The more conversations I have about FCoE, the blurrier the distinctions get between its value prop and InfiniBand’s. The declaration today that InfiniBand switch maker Voltaire plans to get in to the Converged Enhanced Ethernet (CEE) game with a new line of “FCoE-ready” Ethernet switches just reinforces that idea.
Voltaire VP of marketing Asaf Somekh said that the similarities are not coincidental. CEE, sometimes called Data Center Ethernet (DCE), is being worked on by “all the same people who defined the InfiniBand standard 10 years ago,” he said. “Some features have been borrowed and sometimes stolen from InfiniBand, which has been lossless since day one.” Both InfiniBand and FCoE are supposed to consolidate the ‘first hop’ networking infrastructure, carrying both Ethernet and FC packets over a converged pipe.
Somekh said Voltaire remains committed to InfiniBand, but “if Ethernet is going to add features that require InfiniBand expertise, why not leverage that opportunity?” The concept, software and chassis for the new 10 GbE switches will be based on the current InfiniBand models. The company has had parallel engineering teams working on InfiniBand and Ethernet for more than 18 months, according to Somekh.
Voltaire will focus on layer-2 data center switching rather than top-of-rack or edge switches with its switches when it ships them later this year. It plans to team up with server vendors to compete with Cisco’s Unified Computing System (UCS). “A complete solution is a valid thing to do, but Voltaire switches are scalable to thousands of servers and compatible with any server OEM,” Somekh said
The product itself will run Ethernet and will be “FCoE ready,” but “the gateway functionality of FCoE, transmitting Fibre Channel traffic, happens at the top of the rack,” Somekh said. “FCoE is a nice architecture, and people are definitely interested, but it will be some time before it’s [built out].”
Of all the storage companies that have reported their earnings for last quarter, only one has increased revenue from the previous quarter. And that was the smallest of the public storage systems vendors – Compellent.
Compellent’s revenue of $28.1 million in the first quarter of 2009 ticked up from $26.7 million in the last quarter of 2008. That earned Compellent $1 million in income. That and a 4% revenue increase are modest under normal circumstances but not bad during a recession. Compellent added 98 customers in the quarter, with 55% of its revenue coming from existing rather than new customers.
“We grew revenue by hitting a lot of singles,” Compellent CEO Phil Soran said. “We did not have large revenue deals to get us to this revenue growth.”
While it’s unlikely that big storage vendors such as EMC and NetApp are worried about a singles-hitter chipping away at their business, Compellent’s success helps showcase what people are spending their storage budgets on these days.
Compellent tends to sell its modular systems to smaller companies who use its software such as thin provisioning and Automated Tiered Storage to manage data better, and then buy more capacity when needed. These customers aren’t cutting back spending as much as large enterprises who have been overbuying storage for years.
“Selling into the enterprise is a little more challenging than in midsize enterprises, but we’ve made some inroads there,” Soran says, pointing to the addition of Travelers Insurance and the FBI as customers. “Large enterprises buy 30 terabytes every month whether they need it or not. The economy has affected them. In midsize companies, they know when they need it and they buy more storage when they need it. Customers still have to store data but find more efficient ways to do it.”
Compellent started rolling out solid state drives last quarter, and Soran says even midrange customers are using them. Hedge fund Munder Capital Management will appear at Compellent’s C-Drive users’ conference next week to discuss its use of SSDs with Complellent’s Storage Center system.
Automated Tiered Storage is a key piece of Compellent’s SSD strategy. The application is designed to move data intelligently among tiers, a capability industry experts and some of Compellent’s large competitors say will be necessary to make SSDs catch on.
“Automated Tiered Storage is the killer app for solid state devices,” Soran said. “People have to find a way to manage inactive data, and solid state heightens the need for it.”
Compellent also facilitates smaller purchases because it has one platform that customers upgrade by adding cards for different functionality and doing software upgrades instead of forklift upgrades. Soran says support for 8 Gbps FC, 10-Gigabit Ethernet and Fibre Channel over Ethernet (FCoE) and better integration with server virtualization is on the roadmap.
But Compellent’s streak of 14 straight quarters of sequential revenue growth is in jeopardy. The company’s guidance of from $27 million and $29 million for this quarter means it would have to get nearer the top than the bottom to increase over last quarter. It was also a little lower than financial analysts expected, although analysts see Compellent continue to stroke singles for the near future.
“In the field, we continue to see Compellent experience solid win rates, increasing deal sizes, and nice recurring revenue streams,” Amit Daryanani of RBC Capital Markets wrote in a note to clients. “Overall, we continue to see Compellent winning deals primarily on feature/function and scale.”
A week that started happily for Brocade will end with pink slips.
Brocade’s OEM deal with IBM for its Foundry switches won’t save the company from laying off a chunk of its workforce. Brocade today confirmed it made its first workforce reduction since the company acquired Foundry for $2.6 billion last year.
Brocade spokesman John Noh confirmed the cuts, but said the RIF was more of a re-alignment than a layoff.
“Brocade has made some personnel changes to better align our talent with our go-forward strategy,” he said. “These decisions are designed to leverage the significant growth opportunities available.”
The cuts fell more heavily on the Fibre Channel side than on the Foundry Ethernet group. Brocade grew from 2,834 employees at the end of October to 3,950 at the end of January following the Foundry acquisition. Noh said the current reduction impacted less than 5% of the company.
We don’t know yet what Emulex’s board will do about the takeover offer from Broadcom, but Emulex management hardly seems resigned to becoming the Fibre Channel piece of a larger vendor’s convergence strategy.
Since Broadcom went public with its move on Emulex last week, Emulex executives have been positioning their company as one with enough Ethernet capability to successfully compete with Broadcom and others on that front.
The new spin started on the Emulex earnings call Monday night. “The cornerstone of our strategy is the converged data center, based on 10-gig Ethernet technology,” CEO Jim McCluney said. “Our converged data center network is one that unifies IP and storage networking over a single wire.”
McCluney said the strategy revolves around its OneConnect Universisal Converged Network Adpaters and OneCommand management platform. Both rely on 10-Gigabit Ethernet for iSCSI, Fibre Channel over Ethernet (FCoE) and enhanced Ethernet.
With ASICs it gained through a joint development partnership with startup ServerEngines, Emulex claims 16 10-Gigabit Etherenet-based cards, five 10-GigE NIC design wins, three 10-GigE iSCSI adapter wins, and four Fibre Channel over Ethernet (FCoE) design wins with OEM partners.
“While we’re not in a position to announce the details of these wins, we believe some of them have come at the expense of our leading competitors, including Broadcom,” McCluney said.
Financial analysts on the call got the point. “On numerous occasions during the earnings call, Emulex alluded to 10GbE, iSCSI, and FCoE-based, Tier 1 OEM design wins, suggesting the company may not require additional Ethernet-based expertise to compete well in the ongoing unified fabric adoption cycle,” analyst Amit Daryanani of RBC Capital Markets wrote in a note to clients.
So when I spoke to Emulex chief marketing officer Steve Daheb this week about the company’s strategy, it was no surprise he declared Emulex an Ethernet company.
“People are saying,’ You’re kidding me, you guys have done the Fibre Channel thing, now you tell me you’re winning 10-gig NIC deals, Ethernet-based deals?’” he said. “And we are.”
Daheb added that Emulex isn’t abandoning Fibre Channel. It will add encryption and security features to its HBAs, and will support the FC roadmap beyond 8-Gbps.
“We continue to invest in Fibre Channel,” Daheb said. “We have 8-gig HBAs today, and we’ll be a player in 16-gig Fibre Channel.”
But Emulex sees there is more to the world than FC. It could even conceivably follow its HBA rival QLogic into InfiniBand.
“It’s something we’re watching carefully,” Daheb said. “We see InfiniBand for inter-switch clustering catching on. But we’re betting on Ethernet here. With the low latency [of enhanced Ethernet], you get a lot of those same benefits as InfiniBand.”
Quantum completed what its CEO called a “challenging” fiscal year at the end of March, and the fourth quarter was similar to the entire year for the backup vendor. Quantum continued to increase year-over-year disk backup and software sales around its deduplication products while its tape sales declined. But its disk backup sales decreased from the previous quarter, leaving Quantum with a long way to go to accomplish its goal of becoming a market leader.
“I think that the emphasis you heard on the [earnings] call is that it’s very much about getting through [fiscal] ’09 while making a lot of changes in the company,” CEO Rick Belluzzo said on the company’s earnings call Wednesday afternoon. “We think our business model was demonstrated last quarter that this can be a very solidly profitable business. There is a lot of cash generation potential. But we really need to focus on building revenue with our new model, with new products focused on tape of course, but as well aggressively on our disk systems and software business.”
Quantum lost $356 million for the year — including a $339 million one-time, non-cash charge for goodwill impairment — and its revenue for the fourth quarter and full year were down substantially from the previous year. It did show a $4 million non-GAAP profit for last quarter, discounting amortization of intangibles, stock-based compensation charges and restructuring costs. But while its $24 million revenue from disk and software last quarter was nearly double the previous year, it’s a far cry from the $79 million recorded by dedupe leader Data Domain.
Belluzzo said over the next year Quantum will have two major software releases and a new hardware platform for its DXi deduplication VTL family. He didn’t get specific, but emphasized the importance of replication and increasing the scale of the systems. He said Quantum also plans a “significant” new release of its StorNext software that moves data between storage tiers.
“[Our] vision includes our ability to deliver a single scalable disk-based architecture with deduplication and replication that can scale for protecting and managing a terabyte of data and remote office to more than 200 terabyte at a data center, and is also compatible with solutions from multiple vendors such as EMC,” Belluzzo said.
EMC has been selling Quantum’s deduplication software in its disk libraries since around the middle of last year. Dell has also said it will OEM Quantum’s dedupe software, although it has yet to announce any products.
“We are working with Dell on our deduplication technology. When are they going to launch a Dell-branded product? I can’t say,” Quantum CFO Jon Gacek said of when pressed about Dell on the earnings call.
You can scratch Dave Donatelli’s name off the list of possible successors to Joe Tucci at EMC.
There are no signs that Tucci’s departure as CEO is imminent, but people in the storage world occasionally play the “who’s next at EMC” guessing game and Donatelli’s name is almost always on the short list. But news came last night that Donatelli has bolted his position as president of the storage division to take as executive vice president Hewlett-Pakcard’s servers, storage and networking division.
Apparently, EMC isn’t letting Donatelli go without a fight. According to a Reuters story that moved late this afternoon, EMC has filed a lawsuit in Massachusetts seeking to enforce a non-compete clause in Donatelli’s contract and Donatelli has filed a suit in California trying to break the non-compete deal. Reuters quotes EMC spokesman Michael Gallant confirming the lawsuits.
Donatelli’s departure was abrupt. Donatelli joined Tucci on conference calls with press and analysts for the much-hyped launch of EMC’s Symmetrix V-Max system two weeks ago. (He almost certainly was deep into negotiations with HP at the time). He also has been one of EMC’s most visible execs. Another EMC veteran, Frank Hauck, has been named the interim head of EMC’s storage division.
As a 22-year veteran of the company who ran a $14.9 billion division, Donatelli will obviously be missed at EMC but the move will probably have a greater impact for HP. EMC will come up with an adequate replacement, either from its deep roster of seasoned vets or by going outside for an experienced executive. Don’t be surprised to see Hauck get the job permanently – he’s already been CIO, EVP of global marketing, and VP of products and offerings in his 18 years at EMC.
Donatelli likely found an offer from HP that he couldn’t refuse. He will report to Ann Livermore, HP’s EVP of the Technology Solutions Group and a top lieutenant to CEO Mark Hurd. Donatelli’s new division brought in $19.4 billion in revenue last year, and HP is expanding it to include ProCurve switching. Donatelli takes over as HP faces increased competition in the server business with Cisco moving in and Sun possibly getting a boost from the Oracle acquisition. It also comes as the storage and networking worlds begin to converge around Fibre Channel over Ethernet (FCoE) and converged server platforms such as Cisco’s Unified Computing System (UCS) and HP’s BladeSystem Matrix.
Donatelli obviously brings some secrets from EMC and perhaps from EMC’s close ally Cisco with him to his new post. The move should make for some interesting competition over the coming months.
IBM today confirmed one of the worst kept secrets in IT – it will begin rebranding Brocade’s Foundry Ethernet switches under an OEM arrangement next month.
The move is seen as IBM retaliation against Cisco, the Ethernet switch market leader that recently launched a move onto IBM’s turf with its Unifed Computing System (UCS) server. IBM will continue to sell Cisco Ethernet and Fibre Channel switches, but adding Foundry gear intensifies the rivalry between Brocade and Cisco. Brocade acquired Foundry late last year for $2.6 billion to add Ethernet to its Fibre Channel product platform.
“This is not a resale relationship,” Brocade CTO Dave Stevens said. “This is a move by IBM to take our products, test our products, label our products, and sell them as IBM products.”
IBM will sell the Brocade NetIron MLX Series as IBM m-series Ethernet routers, and three families of Ethernet switches: the Brocade NetIron CES 2000 (IBM c-series), Brocade FastIron SX (IBM s-series), and Brocade FastIron GS (IBM g-series).
Jim Comfort, IBM VP of enterprise initiatives, said IBM will OEM more Foundry products down the road but not its entire portfolio. IBM will also add Brocade FCoE gear, although Comfort says IBM won’t favor any one vendor.
“Brocade has an FCoE strategy, which it was developing on its own before Foundry,” he said. “We’re working with Cisco, Brocade, Juniper and others to make sure those [FCoE and enhanced Ethernet] standards are in fact standards. As the standard stabilizes, we’ll bring forth whoever’s products are consistent with those standards.”
With its IBM deal sealed, Brocade is talking to Hewlett-Packard, the other major vendor that Cisco irked by getting into the server business. HP has its own line of ProCurve Ethernet switches, but Stevens says there are Foundry products that do not directly compete with ProCurve.
“If you take ProCurve and take our Ethernet portfolio, there are some areas of overlap but there are other areas with no overlap,” Stevens said.
Products that don’t overlap also include the FCoE switch and converged network adapters (CNAs) Brocade launched earlier this month.
Tandberg Data, the Norwegian company that sells tape libraries and removable disk drives, filed for bankruptcy in Norway and has been taken over by one of its creditors. Day-to-day operations continue for Tandberg’s U.S. subsidiary, Tandberg Data Corp., and its other subsidiaries as the parent company restructures. Tandberg went into bankruptcy because it failed to repay a loan to Cyrus Capital, which then acquired Tandberg’s assets and became its biggest shareholder after the bankruptcy.
According to a press release put out by Tandberg,
Tandberg Data has been unsuccessful in repaying a lapsed loan from Cyrus Capital. As a result Cyrus Capital had no other option other than to enforce their pledges of their loan. As Tandberg Data did not have sufficient capital to repay the loan, it had no alternative than to file for bankruptcy for the holding company, Tandberg Data ASA, and Tandberg Storage.
The Board of Directors of Tandberg Data made the decision to file for bankruptcy after consideration of all other alternatives, including a rights issue, which was unsuccessful. This process will allow Tandberg Data to deal with its cost and debt burden, to effectively restructure its operations and to continue its strategic direction of broadening its focus from being a tape company to a company that provides data protection solutions, including tape, disk, software and services.
The press release attributed at least some of the financial woes to “the global financial crisis,” which it said “impacted the company’s ability to successfully deal with its debt burden.”
Tandberg CEO Pat Clarke, who took over in early 2008, said in the press release that the company will live to fight another day. “The difficult steps we are taking now will enable us to build a company that can be successful in providing data protection solutions and support to our valued customers, suppliers, and business partners for a long time to come,” Clarke said
Clarke took over with the goal of restructuring the company, whose storage products have mostly been based on tape (including IP from the 2006 acquisition of Exabyte). Last year Tandberg added more disk products like the ProStor RDX removable disk cartridge to its portfolio, and refreshed its message around archiving and tiered storage workflows rather than differentiating its products based on hardware features.
“Do-it-yourself” infrastructure is a competitive differentiator among providers of storage services, I’ve learned in conversations with providers over the last two weeks. While not every Web 2.0 service is storage-focused, these discussions make me wonder what the results will be for third-party storage vendors looking to supply prepackaged configurations to service-provider data centers.
Following Carbonite’s lawsuit against its former storage supplier, its competitors such as SpiderOak have pounced on the opportunity to tout their own internal infrastructures in an attempt to lure worried Carbonite customers.
SpiderOak CEO Ethan Oberman told me that SpiderOak assembles its own storage systems out of commodity servers and disk drives, purchasing individual components and assembling them under the company’s proprietary storage clustering software. “We don’t rely on a third party pre-assembled storage system” as Carbonite did with Promise, Oberman said.
Shortly after I posted about Oberman’s statements, Carbonite CEO David Friend invited me to see Carbonite’s infrastructure. I took him up on that last Friday, and it turns out Carbonite’s setup isn’t much different from what SpiderOak described.
Carbonite has between 10 PB and 12 PB of storage in two data centers in the Boston area. While the vendor is suing Promise for products it deployed several years ago, Carbonite has already completely changed out the Promise storage in favor of a self-integrated system of Dell PowerEdge MD1000 and MD3000 servers packed with 15 one-terabyte SATA disks, configured for RAID 6. Four of these units are attached to each server node that runs the company’s internally written parallel file system.
SpiderOak’s Oberman said his company assembles the disk drives and RAID controllers internally. Friend said he’s still content to let a third-party vendor assemble the RAID arrays despite the experience with Promise.
“The software is what we worry about,” he said. Promise’s arrays had firmware bugs, he said, something that might not have changed if Carbonite had done more of the hardware assembly. “Even if you buy a disk drive from somewhere, it has firmware in it – we’re not going to get into that kind of stuff,” Friend said.
Carbonite chose Dell to replace Promise based on a discounted price and its willingness to work with Carbonite to design a customized hardware system, according to Friend.
The more I talk to online storage service providers, the more there seems to be a disconnect between what they’re deploying and what storage vendors are marketing in an effort to reach Web 2.0 shops. While new “cloud” storage systems such as EMC’s Atmos and HP’s ExDS are built on industry-standard hardware components, the vendors also supply software to tie those components together.
Friend said he’s learned that a fully prepackged software-hardware system from a third-party vendor won’t fit his business. “Every piece of software we’ve bought along the way has broken,” he said.
But this also may be because Carbonite is an outlier in terms of its workload. “There aren’t a lot of 10 petabyte data centers out there,” Friend said. He estimated some 95% of the processing time in Carbonite’s data center is spent on write, rather than read operations. “There [also] aren’t a lot of data centers out there that are ‘mostly write,’” he added.
Carbonite also designed its parallelized distributed file system to treat data in its data center and on users’ PCs as part of one big geographically distributed pool. Friend claims this is a differentiator, providing speedier restores to users than competitors such as Mozy can do by reassmbling files before restoring data.
For those reasons, Friend said he doesn’t anticipate that online services focused primarily on storing customer data will be fertile ground for existing storage vendors. This hasn’t stopped third-party storage vendors from making regular sales calls to Carbonite’s data center, according to senior director of operations Kai Gray. Gray said he listens to most of the pitches, but he echoed Friend on the issues with prepackaged software, and said the cost comparison equation has yet to change.
“By the time [a storage vendor] puts stuff together and marks it up, it’s too expensive,” he said. Storage product competition in this data center is at the disk-drive level rather than systems. “We’re eagerly awaiting two terabyte disk drive shipments,” Gray said. Right now Carbonite has mostly Western Digital disk drives deployed, but “we are very drive agnostic.”
While Carbonite has yet to go for a third-party “cloud” storage system, Friend also points out it’s a different animal from many other Web 2.0 companies. “Most data centers are a cost center, not the business itself,” he said. “This is our factory – everything has to be customized because it’s a competitive advantage. It’s worth it to spend money designing our own file system, but if you’re, say, Fidelity, you don’t want to do that.”
Digital archiving the next frontier?
The data center I saw was very impressive – it’s in one of the newest facilities in the Boston area, complete with ultrasonic humidifiers and state-of-the-art security. But it’s not too far from Carbonite’s other data center, bringing to mind what ESG founder and blogger Steve Duplessie wrote after Carbonite announced the Promise lawsuit. The analyst cautioned that enterprise users should ask online backup services about things like SLAs and geographic redundancy to distinguish between consumer/prosumer and enterprise services before signing over their backups.
I asked Friend about this. Carbonite sees itself as a consumer/prosumer offering, he said, and does not offer SLAs or redundancy outside the Boston area. “Because we’re offering a backup service, there’s already geographic redundancy between the user’s PC and our data center,” he said. “No one [in our market] seems to want to pay double for a backup of a backup.”
However, “if we get into archiving, where we might have the only copy of a document, geographic redundancy would come into play,” he said. Is Carbonite planning that move? “We’re thinking about it,” he said. “It would be a logical product line extension.”