FalconStor Launches China Venture

FalconStor is cranking up its efforts to establish a foothold in China, setting up a joint venture company with the Chinese Academy of Sciences (CAS) to offer utility storage in the world's most populous nation.

Under the terms of the deal, which was announced last night, the two organizations have joined forces to create a company called Blue Whale, which will sell storage as a service to Chinese users.

FalconStor execs on the company's earnings call last night explained that Blue Whale's managed storage offerings will use a combination of FalconStor and the academy's CAS technology.

"That will leverage our software services, including snapshot, replication, and de-duplication, in conjunction with a SAN-based clustered file system that [the Academy] has developed," said Bernie Wu, FalconStor's vice president of business development.

This is not the first alliance that the vendor has forged with a Chinese organization. H3C Technologies, the Chinese subsidiary of 3Com, already OEMs FalconStor software for its VTLs, although the new, joint venture deal is taking the Melville, N.Y.-based vendor in a new direction."Think of it as storage-as-a-utility," says Brian Freed, an analyst at Morgan Keegan, explaining that the Chinese Academy of Sciences is much more than just a University. "They own a chunk of the Internet backbone in China, so they have the bandwidth."

Whereas utility storage services have been met with some skepticism in the U.S, the booming Chinese technology market is a very different animal, according to the analyst.

"The shared storage model failed in the U.S. because of bandwidth issues and privacy concerns about handing sensitive data over to a third party," he says, adding that users in communist China are less concerned about the privacy issue.

Although U.S. storage vendors are keen to tap into China's current economic boom, FalconStor is also getting its hands on the Academy's clustered file system.

"That's part of the reason for us to participate in this joint venture," admitted ReiJane Huai, the FalconStor CEO, on last night's call. "It's not only to get access to a certain part of the market in China, but because they have technology, the people, that can help us expand our R&D bandwidth."Specifically, FalconStor will tie its de-duplication, snapshot, replication, and virtualization technology to the Academy's clustered file system, putting the combined technology up against offerings from the likes of Exagrid.

FalconStor will have the rights not only to incorporate the clustered file system into its products, but to sell those products outside of China.

"If you look at the guys that have done well with de-duplication, it's because they have built the de-duplication on top of a clustered file system," says Freed. "Exagrid is using a clustered file system and Quantum is putting their de-dupe on top of a clustered file system."

On last night's conference call, FalconStor officials also talked a bit about VTL partnerships.

FalconStor has already clinched OEM deals with Acer and Chinese server giant Langchao for the VTLs, according to Wu. "We're expecting the midrange edition of our VTL with embedded de-duplication to be well-received by our partners around the world," added Huai.The CEO was somewhat less informative when an analyst inquired whether the vendor's largest OEM partner EMC, which is developing its own de-duplication, would be picking up FalconStor's technology.

"As a rule, we will not comment on our OEMs' roadmap," replied Huai.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.