Clone Memory Maker Dataram Buys Rival MMB

Published: April 13, 2009

by Timothy Prickett Morgan

While the IT press focuses on all the big merger and acquisition deals that are going on as the economy moves along at its sluggish pace, there are plenty of smaller deals going on as companies realize they are too small to go it alone and they meet up with other companies that want to acquire them for one reason or another. So it is with clone memory maker Dataram's acquisition last week of rival Micro Memory Bank, both of which are located in my neck of the woods.

Dataram is based in the suburbs outside of Princeton, New Jersey, and was founded in 1967, before there was a thing called a System/3, much less a System/38, System/36, or AS/400. The company made core memory for various computers, and went public on the American Stock Exchange in 1968. In 1974, the company got a big break when it made memory for the 16-bit PDP-11 minicomputer from Digital Equipment. Believe it or not, the company created a solid state disk way back in 1977--the AS/400's progeny still doesn't have modern flash-based solid state disks when just about every other computer now has them.

Anyway, as Unix machines took off, Dataram made a nice business for itself providing clone memory, and expanded out into PC-based servers, too. In 1999, the company switched to the NASDAQ stock exchange, and has the symbol DRAM, which is pretty cool. By virtue of the consolidation of the System i and System p product lines, Dataram supports the i platform, but the company has not made memory modules for high-end i or p boxes and does not sell cards for the biggest Power Systems machines, either. IBM is very protective of this business, as you might imagine. (You can see what memory features Dataram has for legacy IBM platforms here.) The company sells memory for Power 520 and 550 machines in the current Power Systems lineup (the converged ones) as well as the earlier versions announced last April.

As a public company, Dataram can't keep that low of a profile, which is the tendency of all clone equipment makers. But MMB has been able to keep a relatively low profile even though it had a sizeable memory business right across the Delaware River from Dataram. I told you all about MMB nearly three years ago when it came to my attention that MMB was actually the manufacturer of System p and System i memory being pushed by other third parties under their own brands. To recap briefly: MMB is located in Montgomeryville, Pennsylvania, just north of Philadelphia. The company was founded in the early 1990s by David Sheerr, who started out peddling memory on the pre-Internet dialup bulletin boards around the world. (You remember those times? It wasn't that long ago.) In 1994, he incorporated, made himself president, and within two years, he went from selling memory to being a full-blown manufacturer of surface-mount memory modules, building the SIMMs and DIMMs that are used in laptops, desktops, and servers. In 2001, the company moved into a new 18,000 square foot factory facility with three manufacturing lines. By 2006, MMB had four production lines, 35 employees--including engineers who design the clone memory parts, manufacturing workers, and sales people--and made approximately $25 million a year in sales. About $3 million or so of that figure, according to the company, was for memory modules on various generations of IBM i or p servers.

As it turns out, Dataram bought a bunch of the assets of MMB on March 31. Specifically, Dataram paid $52,346 in cash and assumed responsibilities for accounts payables and debts at MMB totaling $942,107, basically buying MMB for just under $1 million in cash. Dataram is taking ownership of the accounts receivables, equipment, and leasehold that MMB had on its factory. Under the terms of the deal, Sheerr will become general manager of a new memory manufacturing unit, which will be located at MMB's former Montgomeryville factory, where that new unit will continue to design and manufacture memory modules for IBM, Hewlett-Packard, and Sun Microsystems servers, workstations, and PCs. That unit will also resell memory modules made by the server makers themselves as well as doing an active trade in memory modules created by other players, such as Micron Technology, Hynix Semiconductor, Elpida, Samsung, and others.

The asset purchase agreement was kept confidential by Sheerr's request, so more details are not available. Dataram did not say what effect the acquisition would have on its financials in terms of revenues and profits or whether it would eventually consolidate manufacturing into its own Ivyland, Pennsylvania, factory.

Dataram bought a solid state disk maker called Cenatek for an undisclosed sum last October, and it would be funny if the company was able to support SSDs on IBM's Power Systems platforms ahead of Big Blue itself. Rather than create a flash-based SSD product, Cenatek created a software program called RAMDisk that uses main memory to create a virtual disk. That's kinda like the inverse of the single-level storage architecture of the AS/400, but the result is the same: to speed up access to frequently used data to put it into main memory instead of leaving it on disk drives.

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