Denis, Douglas N., was perhaps going to add FALC to the SNAX....
FalconStor Flaps Wings for OEMs
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FalconStor Software Inc. (Nasdaq: FALC - message board), one of the early leaders in the so-called storage virtualization market, is getting ready to announce some major new OEM partners, says ReiJane Huai, chairman and CEO.
FalconStor has already licensed its IPStor software to NEC Corp. (Nasdaq: NIPNY - message board) in Japan, Dot Hill Systems Corp. (NYSE: HIL - message board), and MTI Technology Corp. (Nasdaq: MTIC - message board). But Huai says he's got at least one top-tier original equipment manufacturer (OEM) already signed and sealed. Now he's just waiting for it to be delivered.
"My single top priority for the next three months is to bring on the OEM partners," Huai says. "We have a lot of OEM partners at various stages in discussion — some deals have already been wrapped up." Unfortunately, he says he can't name names just yet.
The company, based in Melville, N.Y., yesterday announced its fourth-quarter and year-end results (see FalconStor Reports on 2001). It posted a net loss for the quarter of $1.25 million and said revenues increased $3.0 million, up 20 percent from the prior quarter. Huai says FalconStor is on track to break even by or before the September 2002 quarter.
FalconStor has been busy certifying its IPStor virtualization software with other players in the industry. The latest announcements on this front are certifications with Brocade Communications Systems Inc. (Nasdaq: BRCD - message board), LSI Logic Corp. (NYSE: LSI - message board), and QLogic Corp. (Nasdaq: QLGC - message board) (see Brocade Smiles on FalconStor). Its software has also been certified with Microsoft Corp. (Nasdaq: MSFT - message board), and, Huai says, FalconStor is working to get certified on Inrange Technologies Corp.'s (Nasdaq: INRG - message board) high-end Fibre Channel directors. Those vendors represents virtually all of the Fibre Channel market, he says.
Such certifications are important, Huai says, to reassure value-added resellers (VARs) and end customers that two vendors' products work together. "The bottom line is that we want to assure the resellers and the end users the solution is backed by our joint efforts," he says. It's particularly important because FalconStor's virtualization software aims to let IT administrators manage storage networks composed of multiple vendors' products as a single resource.
But these are more or less window dressing compared with the real prize: Licensing software to OEMs.
FalconStor is basically slugging it out for OEM wins with DataCore Software Corp., another virtualization software startup — and so far, this is a street brawl that DataCore has been winning. DataCore has lined up Hewlett-Packard Co. (NYSE: HWP - message board), Fujitsu Ltd. (KLS: FUJI.KL), Fujitsu Software Technology Corp. (Softek), and IBM Corp. (NYSE: IBM - message board) as resellers (see IBM Signs Sneaky DataCore Deal). In addition, DataCore has received an investment from Hitachi Ltd. (NYSE: HIT - message board; Paris: PHA), fueling speculation that Hitachi might become one of its reseller partners (see Hitachi to Resell DataCore?). Other companies offering virtualization software include Veritas Software Corp. (Nasdaq: VRTS - message board) and StoreAge Networking Technologies Ltd.
FalconStor won't name which players it's in discussions with. "This is not just our deal," Huai says. "It's our deal along with a partner, and we have to wait until they're ready."
But we have a guess as to which vendor he might be alluding to: Dell Computer Corp. (Nasdaq: DELL - message board). Dell is the only major storage vendor that doesn't already have some kind of virtualization strategy in place. HP is a reseller of DataCore and last year bought StorageApps, a virtualization software vendor (see HP Acquires StorageApps). IBM (and possibly Hitachi) are DataCore partners as well; and Sun Microsystems Inc. (Nasdaq: SUNW - message board) is rumored to be working with Vicom Systems Inc. or buying startup InterSAN Inc. (see Sun's Down on Storage Over IP and Sun Into InterSAN?). Compaq Computer Corp. (NYSE: CPQ - message board), meanwhile, has developed its own software internally to do virtualization, SANworks Virtual Replicator.
EMC Corp. (NYSE: EMC - message board) could also be an OEM candidate for FalconStor's virtualization software. However, EMC already has an initiative underway, called WideSky, to manage multivendor storage networks (see EMC 'Wishes' for IBM).
Bill North, research director for storage software at IDC, says that nailing down OEM partners is crucial for small players like FalconStor with a new technology.
"Storage virtualization tools, to be successful, have to be adopted by companies with large installations, and in order to reach those large installations, you have to enter those under the auspices of a trusted partner," he says.
FalconStor has gotten to the virtualization party early, he says. However, North adds, "the primary competitor in that space that has gotten traction with OEMs is DataCore. The [FalconStor] IPStor product has good potential, but it isn't always the best mousetrap that wins."
FalconStor's stock closed at $9.11, down 8 percent from the start of the session, amid a mixed market for technology stocks.
— Todd Spangler, Senior Editor, Byte and Switch
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