The combination of the decreasing cost of flash memory, along with the growing demand for high-performance storage, has created quite the market cap for a few companies. Nutanix and Nimble Storage are two such companies seeing phenomenal growth. Nutanix, which makes data center appliances that combine compute and storage in one box, announced that last quarter it sold $20 million worth of gear. Nimble storage, which makes storage devices that combine hard disks and flash drives, announced that in the last quarter of 2012 it had $25 million in bookings (via WSJ).

Nutanix is a year-and-a-half old, while Nimble Storage is two-and-a-half years old respectively — and those sales numbers are notable compared to other storage startups numbers. Even the most successful storage companies in the last cycle of startups didn’t post comprable numbers. Here are two examples:

• EqualLogic (acquired by Dell for $1.4 billion) was only approaching $25 million in quarterly revenue into its fourth full-year of sales
• Data Domain (sold to EMC for $2.4 billion) had been selling for three years and was publicly traded when it hit the $25 million milestone

So how are two very young companies reaching sales goals that billion dollar (and publicly traded) companies couldn’t?

It’s all about the Benjamins, baby! By introducing flash in the enterprise storage market, today’s startups have a much more favorable cost-to-performance than the established products before them. Because of this, the big whales are gobbling up startups to either cement market share and/or catch up. To this end, there was IBM’s acquisition of Texas Memory Systems last year, and EMC’s acquisition of XtremeIO.

Outlining the importance of these two acquisitions for the booming Flash market is Wikibon chief analyst Dave Vellante (see video below).

Nimble, Nutanix and a handful of storage startups are well-positioned because of their foresight to bet on flash storage. The IT department is changing, and at a rapid pace — thus its need to purchase in large amounts and quickly has played into flash storage adoption. With Big Data, companies are able to determine what products they need and in or at near real-time and use customer feedback about those products to scale up, and quickly.

The flash storage market is getting more and more ripe for both significant growth as well as mergers and acquisitions. If I were a stock analyst (which I’m not), the “flash storage” stock would be a definite buy. It’s going to be a fun market to watch over the next couple of years. The data center is going through a major shift, and storage is no different. Invest in flash, or fall behind the back.