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Add Dot Hill Systems to the list of smaller storage vendors who are growing revenue significantly while their large rivals stumble.
Dot Hill is unlike the other vendors who are bucking the trend of declining or flat revenues experienced by EMC, NetApp, Hitachi Data Systems, Hewlett-Packard and IBM. The big difference is it has been around since 1984. In tech years, that makes Dot Hill old enough to be the grandfather to the likes of Nutanix, Nimble Storage, Pure Storage and Tintri. And it has been through some rough times, unlike its younger rivals.
Dot Hill also has a different business model. It sells most of its systems anonymously through OEM partners who re-brand its storage. HP’s MSA platform and Lenovo’s S3200 and S2200 are versions of Dot Hill’s AssuredSAN arrays. Quantum also uses Dot Hill storage for its StorNext scale-out systems and DXi disk backup targets. Dot Hill has other OEM and channel partners who build systems tailored for vertical industries, most notable telecom, gas and oil, data analytics, media and entertainment, and high performance computing.
But Dot Hill is growing like a startup. Today the vendor reported $60.06 million in revenue for last quarter, up 25 percent from last year and above expectations. Dot Hill also exceeded Wall Street expectations with non-GAAP income of $3.9 million, which tripled its $1.3 million in income from the same quarter last year. Dot Hill’s forecast for 2015 revenue is from $245 million to $260 million, compared to $217.7 million for 2014.
The growth and optimism comes despite what Dot Hill CEO Dana Kammersgard admitted were headwinds in the storage industry that “are not abating and are likely to exist through 2016.”
So why is Dot Hill bucking that trend? Kammersgard said part of it has to do with its technology. Dot Hill used to mainly supply the hardware for its partners but has added software such as RealStor for autonomic real-time tiering in recent years. Kammersgard said RealStor helped win OEM deals and boost sales for its partners.
He called RealStor’s tiering a disruptive technology for hybrid flash arrays. “The fact that we [tier data] invisibly and in real-time is a significant disruption to the next-generation and traditional storage hierarchy,” Kammersgard said.
Kammersgard also attributed Dot Hill’s channel strategy for its growth. Dot Hill patiently cultivates OEM partners – particularly in vertical markets – that most storage vendors don’t chase because it could take more than a year to get products into the market.
“Traditional storage companies are focused on data centers and the cloud,” Kammersgard said. “They’re not focused on the line of business product portfolio for these [vertical] companies. There is a lack of inclination to pursue OEM business. Large companies like EMC, NetApp and Hitachi are slow to move and inflexible, and not suited to go the OEM route. The new guys like Nimble are basically about sales at any cost, growth at any cost, so they are not suited to taking 18 months to close a deal.”