A week ago SanDisk announced a $327 million deal to acquire Pliant Technology, I believe this is only the first step in SanDisk’s strategy. SanDisk is already well known as a top tier supplier of NAND based memory products including Secure Digital cards, compact flash, and USB memory. Although SanDisk’s brand does carry a premium in the marketplace, the company faces fierce competition from a myriad of vendors because flash memory utilizing standard interfaces has become a fairly commoditized market. Unlike other vendors, SanDisk has a joint venture with Toshiba for manufacturing raw NAND, something that many of the generic competition cannot match.
The move to acquire Pliant Technology was a clear indication that the company is listening to the street and investors, albeit a bit late in the game. Pliant Technology focuses on the enterprise SSD market offering both 2.5″ and 3.5″ drives with MLC and SLC flash. Pliant’s big customers are Teradata, Dell and LSI which typically are not mentioned along SanDisk as partners so giving SanDisk’s MLC NAND a path to large storage vendors is at minimum interesting. Aside from traditional products, Pliant also has a product roadmap with PCIe SSDs, so it may be the case that SanDisk is looking to enter a market to compete with Fusion-io (OCZ is not a major player in enterprise SSDs, despite what marketing may have one think.)
SanDisk did try to enter the consumer SSD market with its uSSD product back in the 2007 time fame, yet that was a less than successful effort. The market became dominated by Intel, Samsung, Indilinx (at the time), SandForce, and even JMicron/ Toshiba to an extent along with all of the suppliers that used the controllers of the aforementioned companies.
I do think that this is SanDisk’s first step in the SSD market, or at least the first step in a reinvigorated effort to move into the SSD market. Pliant has proven technology with enterprise customers, which are high-margin portions of the market. SandDisk does really well in the consumer space, and it makes a lot of sense for SanDisk to look at this space next. Probably the biggest question that SanDisk faces is whether or not Pliant’s MLC technology can be translated to a competitive consumer drive, or if this requires another acquisition. I would not be surprised if SanDisk moves in the consumer space in the next 12 months either through their own introduction or through an acquisition.
Conclusion
Pliant brings great technology to the SanDisk stable, and gives SanDisk a high-margin, relatively more stable and growing business than the consumer flash market. With that being said, and with the Toshiba-SanDisk joint venture’s foundries back up to speed following the earthquake in Japan, it makes sense for SanDisk to leverage its strong consumer brand when entering the consumer/ business SSD market.
