Storage Soup

Jul 30 2008   12:26PM GMT

In a down economy, the rich get richer and the poor go broke

Beth Pariseau Beth Pariseau Profile: Beth Pariseau

In an economic downturn, not everybody makes it through in one piece. Though the storage market has fared better than many (apparently the list of things in life you can count on has been expanded to three: death, taxes and data growth), it isn’t without its casualties. Ciprico and Agami are the two latest.

The Minneapolis-Star Tribune reports that storage controller startup Ciprico has filed for Chapter 11 bankruptcy. According to an analyst quoted in the Star-Tribune story, “Ciprico spent too much cash last year building a sales force to sell a radical new disk storage product that consisted only of software rather than a computer device…Ciprico had the funds and burned them up too quickly.”

Ciprico reported a loss of $3 million on $2 million in revenue for the first quarter of this year, then  laid off 30 percent of its staff in March.  Ciprico CEO Steven Merrifield told the Star-Tribune he hopes to sell off the company’s technology

Poor judgment in the spending department may have been a factor, but Storagezilla also attributes the downfall of smaller companies to the general economic climate. “During a downturn the bigger players get bigger while the smaller ones collapse or are picked off via acquisition,” he wrote – in the midst of reporting that NAS vendor Agami has folded.

I since received confirmation from an Agami source that it has indeed gone out of business, although its web site and phone system are still functioning. In today’s economic climate,  it wouldn’t be surprising if more “on the bubble” storage companies bite the dust.

5  Comments on this Post

 
There was an error processing your information. Please try again later.
Thanks. We'll let you know when a new response is added.
Send me notifications when other members comment.

REGISTER or login:

Forgot Password?
By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy
  • Greg
    I love how you report that the company spent 150% of it's revenue, but you still manage to blame "the Economy". I think most economic downturns are media driven, self fulling prophecies. They have been trying to cause one as long as Bush has been in office. But his policies have prevented it, mostly. I have never been able to figure out how raising taxes on anything will lower the price or help "the Economy" In any way. The Bush tax cuts(on "the rich", yeah right) have brought unprecedented income into the Fed. And yet Democrats are PROMISING to Raise taxes. The more they promise this, the worse "the Economy" gets. The more the Democrats obstruct any increase in Energy Production, (That isn't wind driven and HEAVILY subsidized) The higher Gas prises go. They have managed to Double the price in less than eighteen months. Bush lifts the Presidential Ban on Offshore Drilling, And the price of gas has been dropping steadily ever since. Imagine what would happen if the Dems were working WITH the President instead of AGAINST him. It's just common sense people.
    0 pointsBadges:
    report
  • Greg
    "What if they held a Recession and no one came?"
    0 pointsBadges:
    report
  • Beth Pariseau
    Hi Greg, appreciate your comment, but I don't recall holding President Bush responsible for Ciprico's bankruptcy. It is acknowledged that Ciprico spent too much money. However, companies trying to change direction often have to make significant investments to do so, which they anticipate recovering in sales. Whether or not there is a general recession going on is not something I'm interested in debating. What I can tell you is that in the industry I cover every day, purchasing decisions are shifting in favor of cost-cutting, fast-ROI products. This is often explained (by those companies, and the vendors that sell to them) as a reflection of the overall economic climate. Were users more inclined to make more purchases in the current economic climate, perhaps the outcome of Ciprico's attempted turnaround might have been different--or, were they pulling in more revenue, they might have been able to better survive the transition period.  That's all this post was meant to suggest, and if you disagree with that notion, so be it. But Republicans and Democrats never entered into it.
    0 pointsBadges:
    report
  • Greg
    Well, I am not interested in debating either but GDP figs came out today, ^ 1.9%. Also, Consumers would be more apt to buy if the Mass Media was not so pessimistic (And maybe a little more Honest)about the Economy.
    0 pointsBadges:
    report
  • Beth Pariseau
    that's where i figured you had me confused with someone else. i'm not the mass media, i'm a trade press reporter. :)
    0 pointsBadges:
    report

Forgot Password

No problem! Submit your e-mail address below. We'll send you an e-mail containing your password.

Your password has been sent to: