Call it a study in contrasts. While some of its peers in the storage service provider (SSP) market are starting to suffer from a shortage of funds, Scale Eight Inc. is set to score another $30 million in a third round of financing -- bringing the total invested in the company to date to nearly $60 million.
The news pushes Scale Eight up a position in the Byte and Switch Top Ten Private Storage Networking Companies.
Still, Scale Eight is not completely immune from the tough market conditions still plaguing this sector. Dick Watts, the companys chief executive, says investors forced him to slightly lower the overall value of the company. He's unable to give more details on this until the round closes, sometime next week.
So how is Scale Eight able to buck the trend and sustain the SSP business model where others are failing? (See SSPs Switch to Selling Software.)
"ManagedStorage International Inc., Creekpath Systems Inc., and others had a much more capital-intensive program for getting their services up and running than did Scale Eight, says Watts. These companies spent millions of dollars buying EMC Corp. (NYSE: EMC) hardware, which they deployed liberally in data centers across the U.S. to host their customers storage. But when business didnt coming in fast enough, Watts says, they got stuck with huge debts.