FalconStor Soars Once Again

Transcription

1 Vendor Profile FalconStor Soars Once Again Robert Amatruda IDC OPINION FalconStor brings a well-established history of innovative data protection, recovery, optimized backup, deduplication, virtualization, and data migration solutions. In recent years, the company has been challenged with its move away from being a primary technology provider to large, global OEMs that rebranded and repackaged their products. Initially, FalconStor was a primary technology provider of virtual tape library (VTL) software that many first-tier OEM customers used to build tape replacement products. In recent years, FalconStor's OEM customers acquired their own VTL and disk-based technologies to address their customer needs. As a result, FalconStor no longer had the market access that these companies provided. However, FalconStor continues to innovate and offers an extensible portfolio of software and hardware solutions to address the protection, recovery, backup optimization, deduplication, and virtualization as well as migration needs of customers. FalconStor has remade itself into a smaller, more profitable company with an entirely new management team and remains a global entity with over 2,500 customers in 50 countries. IDC research indicates that the use of disk in the data protection process has accelerated in recent years because it relieves many of the backup bottlenecks associated with using traditional storage methodologies such as tape. Customers are demanding faster backup, restore, and recovery to meet their aggressive backup windows and recovery times. Further: FalconStor provides hardware and software solutions that facilitate improved backup, recovery, and data migration. FalconStor participates in a rapidly growing market for diskbased data protection and recovery hardware and software solutions. IDC's disk-based data protection and recovery forecast captures the enormous market potential that exists for vendors such as FalconStor. IDC anticipates the disk-based data protection and recovery market will grow robustly through the forecast period, with a compound annual growth rate (CAGR) of 6.3% and revenue totaling $17.0 billion in This is inclusive of hardware and software solutions. We believe FalconStor is well poised to capitalize on this growing market potential. FalconStor brings 15 years of experience and over 20 patents in these respective areas. IDC expects FalconStor will emerge as a key innovator in the storage market in the coming years. IN THIS VENDOR PROFILE This IDC Vendor Profile highlights FalconStor's new products, management team, and refined strategy to reemerge as a key innovator in the data storage market. April 2014, IDC #248178

2 SITUATION OVERVIEW IDC research indicates that over the past decade, the customer drivers for increased investment in disk-based data protection solutions result from the need to improve backup window time, provide faster restore and recovery times, enable seamless integration with existing backup applications, improve performance and utilization of backup resources, and lower operational and capital costs. In addition, the accelerated adoption of virtual servers and desktops is causing IT organizations to review and modernize their data protection architectures and processes with disk-based solutions. In addition to improving the backup process, customers have been using various disk-based technologies including snapshots, mirrors, and local and remote replication to create copies of their data for protection and rapid recovery and to improve backup. These technologies have been in use for many years and are widely deployed. FalconStor has provided an extensive set of disk-based enabling technologies allowing customers to more effectively manage, optimize, and migrate their data. FalconStor is providing a unified infrastructure and data services platform that enables customers to virtualize their disk and tape storage, permitting them to optimize their backups and utilize flexible deduplication options, and allowing for rapid recovery functions with replication and snapshots. FalconStor also uses its storage virtualization platform to enable other key protection and recovery functions such as business continuity and data migration. FalconStor's unified platform extends across both physical and virtual server infrastructure as well as enables customers to convert from physical to virtual resources quickly without overhauling their entire storage infrastructure. FalconStor's latest Optimized Backup and Deduplication Solution 8.0 brings together NAS and VTL protocols in a single instance, simplifying the deployment model and providing more flexibility. In addition, the Optimized Backup and Deduplication Solution 8.0 allows customers to use flexible deduplication options such as inline, post-process, concurrent, or no deduplication without having to stop and restart backup jobs. FalconStor's Optimized Backup and Deduplication Solution 8.0 has a wizard-driven setup and centralized management and control to quickly and easily ascertain capacity growth. Furthermore, this 8.0 release utilizes Symantec's enhanced OpenStorage (OST) and replication functionality as well as provides inline NAS and FC dedupe targets with direct output to physical tape for archiving data, eliminating a significant number of backup server workloads. Taken together, these new enhancements provide more efficient backup and replication, alleviating the need for more infrastructure spending. The update to the Continuous Data Protector (CDP) 7.6 integrates the snapshot capability with the Optimized Backup and Deduplication Solution 8.0 to deliver zero-impact backup and recovery protection. An enhancement to FalconStor's Network Storage Server (NSS) 7.6 virtualization platform improves stretch clusters support of up to 100km. Both NSS 7.6 and CDP 7.6 now offer cascaded replication and a near-line mirror function that can be used for added recovery capabilities or near-real-time data mining without impacting or disrupting production data stores. Company Overview FalconStor (Nasdaq: FALC), headquartered in Melville, New York, is focused on scalable and open network storage solutions designed to optimize the storage, protection, efficiency, and availability of enterprise data and applications. Founded in February 2000, FalconStor was an early innovator in storage virtualization, data protection, virtual tape library, snapshot, and data migration technologies. Currently, FalconStor has offices in three major regions Americas (New York), EMEA (Reading, Munich, and Paris), APAC (Taipei, Taichung, Beijing, Shanghai, Seoul, Tokyo, Kuala Lumpur, and 2014 IDC #

3 Singapore) and has more than 2,500 customers located in 50 countries. The company has had success in vertical industries such as healthcare, financial services, higher education, government, and manufacturing. FalconStor's product focus has been on enterprise and midmarket organizations. FalconStor offers a wide range of data protection solutions through a variety of products such as Continuous Data Protector, Network Storage Server, RecoverTrac, and a new Optimized Backup and Deduplication solution that integrates the VTL and NAS interfaces. These solutions can be deployed as a software only as well as appliance based and gateway form factors as part of FalconStor's IPStor data services platform. FalconStor brings a 15-year history of innovation and has its solutions deployed in many Fortune 1000 companies worldwide. FalconStor has its products and solutions installed in key vertical industries such as financial services, telecommunications, aerospace, manufacturing, law, energy production, government, healthcare, and higher education. FalconStor holds 20 patents in the storage arena, with more than 10 patents currently pending. Company Strategy FalconStor's strategy is to build on the company's legacy in storage virtualization, data protection, and recovery services to deliver a unified platform that allows customers to address the growing challenges of data and storage management. FalconStor builds on its innovative approach of providing a virtualized software abstraction layer to deliver a unified set of data services. In today's parlance, it is a softwaredefined storage approach. Virtualizing storage resources allows for a set of common data services for physical, virtual, and hybrid infrastructures while reducing both costs and complexity. This approach also enables data migration and the ability to convert storage infrastructures from physical to virtual on the fly, eliminating traditional storage growth constraints, vendor lock-in, and cross-platform challenges. FalconStor's go-to-market strategy relies on direct sales and sales through over 200 certified partners worldwide. FalconStor offers a flexible purchasing and consumption model to meet a wide range of customers. Traditionally, FalconStor has offered licensed software and prepaid maintenance as well as appliances. To meet ever-changing customer requirements, FalconStor is offering utility-based packaging and bundling of its software and hardware solutions. This model allows customers to have predictable, inclusive pricing for software, hardware, maintenance, and installation with flexible payment options directly from FalconStor or through qualified partners. In addition, FalconStor allows customers to use a blended approach to acquisition, offering leasing terms or subscription-based licensing. More importantly, FalconStor has made very judicious investments in future growth markets such as flash/ssd, cloud, and managed service providers. In July 2013, FalconStor entered into a $12 million joint development agreement with Violin Memory to provide data protection services for its flash memory platform. As a result, FalconStor's IPStor platform is now optimized to work with new high I/O flash/ssd systems. In addition, Dell's Infrastructure Technology Services division chose FalconStor to provide its data migration technology to Dell customers. During the same period, FalconStor and HP jointly developed a storage provisioning adapter for FalconStor's Network Storage Server virtualization platform and HP's CloudSystem Matrix virtualized infrastructure platform. The result enables storage administrators to present a single, heterogeneous storage pool to HP CloudSystem Matrix, fully automating storage provisioning and reclamation across a wide variety of third-party storage systems. This effort qualified FalconStor as an HP AllianceOne CloudSystem Ready partner, further enabling FalconStor, HP, and mutual channel partners to offer an integrated solution. In addition, FalconStor raised more working capital with Hale Capital Partners for a minority position in the company IDC #

4 New Management Team FalconStor has replaced its management team with a roster of proven professionals that is driving the company to profitability, investing in new products, and addressing new customer use cases. The new management team includes: Gary Quinn, President and Chief Executive Officer: Quinn joined FalconStor in April 2012 as vice president of Sales and Marketing for North America, and he was named executive vice president and chief operating officer (COO) in April With more than 20 years at CA Technologies, Quinn last served as executive vice president of International Sales and North American Channel Sales. In his executive sales role at CA Technologies, Quinn turned around a three-year decline of the company's North American channel business to an annual growth rate of 25%. He has more than 15 years of executive experience in the rapidly evolving field of technology, specifically within the partner community, assisting in generating revenue streams and strengthening relationships. Most recently, Quinn was the commissioner of information technology (CIO) at Suffolk County Department of Information Technology. Louis J. Petrucelly, Executive Vice President, Chief Financial Officer, and Treasurer: Petrucelly brings to this role more than 15 years of experience in multidimensional corporate finance, operations, and accounting. Petrucelly was named CFO in August 2012, following his promotion to vice president of Finance and appointment to Treasurer and acting CFO in May Petrucelly served as director of Finance from March 2008 to May 2012 and as director of Financial Reporting from March 2007 to March Prior to joining FalconStor, Petrucelly was the corporate controller for Granite Broadcasting Corp. and held several senior financial management positions with PASSUR Aerospace Inc., including chief financial officer. He began his career with EY. In 2013, Petrucelly was named one of the "40 under 40" by Long Island Business News (LIBN) in recognition of his leadership and accomplishments. Robert Zecha, Executive Vice President and Chief Product Officer: Zecha is responsible for all aspects of product strategy, development, quality, and management across the company's portfolio. In addition, Zecha brings to FalconStor more than 20 years of experience as both an entrepreneur and a product development executive at early stage technology start-ups and established enterprises. Most recently, Zecha was the vice president of engineering and operations for Altior, where he led the delivery of compression storage and networking solutions for Big Data. Prior to that, Zecha held the positions of vice president of business development, engineering, and marketing at SMSC and vice president of engineering as founder of Afide. In 1993, Zecha founded NetVision Corp. and as president led it to a successful acquisition by Network Peripherals, where he served as corporate officer and vice president of worldwide engineering. Tim Sheets, Vice President, Corporate Marketing & Enablement: Sheets is chartered to rebrand and reposition the company back to a leadership position. Sheets joined FalconStor in 2011, leading the Product Management team prior to taking his current role in August of He has over 20 years of experience in the technology industry, having worked for companies such as Seagate Software running reseller and channel programs and Compaq-HP, where he spent 15 years in a number of roles ranging from Marketing to Product Management to Business Planning and, finally, Portfolio Strategy. During his time at Compaq-HP, Sheets launched the industry's first sub-$20,000 FC SAN, grew the server options business from $4.8 billion to $5.6 billion by focusing on options attach rates, and helped define a new category of shared storage for blade enclosures IDC #

5 FUTURE OUTLOOK The accelerated adoption of virtualization and cloud-based initiatives are causing IT organizations to review and modernize their data protection architectures and processes. Disk-based data protection and recovery solutions are enabling customers to alleviate their protection and recovery challenges brought on by their burgeoning virtual computing infrastructure and the need to protect endpoints outside their datacenters. Increasingly, customers are deploying data deduplication in appliance-based form factors such as purpose-built backup appliances (PBBAs). In addition, the use of virtualization is driving customers to deploy or seriously evaluate private, public, and hybrid cloud initiatives. Many firms using traditional backup and recovery methodologies are not well equipped to adequately protect their burgeoning virtual environments and endpoints outside their datacenters. As a result, firms are investing in new cloud-based strategies to protect their data as a lower-cost alternative to on-premise protection and provide them the ability to share data more easily. Particularly, with limited IT staff and static budgets for data protection and recovery, we expect that customers will evaluate and scrutinize cloud data protection vendors much more closely as more of their critical data is moved out of physical datacenters. The underlying business models and staying power of cloud vendors will be assessed more carefully as the option becomes more commonplace. IDC believes FalconStor has made great strides in remaking itself into a new company. FalconStor is well poised to take advantage of new storage technologies and architectures such as flash/ssd, cloud computing, managed service providers, virtualization, data migration, and disaster recovery. IDC expects FalconStor will bring its unique, unified storage services platform (IPStor) to a new set of customers as well as partner with cloud and server providers that require virtualized abstraction layers to provide common data services. FalconStor brings a 15-year history of innovation in storage and data services with products designed for optimized backup, deduplication, and disk-based recovery products utilizing a unified and virtualized platform. The new CEO, Gary Quinn, has gained control of the company's balance sheet and forged ahead on new product offerings while at the same time rebranding and repositioning the company. Not an easy feat. Quinn has brought in a mostly new, seasoned management team centered on new partners, refocused go-to-market models, and new flexible pricing and licensing models. We believe this will expand FalconStor's potential customer base and bring the company into new, faster-growing markets. The future looks very bright for FalconStor, and the company is ready to soar again. ESSENTIAL GUIDANCE IDC has identified key areas that will drive disruption and transformation in the data storage industry in the coming year. These areas include accelerated adoption of public, private, and hybrid cloud deployments; software-defined or software-based storage solutions becoming more widely embraced melding file, block, and/or object storage under one management layer using commodity components and open source code; and the integration of SSD/flash, which is much more prevalent in primary storage arrays and converged infrastructure combining compute, network, and storage in an integrated rack-based system. We believe that FalconStor is at the intersection point of these larger disruptive and transformative trends. The company offers solutions for the rapidly growing software-defined storage and infrastructure markets using a unified data services platform to provide a virtualization and an abstraction of storage resources to deliver policy-based data management and protection IDC #

6 Advice for FalconStor We believe it is sound and prudent advice for FalconStor to do the following: Drive profitability: FalconStor's new CEO, Gary Quinn, has done an admirable job of stabilizing the balance sheet and bringing the company back to profitability. The quest for greater profitability must continue to remain front and center of all other objectives. Sustained profitability will make FalconStor a much more viable competitor against larger and better capitalized storage vendors. Also, sustained growth and profitability give FalconStor credibility and staying power in the market. Drive innovation: FalconStor brings a rich legacy of innovation in the virtualization and storage markets. FalconStor must build on the success of these markets and build on investments in future growth markets such as flash/ssd, cloud, and managed service providers. FalconStor has boldly made investments in these new markets but it needs focus and execution to remain successful. Increase market access: FalconStor must regain its footing with first-tier, global OEMs that will allow greater market access and sales. We believe OEMs can play a complementary role to FalconStor's expanded set of qualified partners. A fine balance of distribution through partners and OEMs must be maintained. We believe FalconStor, if it executes crisply, will soar to great heights and emerge as a leader in managing and protecting data in a software-defined world. LEARN MORE Related Research Worldwide Disk-Based Data Protection and Recovery Forecast (IDC #242452, August 2013) Protection, Retention, and Recovery: Leading Trends Driving Change (IDC #240810, April 2013) Purpose-Built Backup Appliances Gaining Adoption and Enabling Disk-Based Data Protection and Recovery (IDC #235955, July 2012) 2014 IDC #

7 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Global Headquarters 5 Speen Street Framingham, MA USA idc-insights-community.com Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2014 IDC. Reproduction is forbidden unless authorized. All rights reserved.