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Storage Vendors and Wall Street: Happy Together?

3PAR's impressive public offering today puts the spotlight on the IPO momentum among storage companies in the last couple of years, raising many questions: Is IPO still worth the risk? Who will succeed? Who will fail? Who will be next?

There are no simple answers. Going public is always risky, no matter what business you're in. And in the specialized world of storage, a good outcome depends on lots of moving parts.

It's important, for one thing, to be in an energetic market segment. This last while, we've seen successful debuts by vendors of virtualization (VMware), de-duplication (Data Domain, Double-Take), and InfiniBand products (Mellanox, Voltaire). The jury's still out on clustered NAS, however (Isilon).

IPO candidates also need to be swift in the swim toward profitability. "Storage companies who have a solid business plan and model that includes a steady progression to -- if not achievement of -- profitability and the ability to sustain that growth along with a good technology solution and story should do well with their IPOs," states Greg Schulz of the StorageIO Group. "With their continued growth, those companies should see their reward and that of their shareholders with an improvement in their stock valuation."

In his view, 3PAR has the earmarks of a potential winner. "I would expect that we will see a nice realistic progression as they continue to build their business," he notes.

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