Howard Marks

Network Computing Blogger

Upcoming Events

Where the Cloud Touches Down: Simplifying Data Center Infrastructure Management

Thursday, July 25, 2013
10:00 AM PT/1:00 PM ET

In most data centers, DCIM rests on a shaky foundation of manual record keeping and scattered documentation. OpManager replaces data center documentation with a single repository for data, QRCodes for asset tracking, accurate 3D mapping of asset locations, and a configuration management database (CMDB). In this webcast, sponsored by ManageEngine, you will see how a real-world datacenter mapping stored in racktables gets imported into OpManager, which then provides a 3D visualization of where assets actually are. You'll also see how the QR Code generator helps you make the link between real assets and the monitoring world, and how the layered CMDB provides a single point of view for all your configuration data.

Register Now!

A Network Computing Webinar:
SDN First Steps

Thursday, August 8, 2013
11:00 AM PT / 2:00 PM ET

This webinar will help attendees understand the overall concept of SDN and its benefits, describe the different conceptual approaches to SDN, and examine the various technologies, both proprietary and open source, that are emerging. It will also help users decide whether SDN makes sense in their environment, and outline the first steps IT can take for testing SDN technologies.

Register Now!

More Events »

Subscribe to Newsletter

  • Keep up with all of the latest news and analysis on the fast-moving IT industry with Network Computing newsletters.
Sign Up

See more from this blogger

Why Nimble Storage's IPO Succeeded

Hybrid array vendor Nimble Storage went public Friday in what is, as Wall Street measures it, one of the more successful IPOs of recent memory. The company raised about $168 million dollars selling eight million shares at $21 each. That should give Nimble a big enough war chest to give customers confidence that it's a player for the long run.

Unfortunately the Nimble IPO also exposes the perversity of the finance world. Only Wall Street insiders get to buy shares at the IPO price. The underwriters get to dole out IPO shares to their brother-in-law, the CFOs of companies they do a lot of business with, or other connected folks. When the stock soars in the first few days of trading as the ordinary citizens bid up the shares, these insiders sell off, making a bunch of money from their privileged position.

In the case of Nimble, the good news is that all the stock that was sold in the IPO was issued by the company, where in some IPOs the executives, VCs and other early shareholders sell off some of their shares as well. This means both that the full $168 million went to the company and that the early investors still believe Nimble is a good investment. The less good news is that on the first day of trading, the stock jumped up to $34 a share so the insiders, at least on paper, made $104. In the best of all possible worlds, the underwriters would have better assessed demand and priced the offering at $30 or $31.

However IPOs aren’t measured by how much money the company raises, but by the bump the stock takes. So the underwriter is incentivized to underprice the stock to make money for the VIPs he sells IPO shares to, keep them as customers and impress the CEOs and VCs at the other pre-IPO companies that they can avoid the embarrassing post-IPO collapse ala Violin Memory.

So why are investors gobbling up Nimble shares while Violin has lost 63% of its market value since going public in September? After all, both companies make flash-oriented storage systems and the market for both hybrid arrays and all flash systems is growing.

As I see it, there are two big reasons. The more important one is that Violin is selling a product that's time has passed. Sure, a Violin Flash Memory Array can deliver 750K IOPS but so can a 3Par 7450, and the 3Par also does snapshots, replication and all the other data management features we’ve come to rely on over the years. Pure Storage and EMC’s XtremIO can deliver plenty of IOPS and data deduplication to boot. That puts Violin in a tough market position. Add in a bloated CEO compensation package and investing in Violin isn’t an attractive proposition.

Nimble sells a full-featured hybrid array, and while it can’t charge as much as Violin for each unit, there are a lot more customers for hybrids than for all-flash arrays with limited data management. Nimble is adding between 250 and 400 customers a quarter and there’s plenty more room for growth.

[Read about Nimble's architectural approach in "Nimble's 'Scale to Fit' Storage Architecture Can Scale Up 0r Scale Out."]

At the end of one of my Storage for Virtualization seminars last week, I was asked to recommend a storage system. My first question to that person was “What is your company’s risk tolerance?” Some risk-averse companies should only buy from leading vendors. If an EMC, HP or Dell system fails to perform as promised, it’s their problem. If you recommend a WonderStor 5000 and it doesn’t work, it’s yours.

Plus, any time you buy from a startup, say Starboard Storage, regardless of how good the product is, you’re taking a risk that it’ll go out of business. I think Nimble has just crossed over that line -- you can rely on the company being around, even if it’s as a division of Engulf & Devour, for the useful life of any array you buy from them.

Oh, they have some interesting technology too, but that’s a matter for a later post.

Disclaimer: Starboard Storage, Pure Storage, EMC, HP and Dell are or have been clients of DeepStorage, LLC. Nimble has presented at several Storage Field Day events I’ve attended and therefore indirectly paid my travel expenses to those events.

Related Reading

More Insights

Network Computing encourages readers to engage in spirited, healthy debate, including taking us to task. However, Network Computing moderates all comments posted to our site, and reserves the right to modify or remove any content that it determines to be derogatory, offensive, inflammatory, vulgar, irrelevant/off-topic, racist or obvious marketing/SPAM. Network Computing further reserves the right to disable the profile of any commenter participating in said activities.

Disqus Tips To upload an avatar photo, first complete your Disqus profile. | Please read our commenting policy.
Vendor Comparisons
Network Computing’s Vendor Comparisons provide extensive details on products and services, including downloadable feature matrices. Our categories include:

Research and Reports

Network Computing: April 2013

TechWeb Careers