OCZ has announced that they will be acquiring Indilinx, a flash controller design company, for $32M. This move further proves that OCZ is serious about growing their SSD business unit which is increasingly becoming the majority of their accumulated revenue. OCZ has already stated that they expect to see a 100% increase in year over year revenue; this is primarily attributed to growth in their SSD business. The only thing that appears to be missing for OCZ is an extremely strong in-house design team.
If OCZ wants to be considered a major and stable SSD manufacturer, they cannot rely on 3rd parties for their controllers. Using a 3rd party controller would prevent OCZ from distinguishing itself from competition. It would also leave the company vulnerable if their 3rd party controller supplier were to cut them off or go out of business. Of course, we?re specifically referring to SandForce. If the Seagate privatization had gone through, Seagate would have snapped up SandForce and left OCZ hanging out to dry. This scare is probably what is motivating OCZ to buy a controller designer/manufacturer, which is a fairly large acquisition for a company at this point in time.
The only problem now is the question of how SandForce will treat OCZ. Currently, OCZ has majority of their drives running on SandForce controllers. Those lines include the Revodrive PCIe SSD, the Vertex SSDs, Agility SSDs, Onyx SSDs, Deneva SSDs and many others. The reason why OCZ has been considered to be one of the premier SSD manufacturers has been their close relationship with SandForce and the experience that their engineers have had working with them. Currently, OCZ only has one product in their line of SSDs that utilizes an Indilinx controller which is their line of enterprise-grade PCI Express based Z-Drives. Given the overwhelming success of the Z-Drive line in the enterprise, where OCZ rode the sales pitch of "affordable Fusion-io" (or more importantly, "available Fusion-io like storage"), it is clear why OCZ wanted to grab one of key elements for its success.
However, the move to Indilinx could be damaging to OCZ since they have been so heavily focused on SandForce controllers. It is unlikely that SandForce will give OCZ preferential treatment over other vendors or give them anything beyond the minimal amount of information since OCZ just acquired what used to be SandForce?s competition. Usually, these kinds of acquisitions solidify a company?s standing in the market but they also sabotage relationships with companies that previously partnered with them.
OCZ states in their press release that, "The Indilinx acquisition notwithstanding, OCZ plans to continue utilizing controllers from other manufacturers including long-term partner SandForce, who currently supplies SSD processors for a wide range of the Company’s SSD products including the Vertex 2, Agility 2, RevoDrive, customizable Deneva enterprise drives, and the upcoming Vertex 3 family of SSDs." While this statement definitely doesn?t seem hostile, OCZ?s actions speak louder than their words. Buying up Indilinx effectively means that SandForce will put less focus on OCZ and give other vendors a better chance.
OCZ buying Indilinx directly follows Intel suddenly switching to a 3rd party controller for their SSDs, not to mention the buyout rumors of SandForce from Seagate. Needless to say, if Indilinx comes out with a better controller than SandForce?s, then it is highly likely that OCZ has a chance to succeed. Currently, Indilinx?s Barefoot controller is capable of a maximum 240/200 read/write on SATA 2. This is in stark contrast to SandForce?s SF-2500 which does up to 500 sustained read/write and has the capability to have double the capacity as well as SATA 3.0.
Currently, we don?t believe that OCZ?s acquisition was necessarily a great one but we currently have no information on whether or not Indilinx has something competitive in the works. In that case, OCZ didn?t entirely waste their money on a knee-jerk reaction over the now failed Seagate-SandForce deal.