Storage savvy
McData's high-end switches help solve the online storage dilemma.
By Gael Core
From the March 2000 issue
In the make-or-break world of technology startups, experience is often what separates market leaders from followers. On all fronts, it appears that McData's 18 years of experience is serving it well in the highly competitive storage market.
McData's storage savvy has earned the privately held company a strong following. It has designed and built reliable, high-speed data-storage products for mainframe systems in some of the largest corporations in the United States. It has applied that same technology and ingenuity to the world of electronic commerce, where businesses are desperately in need of fast, high-performance storage systems. Simply put, McData's Directors, which can be thought of as high-speed switches, can connect 32 ports and direct data to storage systems on a business's enterprise network. This technology ensures that data is stored in the appropriate repositories, thus avoiding downtime and lost revenues.
The company got its start back in 1982, when several people at Storage Technologies decided it was time to leave. Storage Technologies had been underperforming and was facing financial difficulties. Jack McDonnell, now president and CEO of McData, along with a few other current McData executives decided to spin off a company focused on high-speed switches, or Directors. The group knew the terrain, as they had been supplying IBM (NYSE: IBM) data-center customers with Enterprise Systems Connection (ESCON) switches. McData became the first non-IBM company to add support for IBM's ESCON technology to it cluster controllers. McData was acquired by EMC (NYSE: EMC) in December 1995; in October 1997 it was spun off from EMC and hasn't received any venture funding since.
The company's name was the idea of Mr. McDonnell's secretary. Mr. McDonnell had asked his employees at Storage Technologies for ideas on what to call the company being spun off from Storage Technologies. Several different names were considered, but when his secretary suggested playing off of the president's last name, it stuck. "I didn't have a name in mind, so I said we've got to have a name so we'll use McData until we can think of something real jazzy," Mr. McDonnell says.
McData's mission was simple: become the dominant supplier in the high-end storage market. The McData team knew there was plenty of mainframe storage business yet to come, but it didn't foresee the rise of the Internet and the subsequent surge in demand for online storage systems to handle the new data-storage requirements. "Internet companies have a tremendous need for storage and it needs to be always available to the customer," says Mr. McDonnell. "The motto we heard from customers was 'online or out of business.'" That pretty much sums up the high-stakes game for e-commerce.
What really helped McData establish its market initially was its ability to supply quality products to the IBM market. But it wasn't until 1993 that McData became the main supplier of high-speed switches for ESCON products, which were the forerunners of the current mainstream Fibre Channel technology. ESCON is an input/output processor channel architecture for IBM mainframes developed in 1992 that is designed to support several different types of devices, including terminal controllers, printers, tape drives, and direct access storage devices. ESCON has very fast data rates of 200 Mbps. McData's Fibre Channel network equipment is the backbone that permits servers and storage devices to move data at extremely fast speeds.
McData has its fair share of competitors in producing Fibre Channel products. Among the opposition are Ancor (Nasdaq: ANCR), Brocade Communications (Nasdaq: BRCD), and Vixel (Nasdaq: VIXL), all of which have strong product lines, but lack highly reliable storage features. "McData's current Fibre Channel Director product provides the highest availability of performance compared to competitors," says James Opfer, senior analyst with the research consultancy Dataquest. "McData has laboratory tested their products to deliver five 9s of reliability [99.999 percent]," Mr. Opfer adds.
And the reliability features built into McData products are also at the top of its customers' lists. Its products have redundant components, so that if one fails the system keeps on running. And that's what wins the product such high accolades from customers. "It has a lot to do with how the products manage failure and the granularity of each component's feature set, which insures they don't fail," Mr. Opfer says.
The bottom line is the prevention of lost business. And for customers like Dale Pickford at eData.com, an online database service, downtime means customers may never come back to the online storefront. "If you're down for even an hour -- even if it's one hour in a year -- you could lose hundreds of customers without even knowing it," he says.
Gael Core is a freelance writer based in San Francisco. Write to gaelcore@aol.com.
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