FalconStor Focuses on China

Falconstor is ramping up its presence in China with new products and plans -- including a service that will enable U.S. companies to replicate data at a key technology hub in China.

The news highlights momentum in China's storage sector. Firms such as Huawei, Langchao, and Lenovo have recently boosted the profile of the Chinese technology markets, backed by a government clearly aiming to challenge America's position as IT superpower. (See China: Storage Superpower? and Huawei Sales Hit $11B.) And as China flexes its technology muscles, there has been speculation that cash-rich Chinese firms will look to make their presence felt in the U.S. storage market. (See Redrawing the Storage Map and Insider Analyzes China's Big Three.)

FalconStor, for its part, is launching into China on several fronts. For instance, it's looking to build on the partnership it recently announced with the Chinese Academy of Sciences, a research institution that controls all the Internet traffic coming into and out of the country. The Academy is now deploying FalconStor's PrimeVault service as part of an effort to provide disaster recovery and backup to Chinese firms and government departments.

PrimeVault uses FalconStor software to back up data to service provider data centers, charging a monthly subscription determined by the amount of gigabytes backed up.

According to ReiJane Huai, the FalconStor CEO, U.S. firms will also be able to use this service sometime this year. Businesses with branch offices in China, he told Byte & Switch, will be able to use the Academy of Science's Internet backbone to replicate their data back to the U.S.On another front, Falconstor is looking to expand its relationship with Huawei-3Com (H3C), which since last spring has been selling a series of IP SAN devices in China that use FalconStor software. (See Huawei Sets Sights on IP SANs, FalconStor Teams With Huawei-3Com, and FalconStor, Huawei-3Com Expand.)

Huai says the devices, dubbed the Neocean IX1000 and IX5000, are likely to make their way across the Pacific later this year. "I don't have the exact timeframe," he explained, adding that they could be sold in the U.S. in the second half of 2007.

H3C may also extend its storage offerings. "You should expect the [Neocean] product line to expand vertically with more features and horizontally with more products," added Huai, although he did not reveal specifics.

FalconStor is also looking to increase its headcount in China. "There's a very healthy market there -- there's a growing demand for storage and services," said Huai. In an effort to tap into this demand, FalconStor is planning to grow its 50-person Chinese workforce by around 50 percent during the coming year.

In its most recent financials, FalconStor reported that 5 percent of its revenues are now from China, although Huai expects to grow this figure "by a few percentage points" by 2008.That said, the exec admitted that China's storage landscape is somewhat different to that of the U.S. "China is quite unique -- you see Fibre Channel deployed in only a few strategic locations, such as the banks and the telcos," said Huai. "Outside of that, most of the storage is iSCSI-based because it's simple to deploy and cost effective."

The exec also added some flesh to the bones of FalconStor's InfiniBand story, which began when FalconStor announced a partnership with InfiniBand specialist Voltaire back in 2005. (See Voltaire, FalconStor Join Forces.) A FalconStor InfiniBand offering is currently being developed in conjunction with Voltaire and Mellanox for release next quarter, according to Huai. (See FalconStor Tunes Up InfiniBand.)

James Rogers, Senior Editor Byte and Switch