Fusion-IO's (NYS: FIO) shares were trading higher Tuesday after the company announced a major new deal with Cisco (NAS: CSCO) . This news should come as no surprise. Fusion-io provides high-quality solutions in a rapidly growing space, and there is every reason to believe it has a bright future ahead.

Data-supply problem
Fusion-IO provides data-center solutions that also accelerate processing. Effectively, the company enables its customers to do more with what they have.

The company seeks to solve what it defines as the "data supply problem." No, that doesn't mean the world is running out of data. Quite the opposite, in fact. Companies are swimming in it, and increasingly their success hinges on their ability to wring value from tons of information under their control. This puts a strain on the processing capabilities of data centers, most of which were designed to grow capacity rather than performance.


In rides Fusion-IO with a combined hardware-software offering that accelerates processing, sometimes by as much as 10 times. Fusion-IO is shaking up data-center architecture, and its potential to be a game-changer is significant. Consider that its chief scientist is Steve Wozniak, one of the original founders of a little company called Apple (NAS: AAPL) . Steve knows something about market disruption, and he's giving it another go with Fusion-IO.

The Cisco deal

Fusion-IO has a number of solid blue-chip names among its customer base already -- it's the largest data-center provider to Facebook (NAS: FB) -- but yesterday's Cisco deal is still, well, a big deal. Fusion-IO memory product will now be part of the original equipment in Cisco's Unified Computing System Server, and the pitch is that this will improve productivity at a lower cost to end users.

Facebook uses Fusion-IO storage technology in its data centers because it's so much faster than the alternatives. And while Facebook is currently Fusion-IO's biggest customer, some analysts believe that Apple could ultimately occupy that top spot. The company got its foot in the Apple door by beating out rival Oracle (NAS: ORCL) with a solution that offered four times better performance than Oracle's at half the cost. Not too shabby.

Smart grid

I first came across Fusion-IO as I was researching a series of articles on the smart grid and the future of our electrical infrastructure. Fusion-IO partners with Verdasys -- an enterprise information protection provider -- to provide a data-security platform that can be used in smart-grid applications. Testing found performance improvements of more than 700% in comparison with the alternative technology. I expect long-term growth in smart-grid investments, and I further expect that Fusion-IO will be a winner in that space.

The Foolish bottom line

Analyst estimates project that Fusion-IO's revenue will climb by 82% in the next two years, which would be the fastest rate in the data-storage industry. That would be great, because its P/E right now is a lofty 70 times forward estimates. Still, I think there is plenty of upside for investors, and now may be the right time to get in. Dive in, do the research, and see whether you agree.

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At the time this article was published Fool contributor Sara E. Wright owns no shares in the stocks mentioned above. The Motley Fool owns shares of Cisco Systems, Fusion-io, Oracle, Apple, and Facebook. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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