yesterday I was quite surprised by the press release I received from Violin Systems. But then I got a briefing from them and it’s better than it sounds.

The operation

Violin has acquired some XIO business and assets (all the ISE Arrays business unit in practice), leaving Axellio on its own. This operation brings immediate benefits to the two companies involved. On one side Violin gets some really nice, albeit not really successful, technology along with the channel, customers and recurring revenues from existing support contracts. On the other hand, Axellio (the part not acquired from Violin) got the funds it needed to develop its innovative product.

The terms of the deal were not disclosed but it is clear to me that it was a good deal for both of them.

Violin is now planning to build a larger product line-up with two high performance hardware products (mid range and high end arrays) powered by a single software stack. This will help its channel to become more competitive over time and increase market reach. At the same time, the recurring revenues coming from support contracts will help to show investors some good numbers fairly quickly.

Axellio, born as a project inside X-IO, is on its own now and with some funds (even if it is not really clear how much). This leaves the “new” company more room to maneuver and grow with its high performance HCI/edge computing solution.

Closing the circle

As far as I can tell, Violin has bought assets that will help to build a credible product line-up, accelerating the development of new products for a wider range of use cases. Only time will tell if their strategy pays off – the competition is really tough and to integrate products that are so different in their conceptual design will not be an easy task.

At the same time Axellio now has a chance to succeed. Even if the idea behind Axellio is good, I can’t see anybody who would want to invest in X-IO to finance Axellio growth.<(p>