Segment Information Segment Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

Operating segments, as defined in ASC 280, Segment Reporting, are components of an enterprise for which separate financial information is available and is evaluated regularly by the Chief Operating Decision Maker, or CODM, in deciding how to allocate resources and in assessing performance. ASC 280 also requires disclosures about products and services, geographic areas and significant customers.

Prior to the first quarter of 2014, our CODM managed our business as one reportable operating segment that included the design, manufacture, and marketing of a range of storage systems for the entry and mid-range storage markets. Beginning in the first quarter of 2014, due to the growth and significance of our Vertical Markets, our CODM is managing our business in three reportable operating segments: Server OEM, Vertical Markets and Corporate. Hence, we changed our reporting segments accordingly, and segment information for all periods presented has been reclassified to conform to fiscal 2014 presentation.

Server OEM

The Server OEM segment consists primarily of large Original Equipment Manufacturers who purchase products from us to sell along with their server products. Our products are typically sold in server led sales into their end-user customers' corporate information technology infrastructure. Server OEM customers include Customer A (refer to Note 1, Summary of Significant Accounting Policies - Concentration of Customers and Suppliers).

Vertical Markets

The Vertical Markets segment consists of strategically selected Vertical Markets that have a propensity for high data growth. Some of our target Vertical Markets include Media and Entertainment, Telecommunications Infrastructure, Oil and Gas, Big Data Analytics and Digital Imaging, among others. These customers typically embed their products into their customer solutions which quite often generate revenue for their end-user customers. We sell to these customers through both Vertical Markets OEM partners or embedded solutions integrators, as well as through channel partners. Vertical Markets customers include Customers B and C (refer to Note 1, Summary of Significant Accounting Policies - Concentration of Customers and Suppliers).

Corporate

The Corporate segment consists primarily of costs that support both the Server OEM and Vertical Markets segments.

Net revenues by segment are as follows (in thousands):

	Year ended December 31,
	2012		2013		2014
Net revenue:
Server OEM	$	143,353	$	134,798	$	115,580
Vertical Markets	51,195		71,767		102,085
Total net revenue	$	194,548	$	206,565	$	217,665

Operating income (loss) by segment, and a reconciliation to consolidated income (loss) before income taxes and discontinued operations is as follows (in thousands):

	Year ended December 31,
	2012			2013			2014
Operating income (loss):
Server OEM	$	28,718		$	33,464		$	27,091
Vertical Markets	7,858			21,781			33,587
Corporate	(46,232		)	(49,615		)	(52,375		)
Total operating income (loss)	(9,656		)	5,630			8,303
Total other income (expense), net	3			(39		)	(21		)
Income (loss) before income taxes and discontinued operations	$	(9,653	)	$	5,591		$	8,282

The segments use many of the same assets. For internal reporting purposes, we do not allocate assets by segment and therefore, asset, depreciation and amortization, or capital expenditure by segment information is not provided to our CODM.

Geographic Information

Net revenue is recorded in the geographic area in which the sale is originated. Long-lived assets include property and equipment, net, identifiable intangible assets and other non-current assets. Information concerning principal geographic areas in which we operate is as follows (in thousands):

	Year ended December 31,
	2012		2013		2014
Net revenue:
United States	$	192,801	$	204,764	$	216,306
Europe, Middle East and Africa	14		3		—
Asia	1,733		1,798		1,359
Total net revenue	$	194,548	$	206,565	$	217,665
Long-lived assets:
United States	$	7,682	$	8,147	$	9,159
Europe, Middle East and Africa	68		15		13
Asia	—		—		—
Total long-lived assets	$	7,750	$	8,162	$	9,172