 Hi everybody, this is Dave Vellante. I'm here at Wikibon headquarters. Fusion I.O. is on the move again. The company just announced that it's buying NextGen, a hybrid flash array company. We've been talking a lot at Wikibon and Silicon Angle about the impact of flash. We had a big flash cube this week. For the last 15 years, Function has been moving out of the host out to the array. I'm talking about Function like sharing and snapshots and replication and data migration. All the storage function that companies have made billions of dollars selling. Fusion I.O. is coming at it from the other end of the spectrum. They started at the server. That's smart because Function's moving back. What Fusion I.O. is doing is they're essentially developing a platform and it's making a lot of the Function that has moved out into the array less relevant. Fusion I.O. is coming at this from the server moving out into the storage hierarchy and with me to talk about that is David Floyer. David Floyer is coming to us from the West Coast. Good morning, David. Good morning, Dave. Yeah, so this is a pretty interesting announcement. Fusion I.O. has been making some moves. We saw they recently acquired ID7 and now NextGen. First of all, tell us about NextGen. Where do they fit? NextGen are a hybrid storage company. They use Fusion I.O. storage cards, the PCIe cards. And they have aimed clearly at the hybrid market. They have three different sets of models. The high end going up to 100 to 300,000 I.O.s and the low end around the 50 I.O.s. So very suitable for heavy workloads that small organizations have but combining for a small organization that only wants one or two devices combining flash for the performance side and storage for the lower cost side. So now talk a little bit about the ID7 acquisition, how that fits in and really what are my real question here is what is Fusion I.O. trying to do? Help us squint through that. Well, they bought ID7 which has all of the open source code and intellectual property around the stack. So that's providing the Linux kernel and almost every vendor now is using Linux as a starting point. So it's providing the drivers, providing the code in Linux for the new type of I.O. Let me stop you there. Let me make sure I get this right. So Fusion I.O.s game, their main game is to really extend memory with a persistent flash medium at very high speeds, a little lower cost than memory but persistent and much, much faster than spinning disk. And what you're saying is that ID7 and Fusion I.O. are essentially helping to improve the Linux code, the Linux kernel and the entire stack to make it more friendly for this type of architecture. Did I get that right? Is that correct? That's correct. And with the acquisition of Next Gen, they will add all of the code as well to that, which is the code that traditionally was provided by the storage vendors. So it's the snapshot, the remote replication, synchronous replication, all the thin provisioning, et cetera. All of those sort of capabilities will be essentially open source and just take out all of that, make them own that stack and completely disrupt the whole of the array industry in the long run because the amount of money that will be there available will be very little. They'll be integrators as opposed to innovators in that area. You're saying they being the traditional storage array business will be integrators rather than... So Fusion I.O. is innovating. Let's double click on this. Fusion I.O. is the only company with the capability through software to do what we talk about as atomic rights, the capability to write directly to that flash and bypassing not only the spinning disk but bypassing disk protocols which are very chatty and very overhead intensive and not good for performance. So that's, first of all, that's a correct statement, right, that Fusion I.O. is the only one shipping that today. That's correct. And that's required for very low latency. So what Fusion I.O. are extending their reach from the very low latency into the low latency and providing that stack of functionality on a Linux base as part of the ecosystem and if they provide soup to nuts, all of that capability and provide that platform, that's their goal. That's what they're trying to establish. So when you say platform, you're talking about an end-to-end platform from server out through the network to be able to share these devices across clusters, is that right? That will, assuming that they established the initial platform for the low latency and very low latency, of course that's where they are going at the final resting point. So that's a long-term direction? That's a long-term direction. That's quite a few years off. But Fusion I.O. is attacking the hyperscale market. Obviously Facebook and Apple are its two big customers. The stock was down last quarter and revenues are still under pressure because those two big companies have slowed down their buying. This is a typical pattern for Fusion I.O. But the stock's up today on this announcement and I think largely because Fusion I.O. is dramatically expanding its total available market, David, isn't it? That's right. It talked about the number of new customers that is had in the government in different areas above 5 million and a whole raft of them above a million. So it's trying to extend its customer base away from just the whales in the area and being the platform that the newly emerging cloud service providers are going to use, the new storage stack. This is the one that they're going to use. Going after that market, skating to the park of where new innovation is happening from the ISVs. It'll be in these cloud service providers and providing the platform, an ecosystem on which they can then develop additional products. Okay, but the hyperscale market today is growing very fast but it's still relative to the overall market. It's still small, right? I mean, it's a niche. You talk about the size of the server and storage business. The hyperscale market accounts for what? 10%? Less than 10%? Yeah, if you include the Google and the Microsoft and not all that's available, it's probably around that 10%, 15%. But it's growing substantially larger than the overall marketplace. Will the hyperscale trends, that notion of scale out and high degrees of automation, the market that FusionIO is going after, will that trickle into the enterprise in your opinion? Well, it'll trickle in in two ways. It'll trickle in because all the innovation is likely to, the ISVs, the new ISVs will start life as a cloud provider and they're putting their bet that that will happen fairly quickly. That is happening now that that's where the innovation is going into the marketplace. And we've seen that ourselves in Salesforce.com or ServiceNow or examples like that where the root of new applications and new ideas has come from those cloud providers. They're taking the bet and I agree with them that that's where a lot of the ISV market is going and that will move processing from inside IT to the cloud. And then that being the main thrust there they will establish their platform as their ecosystem, as what cloud providers and then eventually of course those ISVs will produce packages based on that technology for enterprises and it's likely that they will produce the package and have a reference architecture for it. Okay, so the SMB gets access to this technology through the cloud service providers in your view, not directly? Yes, the SMB, they will eventually get through that. But like everything else it's going to be very much a mixed market for a long time and if they can own that part of it they think the pendulum is swinging towards that and that's where the package is. Excellent, all right David Floyer thanks very much for stopping by and clinging us in on this big announcement from Fusion IO Fusion IO expanding its total available market acquiring hybrid flash vendor NextGen for $119 million. David Floyer really appreciate your quick response here and good talking to you. Good talking to you, have a great day. Thanks for watching everybody. We'll be back next time with more breaking analysis here from Wikibon and SiliconANGLE. Appreciate you watching.