Next Buyer Up: Pivot3 Buys Colorado-Based SanDisk Spinout, NexGen

A wild ride for Louisville, CO-based NexGen Storage, a computer data storage company, is continuing. NexGen is being acquired by Pivot3, another data storage operator based in Austin, TX.

The companies didn’t release terms of the acquisition, and the deal is expected to close in February. But it comes only a year after NexGen was spun out from Milpitas, CA-based flash-storage giant SanDisk (NASDAQ: SNDK).

SanDisk gained control of NexGen because in July 2014 it paid $1.1 billion for Fusion-io, a Salt Lake City, UT-based maker of hardware and software flash-storage systems. (As a side note, Fusion-io’s chief scientist was Apple co-founder Steve Wozniak). In April 2013, Fusion-io had purchased NexGen for $119 million; the latter company was founded in 2010 with deep roots in Colorado, as Xconomy revealed in a story at the time.

When SanDisk spun NexGen out, it maintained no ownership interest in the company and revealed few other details about the terms of the deal. SanDisk left NexGen co-founder John Spiers in charge as CEO and agreed to supply NexGen with flash-storage technology.

Pivot3 is acquiring NexGen to provide additional services for its enterprise and mid-size customers, the company said in a statement. Pivot3 offers software for computing, memory, and storage on a “commodity priced” hardware server—intended to be an all-in-one tool the industry refers to as a hyper-converged infrastructure—to businesses ranging from casinos to correctional departments and aviation authorities, among others, as Xconomy wrote in a 2013 profile.

A key driver in the ongoing interest in NexGen is its technology, which has replaced some flash data storage architecture that has typically been tied to hardware with software, Spiers said in a video discussing the acquisition. That allows for better quality of service, he says, by helping its customers’ IT departments do things like prioritize and manage their data.

For example, NexGen’s tools are able to prioritize applications run by a hospital’s IT department for healthcare services over the hospital’s internal e-mail server, Pivot3 said in a statement. If there’s a surge in e-mail downloads from employees, NexGen’s software can prevent it from interrupting life-or-death healthcare systems that the hospital needs, the statement says.

The deal makes sense, according to Pivot3 CEO Ron Nash, because both companies focus on providing software-based technology operated on commodity hardware. That allows customers to lower costs and reduce the complexity in operating data centers, he said in the announcement video.

That’s going to become more important as more industries start collecting data (and storing it) from the various tools that are used in every industry, from smart electric meters to mechanical systems that operate a hydroelectric dam, Nash says.

“All of these things in the Internet of Things are going to be sending data back,” Nash said in the video. “Smart organizations are going to be taking that data in real time, storing it, analyzing it, and sending back business decisions to change how they operate.”

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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