Auspex on the Mend

After losing out to NTAP and EMC, Auspex is back with a new team and new products

August 11, 2001

3 Min Read
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Auspex Systems Inc. (NASDAQ: ASPX), left for dead in the network-attached storage (NAS) market by Network Appliance Inc. (Nasdaq: NTAP) and EMC Corp. (NYSE: EMC), is staging a comeback.

With a new line of products, a leaner and more focused management team, and a healthier bank balance, Auspex is hoping that within a year or so it will have regained its seat as a leader in the NAS market.

The company hopes to recoup its double-digit market share in the enterprise NAS space currently dominated by Network Appliance and EMC. In 1997/98 Auspex owned around 40 percent of this sector. But by 1999 it was down to 10 percent, and today its languishing at around 2 percent -- a sore point for the company that invented the first NAS appliance.

What happened? The company was founded back in 1987, but due to a succession of different engineering teams, an acquisition that didn’t work, and alleged managerial miasma, Auspex went from a $250 million company to almost bankrupt by the end of the 90s.

"They created the NAS market and by arrogance they almost destroyed it," says Robert Grey, an analyst with IDC.Regent Pacific stepped in last summer and helped Auspex complete an IPO, which raised $90 million. Earlier this year they introduced a new management team led by Mike Worhach, previously head of worldwide sales for Data General (now EMC). And the turnaround appears to be taking shape.

Auspex has just launched its NS3000 family of NAS servers that scale up from 500 gigabytes to 68 terabytes of data, the largest capacity in the industry, the company claims. Features include clustering, software mirroring, RAID mirroring, server-to-server replication, and network fail-over capabilities.

The first NS3000, on the shelves this summer, offers 500 gigabytes at $139,500 a pop and is for NT environments only. The NT/UNIX model costs an extra $25,000. The top-of-the-range 68-terabyte model won’t be available until the end of the year, when pricing will also be released. A 72-Tbyte version is also in the pipe soon afterwards.

“This company is a potential flyer when its new technology takes hold and the market gets better,” says Harsh Kumar, storage analyst at Morgan Keegan & Company Inc.

There are still some holes though. The company has no virtualization software roadmap yet, which is the hottest area of the market right now. “We need to pick some software partners for this,” says Bob Iacono, VP of marketing.Auspex also has plenty to do on the financial side to regain market share, but things are picking up. For its fourth quarter, ended June 30, 2001, it reported a net loss of $49.4 million, or $1.18 per share, on revenues of $51.8 million, down 36.9 percent from the same period a year ago.

However, the company ended this quarter on a positive note, albeit a very small one. Its net loss for the fourth quarter was $14 million, or $0.31 a share, compared with a net loss of $14.1 million, or $0.31 per share in the prior quarter, an improvement of just 1 percent.

It’s also beefing up its sales and distribution channels in Asia and North America through partnerships with Insight Enterprises Inc. and Bell Microproducts.

IDC predicts that the NAS market will more than double in size from $3.09 billion this year to $6.57 billion in 2003, so Auspex has plenty to aim for.

— Jo Maitland, Senior Editor, Byte and Switch http://www.byteandswitch.comMovers and shakers from more than 100 companies – including Network Appliance and EMC – will be speaking at StorageNet, Byte and Switch’s annual conference, being held in New York City, October 2-5, 2001. Check it out at StorageNet2001

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