DataCore Has Reason to Celebrate

Once dismissed by the storage industry analyst community, DataCore is enjoying a renaissance in the U.S. market. We explain why.

Four years ago, some industry analysts had written off DataCore Software, a developer of storage virtualization wares based in Ft. Lauderdale, FL, as just another start-up falling prey to inevitable market forces. It was an easy decision. The company was down on its luck, venture- capital providers were looking for an exit strategy, big names such as IBM, Cisco Systems, and EMC were chasing the virtualization space with their own products. The "V" word itself was failing to resonate with companies that were busy trying to digest the hardware purchases from their Fibre Channel "SAN" sellers.

What has happened to the company since 2004 is remarkable. In fact, everything about the DataCore experience has run counter to the way that things tend to play out in Silicon Valley or with storage firms in Colorado or the Northeast U.S. In those high-profile, high-tech zones, where start-ups come and go with considerable frequency, employees are like so many migrant workers. Changing jobs, the saying goes, is less a career choice than a wardrobe decision. In the Valley, workers tend to view their periodic hiring and firing simply as the exchange of golf shirts emblazoned with different company logos.

Maybe it’s the Florida connection that makes DataCore different. Florida has always been an odd place to find technology companies. It is a tourist destination, hardly a capital of finance or tech education. Most people are from somewhere else and the old saw remains pretty accurate: Florida is the land of the newly wed and nearly dead. Let’s not forget the weather that, in some seasons, knocks out power on a daily basis -- like clockwork, at 4PM -- when the storms roll off the Gulf of Mexico or the Southern Atlantic; or, in meaner seasons, knocking over buildings, ripping roofs from businesses and homes, and tearing up virtually everything above ground.

Florida may not sound very tech friendly, but a few companies, such DataCore -- and just down the road, Citrix Systems -- have demonstrated considerable staying power. In fact, much like certain species of ticks in the Everglades, they have shown remarkable resiliency. Efforts to dislodge them cause them to burrow deeper.

When the dotcom downturn finally reached the storage industry in 2001, DataCore took the hit like everyone else. The company downsized. Many of its offices went dark. The analysts took them off their radar. Then, in a surprise move (by Silicon Valley standards, at least), management bought out all but one of its investors, making the company 60 percent employee-owned. CEO and president George Teixeira and chairman and CTO Ziya Aral believed they were creating something special, and they were on a mission to prove it. That view was shared by a core group of staffers who worked overtime at part-time salaries just to keep the work alive.

Finding Traction

Against all odds, DataCore found traction first in European markets. Teixeira attributes this to the fact that Europe has a bounty of independent integrators that are not "hardware bound" as most integrators have been in the U.S. In that market, the value of platform-agnostic software was more appreciated. While the U.S. was dominated by "relationship selling" by brand-name hardware vendors who sought to preserve their own margins by joining software at the hip to proprietary hardware that would offer the customer equal parts one-stop-shop value and lock-in technology, the Europeans seemed to prefer to add value through third party wares -- where DataCore played.

Teixeira sees things changing in his home market today. Driven in part, he says, by the popularity of VMware, software is increasingly separated from hardware sales. "We are seeing the evolution of new partner channels that didn’t exist two years ago. We dropped our relationships with ‘box movers’ and now work mainly with channel partners who lead with services and software consulting."

To say that the strategy has paid off would be an understatement. According to its senior management, DataCore is now adding between 300 and 500 customers for its virtualization products each quarter. Recent deals have included IKEA, OSI International Foods GmbH (a major supplier to McDonald’s, Kraft, and Hard Rock Cafes), and many county and city governments, including Orange County in California.

New attention to iSCSI and VMware in U.S. companies is providing opportunities for the company to sell its SANmelody product, which provides a simple method for creating virtual iSCSI storage servers out of "just about any computer with a disk drive" elegantly and affordably.

Teixeira says that in most cases, SANmelody sales validate the DataCore technology and introduce customers to the DataCore vision and support organization, typically leading to further sales including DataCore’s flagship SANsymphony solution: a robust, enterprise-class, Fibre Channel and iSCSI storage virtualization platform. He is quick to point out that three months after his company enters an account, he is seeing orders for more licenses, "About 50 percent of our deals today are in Fibre Channel storage virtualization, but the trend we are seeing is toward more iSCSI."

CTO Aral, while leaving much of the market analysis to Teixeira, is keenly aware of the potential and the limitations of both the technologies his company offers and those with which it interacts. VMware, he acknowledges, is the darling of the industry right now, but he views server virtualization technology as very much a work in progress.

"Server virtualization is supposed to constrain server sprawl, but we are seeing more server sprawl after virtualization is applied to servers in the shops that we visit. It is supposed to enable companies to reduce the size of their IT staff, but since there is no real management framework, the resulting infrastructure requires more people to manage it, not less."

Aral says that the server virtualization market is still maturing. He says that VMware has exposed the potential, but Citrix Systems and Microsoft are coming on strong to improve the story. "Microsoft wasted time for a few years, but it has the fastest server virtualization solution today and will not be far behind VMware for long."

"The anchor chain on the server virtualization story is storage, or rather point-to-point connections that are embedded in the server-storage connection today," Aral observes. "Storage provisioning is not virtual. It is hardware-based. To realize the value of server virtualization, we need to simplify storage and untether it from its hardware anchors."

Notes the CTO, "Fibre Channel has imposed limits on what you can do with VMware from a storage provisioning and performance standpoint." A large part of the problem, he notes, rests on the proprietary obstacles built into arrays from different vendors that limit their ability to be aggregated into virtual volumes at will.

Heterogeneous Storage Virtualization

Aral answered our questions about the viability of heterogeneous storage virtualization and the resulting instability of volumes created from multiple vendor equipment with this comment: "We have been working on incompatibilities between I/O pathing issues in arrays and they have been dealt with one-by-one over the past five years. We can stripe across LUNs exposed by different vendors, but it isn’t a perfect result. At a minimum, the slowest LUN sets the performance of the resulting volume."

Provisioning storage to VMware-virtualized servers from a DataCore-virtualized LUN presentation is a snap, he says. Managing the virtualized storage repository, as his customers are learning, is much easier than trying to manage proprietary hardware platforms offered by the brand name vendors.

At the end of the day, DataCore Software, once dismissed by the storage industry analyst community, is enjoying a renaissance in the U.S. market, capitalizing on a mixture of trends ranging from the current fascination with server virtualization and storage thin provisioning (which they pioneered), to a shift in buyer habits that favor software over proprietary hardware and iSCSI over Fibre Channel.

We have and will continue to cover their progress here. Against a backdrop of dismal news on the economic front, and dismal performance in the tech sector generally, it’s a pleasure to hear about a company that continues to thrive by ignoring the marketecture and listens to its customers. Maybe that is what basing your company away from the tech corridors and down in Florida buys you: a little common sense.

Your comments are welcome: jtoigo@toigopartners.com.