BlueArc's Gustafson Moves Up

Mike Gustafson is now officially CEO of BlueArc Corp., after serving ten months as its president (see Gustafson Takes BlueArc CEO Post). And he's gung-ho about the high-end enterprise NAS company.

"Our product is rock solid... We've increased our customer base 60 percent and grown our revenues over 100 percent since January 2004," Gustafson says. He says BlueArc's customer list numbers about 150 and its employee roster is 160.

At least one source, who asked not to be named, says BlueArc has performed solidly in the high-end NAS market but needs to branch out. "Where they are weak is in the SMB/SME markets," the analyst says. "They need lower-end products that can either scale or be virtualized."

Gustafson doesn't mention any ambitions in the SMB direction. Instead, he aims to expand BlueArc's presence on vertical markets that require high-end NAS, such as entertainment, Internet services, CAD/CAM engineering, and federal agencies. In these markets, he sees plenty of prospects that won't require changing BlueArc's essential high-end features -- or $100,000-plus price tag.

Indeed, BlueArc's already publicized a few customers that fit the profile (see Turner Studios Casts BlueArc , BlueArc Consolidates Life Sciences Firm, BlueArc on NBC's Olympic Team, and BlueArc Stores Fios's Evidence).Still, the recent intro of new high-end NAS gear by EMC Corp. (NYSE: EMC), along with the alliance between Network Appliance Inc. (Nasdaq: NTAP) and IBM Corp. (NYSE: IBM), show competition is heating up in just the direction that could hurt BlueArc most (see EMC Launches High-End NAS and IBM, NetApp Ink OEM Pact).

Gustafson thinks BlueArc's got nothing to fear, despite claims by EMC to new NAS performance heights. BlueArc, he claims, can do what EMC can with less hardware. The company's architecture is based on FPGAs, he notes, instead of CPUs, which help it boost performance.

Gustafson's big on partnerships, particularly a Canada-wide reseller agreement with Storage Technology Corp. (StorageTek) (NYSE: STK). (See StorageTek Canada Signs With BlueArc.) More deals like that one will help keep BlueArc's momentum, in his view.

Gustafson faces other challenges than the competition. There are industry mutterings that BlueArc's market profile is low. Some have questioned the peculiar departure of ex-CTO and cofounder Geoff Barrall in January (see BlueArc's Barrall Says Bye Bye). Prior to leaving the firm he helped found six years ago, Barrall was doing double duty as a consultant for other companies, saying he no longer had a role at BlueArc.

Gustafson himself seems entrenched. He joined BlueArc from McData Corp. (Nasdaq: MCDTA) in June 2004 as president (see BlueArc President Speaks Up). Apparently, it was a test run for the CEO spot. "They weren't sure if I was going to be able to pull it off," he quips.So far, he has. But the next few months could be the turning point for BlueArc and Gustafson, as big players shoulder into the company's feeding ground and the new CEO's decisions about products and positioning are put to the test.

Figure 1: Mike Gustafson, CEO, BlueArc

Mary Jander, Site Editor, Byte and Switch