really turned the corner. Clearly, they had to exit. Hopefully, their actions will allow their intellectual property and customer business to continue."

Woodall called Violin Memory a pioneer of the flash storage business and helped to define the industry, but its idea of a flash module vs. standard SSDs never really caught on.

"Violin Memory had an early customer and performance advantage," he said. "But the market changed much since the company started. Flash storage is a disruptive technology, but it's still storage. The advantage has moved to more established vendors, those that have the ability to integrate with technologies from other vendors and that have broad software and services capabilities."

The flash storage business is not a forgiving one, Woodall said. "It seems to favor established vendors over startups," he said. "Customers are not all focused on speeds and feeds. Instead, they look at, do you have a Docker plugin? Do you scale? Things are changing faster that the startups anticipated."

Violin Memory executives were not available to talk to CRN by press time. However, Kevin A. DeNuccio, Violin Memory's president and CEO, said in a prepared statement, "We are taking this action, which should conclude by the end of January 2017, to bolster Violin's ability to serve the needs of its customers. Violin intends to continue to sell solutions to customers and prospects as well as service and support customers during this restructuring."