Sandial Clocks In

High-end Fibre Channel switch startup Sandial Systems Inc. is aiming to change the status quo in the industry -- by snatching control of the sale of SAN infrastructure devices away from the major storage systems vendors.

But while it's a customary ritual among excited startups to declare the ancien rgime irrelevant, bucking this particular industry trend won't be easy.

Today, nearly all SAN switches are sold to end users by EMC Corp. (NYSE: EMC), Hewlett-Packard Co. (NYSE: HPQ), IBM Corp. (NYSE: IBM), and other storage vendors -- not by the companies that actually make the devices, like Brocade Communications Systems Inc. (Nasdaq: BRCD) or McData Corp. (Nasdaq: MCDTA).

Even networking behemoth Cisco Systems Inc. (Nasdaq: CSCO) has had to curtsy just a bit when confronted with the powerful hold the storage vendors have on this market. Cisco this week proudly announced that it has inked reseller deals with EMC, Hitachi Data Systems (HDS), HP, and IBM (see Cisco Puffs Up Reseller Deals).

Nevertheless, Sandial, which says it will ship its first switches by the end of June 2003, says it's committed to going it alone -- at least, for now. Down the road, Sandial says it will seek original equipment manufacturer (OEM) deals as a third tier in its go-to-market strategy after direct sales and systems integrators.But the startup clearly believes OEMs are set to lose their iron grip on the channel for SAN switches. The Fibre Channel switch segment is on the same trajectory as Ethernet, which grew from small-scale LAN "island" deployments to large enterprise backbones, according to Sandial. Furthermore, it says, as disk storage is becoming a commodity, the network is becoming more strategic; that means customers are increasingly interested in purchasing their SAN infrastructure separately from their storage.

"Fibre Channel itself has matured, and we think the market is really ripe for change right now," says Michael Welts, executive VP of marketing at Sandial. "There's a sense of networking déjà vu happening all over again."

Perhaps. But we had a strong sense of déjà vu because Sandial's general story -- it's developing a highly scaleable switch that will be able to provide "thousands" of ports -- is very similar to those of other "next-generation" high-end SAN switch startups.

Sandial makes its debut amid rumors that McData is seeking to buy Sanera Systems Inc., another monster SAN switch startup. Others vying for traction in this space include Cisco (through its in-house "startup" Andiamo Systems Inc.), Maranti Networks, MaXXan Systems Inc., and Rhapsody Networks (acquired by Brocade). Each claims to have developed the smartest, fastest, and biggest enterprise-class SAN switch to end all switches (see Is McData Lowballing Sanera?, Brocade Loads Code, Signs EMC, MaXXan Axxes Staff, and Maranti Hires SAN Virtuoso).

But unlike some of the other next-gen SAN switch players, Sandial has actually been able to surface at least one beta customer: athletic shoe maker New Balance, which has connected a redundant pair of the startup's switches to its HP xp128 storage array (a rebranded version of the Hitachi Lightning 9970V). [Ed. note: Does that redundant pair come in a size 9?]"We're earning our way into the market instead of putting all our dependency on the OEMs," Welts says.

One of the problems with the OEM model, he says, is that the switch is sold as an afterthought to storage. Fine -- but if that route is undesirable, why has Cisco been so eager to land reseller deals with the majors? "Cisco has to hit a big number," he says, "but that doesn't allow them to have that direct touch."

Prospective customers have raised the question of Sandial's certification with specific storage arrays, but Welts says if this is put to the storage vendors as a technical support issue (rather than certification) it hasn't been a problem.

Reading between the lines, it looks as if Sandial figures its chances are better trying to sell direct instead of going through a lengthy and costly OEM approval cycle only to end up No. 4 on its price list. Welts concedes Sandial is interested in controlling its own destiny, "instead of waiting for somebody else to hit the revenue for us."

Sandial hasn't disclosed the speeds and feeds of its "storage backbone switch," but Welts says the initial system will be able to scale to well over 256 ports and into the thousands. At the same time, Sandial will also offer low-port-count "edge" configurations. The switches are able to monitor and control each connection using several field programmable gate arrays (FPGAs) on each port, rather than a shared-memory approach. Those FPGAs provide a way to map quality of service to specific applications, Sandial says.What about the criticism that there's a limited total addressable market today for humongous SAN switches? Welts notes that Sandial is gunning for top-tier Global 2000 accounts, pointing to an IDC forecast that by 2006 SANs with more than 128 ports will be 70 percent of the market. "We just can't build ports fast enough," he says.

Initially, though, Sandial will not provide virtualization features for its switch, although that's (supposedly) on the roadmap. "The plumbing layer needs to be fixed before we go up to higher layers."

Sandial was founded in August 2000 as Malachite Technologies, a name it changed because it was deemed not memorable enough. Malachite originally developed an optical multiprotocol data center switch with a much broader mandate in mind, but in April 2002 the company switched over to focus just on Fibre Channel SANs.

The startup has raised around $50 million in funding from investors including Bessemer Venture Partners, Prism Venture Partners, DB Capital Partners, and Oak Hill Venture Partners. The Portsmouth, N.H.-based company has 75 employees (see Sandial Passes the Time, Malachite Unearths $30M, and Malachite Plans to Light Up SANs).

Welts says Sandial will "probably take one more infusion of cash" late in 2003 in the form of a strategic round. The company expects to become cash-flow positive in late 2004.Will Sandial succeed with its end run around the storage giants? Start the clock!

— Todd Spangler, US Editor, Byte and Switch