FalconStor Tunes Up InfiniBand

Coming off a strong quarter spurred by virtual tape library (VTL) sales, FalconStor is ready to make a move into InfiniBand and expand its disaster recovery services this year. (See FalconStor Reports Earnings.)

FalconStor rebounded from problems earlier in the year to finish strong in its final quarter, largely on the strength of its virtual tape library (VTL) software and expansion into China. FalconStor has OEM deals with EMC, Hewlett-Packard, IBM, and Sun to sell VTL software, and VTL sales accounted for most of its revenue last quarter.

FalconStor also reported more than 5 percent of its revenue from China, thanks to recent partnerships with networking giant Huawei and the Chinese Academy of Sciences, the nation's Internet backbone. (See FalconStor, Huawei-3Com Expand, Huawei Sets Sights on IP SANs, and China: Storage Superpower?)

FalconStor generated $20.2 million in revenue last quarter, well above analysts' consensus forecast of $16.6 million. That was a 55 percent year-over-year and 56 percent sequential increase, and a long way from the first quarter of 2006 when FalconStor lost $3.6 million after falling short of revenue expectations. (See Storage Financials Take a Dip.)

Besides VTLs, FalconStor has software for continuous data protection (CDP), IP SANs, and virtualization. On a call with analysts Tuesday evening, VP of business development Bernie Wu said FalconStor is poised to enter a new area: InfiniBand. Wu says he sees the high-speed interconnect going beyond high-performance computing into data centers. He says FalconStor could generate income from InfiniBand software around the middle of this year."We've begun proof of concepts for OEMs and large end users for an InfiniBand-enabled version of IPStor," Wu said. "We're seeing a growing level of interest from people using InfiniBand in commercial environments seeking the benefits of high-performance computing clusters."

FalconStor execs didn't provide more details on their InfiniBand product. However, a hint might come from a partnership FalconStor and Voltaire announced in late 2005. The companies' customers would be able to use IPStor with Voltaire InfiniBand switches. (See Voltaire, FalconStor Join Forces.) That partnership required FalconStor to optimize IPStor for the iSER RDMS protocol used by Voltaire's InfiniBand gear.

Wu also claims FalconStor's PrimeVault DR services are ready for prime time. PrimeVault launched more than a year ago, mostly with Asian partners. He says the company is about to add some U.S. hosting-center partners.

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. Wu says the service could bring FalconStor partnerships with tape backup firms such as Iron Mountain.

"Traditionally, people have been trucking tape to Iron Mountain," he says. "With Single Instance Repository [FalconStor's de-duplication software] and VTL, you'll see a change in the economics of electronic replication. I would consider Iron Mountain a potential partner. They're experimenting with electronic vaulting, and I think that will be the wave of the future."As for current partners, FalconStor announced this week that EMC extended its VTL OEM deal through 2113. (See FalconStor, EMC Expand Partnership.) FalconStor execs say EMC's upgrade of its VTL product last October helped propel its strong quarter. (See EMC in Full Launch Mode.)

Wu said sales through Sun also rebounded last quarter, and Sun revealed plans for a VTL product based on its Solaris operating system and FalconStor software. (See Sun Opens Tape Again.) Wu says a reseller deal is also in the works with Sun for FalconStor's CDP.

Wu says McData also had strong sales last quarter with the VTL it sold through an OEM deal with FalconStor. (See Grass Roots Marketing Gone Wild, Part I.) Although Brocade is discontinuing the branded product now that it has acquired McData, it will offer the FalconStor VTL and replication products through its professional services unit. (See Brocade Closes Out McData.)

Dave Raffo, News Editor, Byte and Switch