Violin memory: Reasons behind the demise of an all-flash pioneer

In these days when flash storage grabs so many headlines for the right reasons it’s quite a surprise that one of the pioneers in the space – Violin Memory – is about to hit bankruptcy hard, with an upcoming fire sale of its remaining assets.

Violin was – and still is – widely regarded as having a good set of products, based around all-flash arrays built around custom silicon and with an emphasis on performance and more recently adding advanced storage features that enterprise customers needed.

In September 2013, Violin was, according to Gartner, the market leader in all-flash arrays, with a 19% share.

At its IPO in September 2013 the company raised $162m, selling shares for $9 initially, but saw them fall to $7 on the same day and to $3 by the end of November that year. Investors are thought to have been scared off by how quickly Violin had used its cash reserves.

But in 2014, Violin gained a new CEO and sold off its PCIe flash card business. In June that year, it upgraded its all-flash arrays – re-branding the product the Concerto 7000 series – with the addition of advanced storage functionality.

It released the Flash Storage Platform (FSP) in February 2015, with additional models in December 2015. Then in September 2016, almost as a last throw of the dice, Violin Memory added two new FSP all-flash arrays, aimed at extreme high performance and general workloads.

The numbers that track Violin’s decline are quite shocking.

In 2012 Violin could boast $72 million in revenue. By mid-2016 that was down to $7.5 million for the previous quarter and the company had lost $603.3 million during its history, including $99.1 million in 2015. In 2016 Violin lost $25.5 million, $22.2 million and $20.1 million over the first three quarters.

From January 2014 Violin reduced headcount from 437 employees to 82 by the end of 2016, through several staff reductions.

By the end of 2016 Violin’s reserves were down to $31.4 million in cash and equivalents and it had filed for Chapter 11 bankruptcy protection. By the end of December Violin had $3.62 million in cash, with that total dropping to around $1.6 million by the January 13 planned date for the auction of its assets.

So, what went wrong?

The big, obvious answer is that it spent more than it earned, did not get new customers at a quick enough rate and failed to cut costs quickly or effectively enough to stem an increasingly worsening situation.

And then, while in a situation of declining fortunes Violin suffered further as a result of the market’s perceptions of its decline, and that was only fuel to the fire/a vicious circle etc.

It’s quite some decline. Clearly, as all-flash market leader in 2012/2013 the market it served gave it a resounding thumbs up.

Then investors also flocked to throw $9 a share at it in its IPO. Those shares are now worth a paltry 4c each.

While clearly possessing a good set of products and tens of US patents, the market it did so well in initially arguably became a niche one.

This was, namely the early all-flash array market, where high performance was married with high cost and boxes lacked the features enterprises expected in their general storage, such as synchronous replication, CDP, snapshots etc.

And that didn’t matter because businesses with extremely high performance requirements were happy to throw cash at what was effectively a point solution for their most valuable datasets.

But the all-flash market changed.

All-flash arrays gained advanced storage features and hybrid flash became the most common method of flash deployment. The flash storage array market became less one of point solutions and spread to encompass general, mixed workload, primary storage needs. The big six in storage and many of the startups successfully provided this.

Meanwhile, Violin just didn’t seem to be able to keep up, at least not without incurring crippling losses.

Now all that remains to be seen is what will emerge from the auction sale of the remains of Violin later this month.