OCZ Technology kicked off the year’s M&A Monday by dropping $15 million on privately held Sanrad. The acquisition is part of OCZ’s push into enterprise flash, specifically PCIe cards.

Sanrad has been around since 2000. It started off selling iSCSI SAN switches, and then adapted those switches for storage and server virtualization. But OCZ is most interested in the software that runs on those switches. Sanrad last September launched VXL software that caches data on flash solid-state storage.

VXL runs as a virtual appliance and distributes data and flash resources to virtual machines. The software enables caching more efficiently and lets customers distribute flash across more VMs without a performance hit. VXL software does not require an agent on each VM and supports VMware vSphere, Microsoft Hyper-V and Citrix Xen hypervisors.

Sanrad’s StoragePro software lets administrators manage storage across servers or storage devices as a single pool. Sanrad sold StoragePro with its V Series virtualization switches.

During OCZ’s earnings call Monday evening, CEO Ryan Peterson said the Sanrad software will be packaged with OCZ’s Z-Drive PCIe SSDs. The move can be considered competitive to Fusion-io’s acquisition of caching software startup IO Turbine last year.

Peterson said the Sanrad acquisition is part of OCZ’s strategy to see PCIe “as more than simply a component and truly as a storage system, which includes things like having VMware, virtualization capability, and support for vMotion, where there is mobility among the virtual machines of the cache …”

Ryan didn’t mention any plans for Sanrad’s switches. He said Sanrad’s revenue was in the “low single-digit millions” over the past few years, indicating low sales despite OEM deals with Brocade and Nexsan.

OCZ also revealed a new PCIe controller platform developed with chip maker Marvell. The new Kilimanjaro platform will be used in the next version of the Z-Drive, R5. That card will have a PCIe 3 interface. It can deliver about 2.4 million 4K file size IOPS per card and approximately 7 GBps of bandwidth, according to OCZ and Marvell. OCZ is demonstrating the R5 at CES and Storage Visions with an IBM server this week in Las Vegas.

It is also demonstrating new 6 Gbps SATA-based SSD controllers based on its 2011 acquisition of Indilinx.

OCZ’s push to the enterprise is beginning to pay off. Peterson said OCZ’s enterprise-class SSD revenue increased approximately 50% year over year last quarter and now makes up approximately 21% of its SSD sales.

LSI acquired flash controller chip vendor SandForce for $322 million Wednesday, seven months after it sold off its Engenio storage systems division to NetApp for $480 million. LSI already had an equity stake in SandForce and is one of its customers. SandForce also sells chips to OCZ, Smart Modular, Viking Technology and others.

LSI uses SandForce’s solid-state drive (SSD) chip in its server-based WarpDrive PCIe cards. When the SandForce deal closes – probably in January – LSI will have more control over that technology at a time when server-based PCIe flash will be gaining a lot of attention.

Fusion-io turned its early dominance of PCIe flash for enterprises into a successful IPO, and competitors are lining up to challenge Fusion-io. EMC is among them with its Project Lightning product that is in beta and expected to ship by the end of 2011. Industry sources say EMC will use PCIe cards from Micron and LSI as part of Project Lightning. LSI executives won’t name their OEM customers, but LSI CEO Abhi Talwalkar said Wednesday that he expects a major storage vendor to start selling WarpDrive adapters at the end of this year.

Gary Smerdon, vice president of LSI’s accelerated solutions division, said owning the flash controller chip technology will result in tighter integration of LSI’s flash and management products. The acquisition also guarantees that LSI can keep the flash IP that is already in its products.

“We believe the market for PCIe flash adapters is a rapidly growing market,” Smerdon said. “Now we have a division to specifically focus on the PCIe opportunity. We’re using SandForce’s FSP (flash storage processor), but we didn’t want to talk about a lot of the benefits before because that begs the questions, ‘Where are you getting this from?,’ and ‘What happens if something happens to [SandForce]?’”

LSI executives say they intend to keep SandForce’s customers, too. At least one seems happy to stay onboard for now. After the deal was announced, OCZ CEO Ryan Petersen released a statement saying “SandForce has been a great partner, and we expect the added resources of LSI will only benefit SandForce’s customers. Moreover, because OCZ and SandForce previously contemplated this scenario, we expect that this combination will have no material impact to our existing product lines or business.”

OCZ is SandForce’s largest customer and is responsible for most of SandForce’s revenue, which is expected to be around $60 million this year.

SandForce is the second SSD device startup acquired this year. SanDisk acquired Pliant Technology for $327 million in May.