Tom Georgens, CEO, Engenio

"We're not going to build monolithic systems... We're going to do the underlying technologies."

July 12, 2005

5 Min Read
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Eleven months after Engenio Information Technologies Inc. backed off an IPO, CEO Tom Georgens says his team made the right decision but he looks forward to doing it all again (see Engenio Gets Cold Feet).

Absolutely, it’s still the plan of record,” Georgens says when asked if he still wants to take Engenio public. “I’d like another shot at it.”

He has no concrete timetable, though. A lot has changed since Engenio backed off because it didn’t like the price of preliminary bids on its stock. For now, the company remains a division of LSI Logic Corp. (NYSE: LSI), which said in November 2003 it would spin off its storage unit, christening it Engenio (see LSI Logic Spins Off Storage Systems and LSI Spells Engenio).

Among the challenges Engenio faced since it passed on an IPO are sales that declined year-over-year in two of the last three quarters (see LSI Logic Announces Q1, Engenio IPO Hopes Revived, and LSI Stands By Storage). Engenio's biggest customer, IBM Corp. (NYSE: IBM), launched its own midrange storage system, leading to speculation that it would end its partnership with Engenio (see IBM Still Loves Engenio). There was also talk that another big customer, Storage Technology Corp. (StorageTek) (NYSE: STK), would be sold, which was seen as endangering the Engenio relationship.

Georgens hopes the problems are behind him. IBM launched a new OEM system from Engenio last month -- the DS4800 -- and publicly announced a roadmap for Engenio products (see IBM Drives 4-Gbit/s). And StorageTek is being acquired, but it’s by another Engenio customer, Sun Microsystems Inc. (Nasdaq: SUNW). (See Sun to Acquire StorageTek for $4.1B.)We spoke to Georgens today about these and other issues facing his company.

Byte and Switch: You compete for OEM deals with Adaptec, Dot Hill, and Xyratex. Is there enough business out there to support all of you?

Georgens: The problem is, there are relatively few targets. But there’s more openness toward outsourcing than there’s ever been. There’s a number of deals in play right now. [A lot] depends what happens with those deals. A fair amount of share gain is possible among OEM partners. Until that shakes out, we won’t know. But I think consolidation is possible after that.

Byte and Switch: You’ve traditionally made systems in the midrange, which is the fastest growing segment now. Is that where you think you’ll stay?

Georgens: I think you’ll see us in the low end of external storage all the way up to the high end of the midrange. We’re not going to build monolithic systems to compete with EMC’s Symmetrix. We’re not going to do things like backup and restore, and content addressed storage. We’re going to do the underlying technologies.We see a lot of third-party competition at the low end -- Dot Hill at Sun, Adaptec at IBM. When EMC entered the low end of the business, they raised the bar for the technology there. The AX100 extended the EMC market down. [See EMC, Dell Get Small With SATA.] Now there’s great interest from OEMs to compete at the low end.

Byte and Switch: There’s been a lot of speculation that Hewlett-Packard will look for an OEM deal in the midrange, even after bringing out a new line of EVA systems in May. [See HP Plans EVA Facelift.] Are they a potential customer?

Georgens: I don’t know if they will OEM in the midrange, but changes are afoot there. Their new CEO, Mark Hurd, came from NCR, and NCR’s a customer of ours. [See High Hopes in Palo Alto.] If they do [OEM], that’s a huge opportunity for whoever wins it.

Byte and Switch: HP sells Hitachi Data Systems’ high-end TagmaStore, and there’s talk that Hitachi is trying to get HP to resell its new midrange systems as well. [See Hitachi Plans Midrange Rollout.]

Georgens: If I were Hitachi, every time I talked to HP about the business I’d say, "What about [Hitachi’s midrange] Thunder?"Byte and Switch: Were you ever worried about losing IBM’s business when they brought out their DS6000 midrange system?

Georgens: That was a storm we needed to weather, although IBM sat down with us before the announcement and gave us a commitment. It was frustrating, because people say, "This is the end of Engenio -- IBM will take its business away." You know you have a commitment, but you can’t share it. The only thing that will solve the situation in people’s minds is time.

But now we have the DS4800 announced. IBM has made executive changes in storage and reiterated that message.

Byte and Switch: What does the Sun-StorageTek deal mean for Engenio?

Georgens: I’m cautiously optimistic that, at the very least, my business isn’t going to get hurt. There was a lot of speculation about StorageTek being bought by others like EMC, Network Appliance, and Fujitsu. I’d rather have them bought by one of our partners. If StorageTek were bought by EMC, it would be hard for me to find a silver lining.Byte and Switch: Engenio had the first complete 4-Gbit/s system and was among the first to launch with SATA drives. [See Engenio Intros 4-Gbit/s FC Storage.] Yet you haven’t come out with iSCSI yet. Why?

Georgens: I don’t consider iSCSI a product in itself. You’ll see a platform with connectivity alternatives, and iSCSI will be one of those alternatives. I don’t think any of my partners expect to make a killing in iSCSI.

Byte and Switch: Do you set your technology roadmap, or is it mostly driven by partners?

Georgens: Some things are obvious -- like 4-gig. With mainstream technologies, we want to be as early as possible. With emerging technologies like iSCSI, we often get conflicting interest from OEMs. But on the technology decisions, we typically make our own calls.

Byte and Switch: So if IBM asked you to make an iSCSI system, you’d turn them down?Georgens: We’ve passed on bidding on systems before because we didn’t believe in them.

Byte and Switch: What other new technologies do you like?

Georgens: We’re starting to see more mainstreaming of InfiniBand, not just in high-performance computing. We’re seeing it in the financial sector in New York, and with database companies as a way to cluster. With our new 4-gig sytem, you can remove the front end and replace it with an InfiniBand connection. InfiniBand’s come back a long way.

— Dave Raffo, Senior Editor, Byte and Switch

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