NEW! Top 10 Storage Startups to Watch update from July 2008

Summer. The time for grilling, lazing on the beach, and topping up that tan. Sadly, were not that fortunate here at Byte and Switch towers, where the last few weeks have been spent trawling and poking our way through a fresh crop of storage startups.

Yes, that’s right. Once again, we have readied a list of the storage startups we think are most watchable. Tech sector IPOs may be few and far between in these challenging economic times, but, as our latest list shows, there is no shortage of innovation going on in storageland.

Spanning the worlds of online backup, solid state disks (SSDs), 10Gbase-T, and even eco-friendly hosted storage, the latest up-and-comers are all touting new approaches to storing data. As storage managers wrestle with ever-expanding volumes of data and increasingly tight budgets, we have identified the startups that we think might just offer that extra something in the data center.

As many of the vendors on the list prove with their early customer traction, funding, and strategic partnerships, there is ample opportunity for innovative firms to get a foothold in the storage market, even while the macro-economic outlook remains bleak.

Some of the firms on our new list are already being touted as acquisition bait, whereas others are discussing their lofty IPO ambitions, so it will be interesting to see what the future holds for these startups.As we've done for more than two years now, we present this as an entirely fresh list. And we intend to follow up later to see how we did. (Check out our hindsight self-reviews of our first, second, and third lists of startups).

Just as in our previous lists, we have not ranked our winners in any way except alphabetically, eschewing any hint of preferential order.

Inevitably, not everyone will agree with all our picks, but that’s absolutely fine. In fact, we'd love to know what you think. Is there a great startup that slipped through our net? Were we on target? Keep in mind that we update this list every few months, so there's plenty of time to suggest a firm you think may be worthy of our attention for the next list, in fact, we’d be grateful for your input.

Hit the message board, write to us individually, or email us at [email protected].

Enjoy!The List:

Next Page: Apptio

Apptio is arelatively small company that has garnered support from some very big names in the storage market, including venture capital firm Greylock Partners and Marc Andreessen, the software pioneer who co-founded Netscape (eventually bought by AOL) and Opsware (purchased by Hewlett-Packard). Apptio’s differentiator is the Apptio Cost Transparency service, a novel way to help companies calculate their IT spending, including their storage costs.

The startup, which is approaching 20 employees, relies on a software-as-a-service (SaaS) model to provide corporations with a series of analytics, modeling, and reporting services, with starting prices of $5,000 per month. The reports are designed to help businesses, especially mid-market and large enterprises, determine how much they are spending on items such as services, operations, networking, product capital, software, servers, support, and storage. Finlay Enterprises, HomeStreet Bank, and Motricity are found in Apptio’s customer base, which is nearing the two dozen mark.

Founded in the middle of 2007, the fledgling enterprise raised $7 million in its first round of funding with support from Greylock Partners and Andreessen, as well as Madrona Venture Group, (Opsware co-founder) Ben Horowitz, Ignition Partners, and Shasta Ventures.Apptio's co-founder Sunny Gupta, now president and CEO, worked with Andressen at Opsware as executive vice president of products. Kurt Shintaffer, co-founder and CFO, is also an Opsware alumnus. He was not on the founding team but oversaw corporate finance, legal, accounting, human resource, and information technology functions at iConclude, a firm that Opsware bought in 2007.

The startup is moving into a crowded market. Cost accounting systems -- including products such as charge back systems -- have been part and parcel of network and systems management suites, such as HP’s OpenView and IBM’s Tivoli, for many years.

Apptio is trying to differentiate itself by offering customers simpler, less expensive solutions than those that are currently available. Time will tell if the company can deliver on its promises. If it does, the enterprise may eventually be acquired by one of the established management vendors, in which case Gupta, Shintaffer, and Andreessen may start kicking around ideas for another startup.

Next Page: Atrato

Atrato, which was officially launched earlier this year, provides on-demand storage for the high-performance computing (HPC), digital entertainment, and Web sectors. Originally founded in 2003, the company has been able to grow the company from a small operation to one that employs 55 people and services dozens of customers, including MusicGiants and SRC Computers.The startup, which has amassed some $14 million in funding, was founded by Dan McCormick and Jonathan Hall who now serve, respectively, as the company’s CEO and director of business development.

Named after the fast-flowing Atrato river in Colombia, the startup’s flagship product is its V1000 disk array, which, it claims, offers an extremely high level of IOPs in random read/writes compared to traditional storage from the likes of EMC and IBM.

The startup’s full rack (42U) configuration offers over 400-Tbytes raw capacity with 80,000 random IOPS and offers a significantly “greener” alternative, using only 8.6 IOPS/Watt and 23 Watts/TByte. A standard rack from a typical storage vendor, for example, would offer a capacity between 48 Tbytes and 200 Tbytes and support an average of 20,000 IOPS.

Up until now users looking for a high level of I/O performance have typically opted for solid-state disk technology, although that technology comes at a price premium, according to at least one analyst.

"The V1000 fits between SSDs and traditional storage," said Russ Fellows, senior analyst at the Evaluator Group, earlier this year. "It's faster access than traditional storage, but not as expensive as SSDs... This is for any applications that have very high random I/O writes such as financial applications and OLTP databases. This could also be used for workloads like streaming multiple video feeds and capturing video from high-definition video cameras.”Atrato’s solutions nonetheless come at a hefty price -- pricing starts at $95,000 for a base system and goes up depending upon the system configurations selected.

Next Page: Bastionhost

Bastionhost may not be the biggest company on the Top 10 startup list, but it certainly has some strong prospects for growth, and as its CEO and founder Anton E. Self told us, “it has unlimited ability to grow.”

In a nutshell, Bastionhost provides real-time remote hosting and data storage for networked systems applications from an undisclosed location in a remote part of Canada. With the recent announcement of this "Dataville" concept, it aims to address the fundamental infrastructure problems of the booming data center industry: the cost of energy and the need to keep data secure from disaster and terrorist attack.

The company is run by two serial entrepreneurs -- Anton Self, its CEO, and Scott Harmolin, the company’s CTO -- which makes it unique in a sector that is dominated by companies like Q9 Networks, Savvis, Equinix, Digital Realty Trust, IBM, EDS, Dupont Fabros, Interxion, AboveNet Communications, Peer 1, AT&T, Qwest, and more.Even with stiff competition, the company believes it’s positioned properly to address the growing concerns of the customers in its industry. It prides itself on its ability to serve companies from New York to London from its single location “in Atlantic Canada” and believes that its sourcing of scalable green power, such as wind turbines, makes it a more attractive target than its competitors.

The rising cost of energy and the ever-present risk of terrorist attack or natural disaster has boosted managed storage services in isolated, environmentally friendly locations such as Iceland, which is championed by HDS .

This message seems to be getting through. Although Bastionhost can’t divulge any on its 10-strong customer list due to licensing agreements with those companies, it believes it offers the kind of service that would attract any organization.

Right now, Bastionhost has 13 employees and told Byte and Switch that is has experienced strong growth over the past few months, possibly thanks to spiraling energy costs in the U.S. and Europe. The vendor has earned it a little over $1 million in closely held capital funding in the two years it has been open.

Next Page: CarboniteThe latest list of storage startups would not be complete without at least one vendor representing the booming business of online backup.

With users looking for ways to avoid spiraling hardware costs, Boston-based Carbonite makes it onto the Top 10 list after racking up more than a quarter of a million customers in the space of just over two years.

”This time last year Carbonite had about 50,000 customers; now we’re 250,000,” says David Friend, the vendor’s CEO and co-founder. “Every month is 10 percent bigger than the month before, so that adds up quick.”

Carbonite touts its PCBackup software as an alternative to Mozy, which was acquired by EMC for $75 million last year, although Friend says the vendors have very different strategies.

Whereas EMC, for example, is keen to extend Mozy’s reach into enterprises, the Carbonite CEO says that he has no such aspirations for his firm.“We don’t sell to large corporations -- we have tons of little companies, but not enterprises,” he says. “The biggest opportunity in this market is the 700 million or so PCs that are in homes or small businesses today.”

For home users, Mozy charges $4.95 a month for unlimited storage, although pricing for the business version of the vendor’s software, MozyPro, gets a little more complex. MozyPro desktop users, for example, could expect to pay $3.95 per month plus 50 cents for every Gbyte stored.

Carbonite, in contrast, charges a flat rate of $49.95 a year for unlimited storage capacity. “We have resisted pricing by the Gbyte; we just think that it’s too complicated,” says Friend.

The vendor’s message certainly appears to be catching on. In addition to its sharp customer uptick, Carbonite is also shipping its online backup software pre-installed on Packard Bell PCs for the European market.

“You can take the PC out of the box and the online backup service is up and running,” explains Friend. “We will be announcing another strategic relationship like that quite soon -- it’s an OEM deal.”Carbonite’s growth has also been reflected in its workforce, which has grown to 74 from 27 this time last year, and is expected to reach 150 by mid-2009.

Despite the recent flurry of M&A activity in the online backup space, the Carbonite CEO tells Byte and Switch that he is not on the lookout for a potential purchaser.

“We don’t particularly want to sell out -- we would like to go public. There’s no reason why Carbonite could not get to 10 million subscribers. If we get to 10 million subscribers, that’s certainly big enough to go public.”

The vendor, which has racked up $27 million in two rounds, would like to go public at the end of 2010 or early 2011, he adds.

Despite Carbonite’s ambitious plans, the online backup space is a particularly tough market at the moment, according to George Crump, president of analyst firm Storage Switzerland.“The challenge here, of course, is that this is a very crowded space with big players entering, plus not many barriers to entry for the smaller players,” he says.

Next Page: Pliant Technology

With a former Quantum founder helping steer its path, secretive disk drive startup Pliant Technology makes it onto the Top 10 list thanks to a fresh take on solid state disk (SSD) technology.

The company was founded two years ago by Maxtor and Quantum co-founder Jim McCoy, in an attempt to solve the performance limitations of traditional enterprise disks. McCoy, who now serves as Pliant’s chairman, is looking to tap into the current popularity of SSD technology with the rest of his management team.

“It’s a new kind of Flash-based SSD,” says Amyl Ahola, Pliant’s CEO. “It’s a very high performance Flash SSD, significantly higher in IOPs and bandwidth than any other SSD that is being talked about.”High-end SSDs based on RAM, such as those sold by Texas Memory Systems, can handle up to around 400,000 IOPs (input/output operations per second), considerably more than the 52,000-plus IOPs touted for NAND flash SSDs from the likes of STEC.

These are big claims, although Ahola promises that Pliant’s drive technology will be closer in performance to DRAM. “It will be closer to the 400,000 than to the 52,000,” he says, adding that Pliant is already in discussions with OEMs that are looking to use the 3.5-inch drive.

Unlike traditional disk drives, there are no mechanical components within SSDs, which can reduce the amount of power needed to actually run the drives, something storage vendors such as EMC and Sun have latched onto.

There is undoubtedly a market for SSDs, although Pliant will have its work cut out competing with the likes of STEC, which already has a deal in place with EMC.

Undeterred, Ahola explains that Pliant’s "secret sauce" is its controller technology, which is based on its own ASIC design. “It’s a very highly parallel architectural approach and very, very, high performance."This will form the heart of Pliant’s Enterprise Flash Drive (EFD) when it is launched later this year, according to the exec.

“Our first product is under test right now,” says Ahola. “We expect to be sending some sample units to customers in the September time-frame and to be in initial production by the end of the year.”

Based in Milpitas, Calif., Pliant currently has around 14 full-time employees, although the CEO expects to grow this number to 30 by the end of the year. Another funding round to follow its $8 million A round earlier this year could also be in the cards.

”We’re due for another round of funding around the end of the year,” says Ahola.

Next Page: Solarflare Communications10-Gbit/s Ethernet specialist Solarflare Communications makes it onto the Top 10 startups list for its efforts around 10Gbase-T, which it claims will help pave the way to a 2010 IPO.

The vendor recently clinched $26 million in Series C funding, which brought the silicon vendor’s total funding to a whopping $126 million, and is planning to launch a low-power version of its 10Gbase-T transceiver later this year.

The vendor tells Byte and Switch that it is currently sampling the low-power version of its 10Xpress transceiver, which will cut the silicon’s power consumption from 11.7 Watts to 5.5 Watts. Solarflare will be in full production with the low-power silicon by the fourth quarter of this year, according to Russell Stern, the vendor’s CEO.

Traction with OEMs looks as if it should not be too much of a problem.

Solarflare already has an OEM partnership with Dell, which ships its current 10Gbase-T transceiver in a network interface card, so it seems likely the Austin-based server giant will be one of Solarflare’s first customers for its souped-up transceiver.The vendor also has OEM deals in place with SMC Networks, which is using Solarflare’s 10Gbase-T transceiver and controller in NIC cards and a switch. Test specialist Ixia is also using the vendor’s 10Gbase-T transceiver within the equipment it sells to companies looking to test their switches and networking gear.

In total, Solarflare has 12 customers, most of which are OEMs.

”The OEMs are [with] switch vendors, server vendors, and storage appliance vendors,” says Bruce Tolley, Solarflare’s vice president of marketing, adding that that vendor is either targeting, or in discussions with, almost 40 other firms. “We have got some iSCSI storage appliance applications that we’re pursuing.”

In addition to the new version of the 10Xpress transceiver, Solarflare is also looking to build LAN-on-motherboard technology for servers.

“That technology only exists at 1Gbase-T,” says Stern. “Our goal is to have that exist at 10Gbase-T -- we will put out products next year that do just that.”Solarflare, which acquired controller specialist Level 5 for an undisclosed sum in 2006 is even eyeing up a possible 2010 IPO, according to the CEO.

”We continue to raise money well ahead of our needs, and we will continue to do that as we drive towards our IPO,” he says. “It’s always hard to tell [when that will happen] with the way the markets are going right now, but our goal is by early 2010.”

The Irvine, Calif.-based vendor nonetheless faces a stiff challenge from local rival Broadcom, which has recently been busy building its own 10Gbase-T product. Another startup, Aquantia, also demo’d a low-power 10Gbase-T PHY at Interop earlier this year, which it will offer in the third quarter.

Aquantia does not yet have any named customers for its low-power PHY, although analysts have already identified these technologies as a key step toward cheaper, greener servers and storage devices.

At least one analyst feels that Solarflare’s recent virtualization demos at Interop bode will for the future. “They seem to be jumping on Hyper-V and VMware, which is key,” says George Crump, president of Storage Switzerland, but warns that there is still plenty of work for Solarflare to do.“Their messaging is not as tight as [10-Gbit/s chip specialist] Neterion, and they don’t have a shipping product yet in a market where the front runners are now being selected.”

Solarflare currently has around 114 employees, up from 95 a year ago, and Tolley says that this figure is likely to grow to 150 within 12 months.

Next Page: Tilana Systems

Data here, data there, data, data, everywhere. Tilana Systems Corp. has taken on the task of trying to synchronize the backup of information stored on disparate data sources.

If an employee works with three systems (for instance -- a Windows-based laptop, a Macintosh workstation, and a Blackberry), the Tilana Reserve system will back up and archive the data on each device via its hosted service. By using a single Tilana Reserve account, an individual or corporation can selectively protect and sync folders and files on different computers.Tilana’s focus is on the low end of the market, concentrating on small and medium businesses as well as consumers. Service pricing ranges from $4.95 per month for 5 Gbytes of storage to approximately $220 for 300 Gbytes of information. The company has a few hundred customers, including Aspire Staffing and eVantage Design, a custom Web development company.

Founded in October 2005, the startup, which has about 10 employees, has raised several million dollars from a limited number of individual investors. Joe Austin, who has more than two decades of IT industry experience, serves as Tilana’s CEO.

Previously, Tilana was CEO and president of Miva Corp., an e-commerce solution supplier that was acquired by FindWhat Inc. a pay-per-click provider. Austin brought much of the Miva executive team with him to Tilana: Jon Burchmore, CTO, served as vice president of development for Miva; Tim Sullivan, COO/CFO, was senior vice president of operations; and Derek Finley, vice president of marketing, held the same position at Miva.

The evolution of the continuous data protection (CDP) sector underscores how quickly the storage market can change. A few years ago, a bevy of startups emerged. Many have since been purchased: Revivio by Symantec; Kashya by EMC; Alacritus and Topio by NetApp; TimeSpring by Double-Take; Storactive by Atempo; and FilesX by IBM. Increasingly, CDP has been integrated into other storage functions. That change may be one reason for the apparent demise of high-profile startup Mendocino Software.

With its focus on the low end of the market, Tilana has an interesting business model, one it hopes will carry the company forward as the market continues to evolve.Next Page: Violin Memory

Another startup on the latest list claiming a new approach to physical storage is Violin Memory, which launched its 1010 Memory Appliance almost a year ago.

The vendor is touting the two-rack-unit-high device as the “industry's first terabyte-scale Memory Appliance," which it says can accelerate processing of large data sets.

The startup’s CEO Greg Kenepp told Byte and Switch that the Memory Appliance uses DRAM to offer much faster data access times than traditional disk.

”With DRAM solutions, what you’re getting is something that’s 1000 times faster than disk systems,” he says. “If you go to a Tier 1 storage system, if you get a cache hit, it’s about 500 micro-seconds latency – our latency is 3 micro-seconds.”The Iselin, N.J.-based vendor is pushing the standalone Memory appliance as an alternative to solid-state disks (SSDs) that would slot into systems from the likes of Sun or EMC.

“This is a unique approach to creating a tier 0 within the storage infrastructure with excellent scalability,” says George Crump, president of analyst firm Storage Switzerland. “The challenge is customer adoption, but the technology is unique enough to be compelling.”

Although the Violin Memory Appliance also uses solid-state technology, the device has its own in-built RAID controller, unlike disk form-factor SSDs. Violin attributes its fast data access times to its internal switch network architecture, which the vendor claims is also faster than SSDs. SSDs often have speeds of around 20 micro-seconds.

The CEO, who took over Violin Memory’s helm from Tom Gill earlier this year, told Byte and Switch that the vendor has five customers, although only two of these, MIT and software specialist Perforce, can be named.

“They are using our products to accelerate real-time processing of large data sets,” he says, adding that the 1010 device is typically used to speed up applications such as MySQL and Oracle. “We all know that data is doubling every other year, so there’s a tremendous need to process these data sets.”Next up for the startup is a Flash-based version of its Memory Appliance, which will be launched in September. Although not as fast as the vendor’s DRAM-based device, Flash, unlike DRAM, does not lose data if the power goes off.

“The benefit of disk-based storage is that if the power goes down, you don’t lose the data,” says Kenepp. “Flash solutions have this attribute.”

The CEO was less forthcoming on the subject of the 25-employee firm's financials, refusing to reveal specific details.

The startup’s message seems to be getting through nonetheless. Violin Memory has already forged a partnership with FalconStor , which certified the Memory Appliance for its Network Storage Server (NSS)software.

“I like their SSD technology,” says one analyst, who asked not to be named, explaining that Violin Memory offers good SSD densities of 500 Gbytes to 5 Tbytes per appliance. “[But their biggest challenge is their only interface is PCI-Express – they really need Fibre Channel, iSCSI, FCoE, and Infiniband interfaces.”Next Page: VKernel

VKernel has been busy lately. The company, which is a provider of virtual appliances for managing virtual server environments, has announced a slew of new products like the Capacity Bottleneck Analyzer Virtual Appliance, which aims to immediately identify and correct serious bottleneck issues in a VMware environment.

VKernel’s flagship offering is its Chargeback virtual appliance, which uses a SuSE Linux kernel, runs as a VM within VMware's ESX server product, and essentially "meters" how much compute power and storage are used by other VMs.

Complexity has often been highlighted as one of the biggest challenges of virtualization, with many struggling to fully exploit the technology.

The 35-employee vendor, which is led by Alex Bakman, started shipping its first virtual appliance less than a year ago, in October 2007, but has already started to make its mark.In just under 10 months, VKernel has racked up about 50 customers that include the likes of Hasbro and Safelite AutoGlass, surprising quite a few people. As VKernel is quick to point out, last year’s $4.6 million in funding from Hummer Winblad and Polaris Venture Partners didn’t hurt either.

VKernel believes that it is one of the leaders in this corner of the virtualization market and explained that its size and business agility make it a key player for customers that are looking to rapidly virtualize their data centers.

“As organizations rapidly virtualize their data centers, they are experiencing a whole new set of systems management challenges which cannot be solved today with traditional vendor tools in a timeframe that is acceptable,” a spokesman claims. “At the core of VKernel’s mission is a new ‘pay only for the features you need to instantly solve problems’ systems management approach.”

Beyond that, VKernel believes that pricing is a major concern for customers. According to the company, its Capacity Bottleneck Analyzer Virtual Appliance and Chargeback Virtual Appliance are both $199 for the standard edition and $299 for the enterprise edition.

The vendor, which competes with Vizioncore in the ESX Server monitoring space, is getting ready for a busy fall. According to the company, it’s adding 15 new channel partners in the upcoming months and will be releasing Capacity Bottleneck Analyzer 2.0 in the same timeframe.Next Page: Zmanda

Is open source software the key to long-term success in the storage market? Zmanda, which was founded in June 2005, certainly thinks so, and has built its business on the open source Amanda data backup and recovery system.

Amanda was initially developed at the University of Maryland in 1991, so there are now hundreds of thousands of deployments worldwide. While open source is often associated with Linux, Zmanda offers products and services for companies needing to backup Linux, Unix, Windows, and Mac systems as well as databases and applications. Low cost is typically an attraction with open source products, and Zmanda’s two main products Amanda Enterprise and Zmanda Recovery Manager for MySQL Backup Storage Server have annual subscription prices starting at $20 per desktop and $100 per server. Zmanda also offers backup features for Amazon S3 at a price of 20 cents per Gbyte of storage.

Zmanda, which claims to have 500,000 installations worldwide, has had success with large well known companies: Its services are used by Amazon.com, BabyCenter, Cisco, Travelocity, and Yahoo.

The startup has a modern corporate infrastructure, with about half of its 50 employees stationed in Sunnyvale, Calif., and the rest in Pune, India.The storage supplier’s business plan attracted $5 million in venture capital and an additional $8 million in Series B financing.

Some of its investors include BlueRun Ventures, Canaan Partners, and Helion Venture Partners, an India based venture capital company. Chander Kent is CEO and founder. Prior to Zmanda, he ran LinuxCertified Inc., an open source product and services company. His storage experience comes from being a business development executive at Veritas and software and product line manager for storage software at SGI. Paddy Sreenivasan, vice president of engineering, and a founder of Zmanda, spent time at Cisco, SGI, and HP.

Data backup and recovery has become a highly competitive market. Zmanda is butting heads with well established suppliers, such as EMC and Symantec, as well as smaller suppliers like Arkeia and BakBone. To date, Zmanda has fared well against the raft of competitors and anticipates that its open source approach will continue to be a popular choice in the future.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.