Avamar CEO: Hardware's a Hard Sell

Avamar Inc. is the latest vendor to find that hardware is taking a back seat in many storage segments. CEO Ed Walsh, a veteran of storage hardware companies, is trying to convince people his new firm is a software supplier.

People seem to think we have something in our hardware, some kind of accelerator,” he says. “We don’t. We’re a software company. You don’t make money on hardware.”

Walsh's predicament is an increasingly common one, as suppliers attempt to add value to commoditized hardware. It's a challenge the biggest vendors, including EMC Corp. (NYSE: EMC), have been grappling with for a couple of years (see EMC Growth Continues, EMC Holds Storage SW Lead, and IDC Says Storage Software Up).

Walsh, who left his post as sales boss at switchmaker CNT to take over data protection startup Avamar in June, says he has run into confusion in the market from people who think Avamar is an appliance company (see Avamar Appoints New CEO). The problem, he says, is that Avamar sells its products in appliance form as well as standalone applications.

Most of Avamar’s 100-plus customers buy its Axion software and run it on their own Linux servers, Walsh says. The software reduces the space and bandwidth required for backups by tracking metadata and sending along only what is changed.This message seems contrary to Avamar’s early expectations that customers would prefer the software integrated with hardware when it started shipping in 2002 (see Avamar Kicks It to Disk). Walsh acknowledges that: “It was something the company just started doing and stayed with. When you’re an early-stage company, you package it up, make sure it works, and get it out there. You try to make it easier. But software-only is a much better model. Customers wanted to put it on their own platform. And that’s a trend I think you’ll see continue.”

Despite Walsh's protests, it's clear that hardware isn't a moot point everywhere in the backup space -- which could continue to confuse things. Avamar’s most direct competitor, Data Domain Inc., relies on its hardware to apply data compression (see VCs Add $15M More to Data Domain). And Avamar’s concentration on disk-based backup also puts it in competition with virtual tape libraries (VTLs), content addressed storage (CAS) archiving systems, and low-cost SATA drives -- all of which involve hardware to some extent.

— Dave Raffo, Senior Editor, Byte and Switch