XIOtech Stresses Simple SANs

XIOtech Corp. is chasing a new market and sales strategy with the entry-level SAN system it launched today (see XIOtech Launches Entry-Level SAN ).

XIOtechs Magnitude 3D Edge is a single-controller system aimed at first-time SAN customers in small to midsized businesses (SMBs) and departments (see XIOtech Launches Entry-Level SAN ). It's a scaled-down version of the midrange storage array that XIOtech released in August 2003. The new 3D can be bought for under $50,000, and versions are available with less than 100 Gbytes capacity.

XIOtech’s plan is to get its foot in the door with the entry-level system and allow businesses to scale to a full-blown Magnitude 3D over time, according to CEO Alain Andreoli. “This is for people who just want to get up and running quickly, who don’t want to deal with complicated SANs."

The Eden Praire, Minn.-based company seems out to prove that price and simplicity can steal sales from the likes of EMC Corp. (NYSE: EMC), IBM Corp. (NYSE: IBM), Hitachi Data Systems (HDS), Hewlett-Packard Co. (NYSE: HPQ), Dell Computer Corp. (Nasdaq: DELL), and Sun Microsystems Inc. (Nasdaq: SUNW).

So far, XIOtech is among the only companies to challenge the larger players with low-end systems. Others, including startup 3PAR Inc., are aiming to challenge the big players at the high end (see 3PAR Pockets $32 Million).XIOtech faces a couple of hurdles. First off, the size of the small-SAN market hasn't been nailed down. It's not yet clear to what extent small companies and departments will be buying SANs without input from large IT departments, which already have vendor preferences.

Still, XIOtech hopes to build on momentum from the Magnitude 3D, which Andreoli says accounted for half of the company's fourth-quarter 2003 revenue. (Andreoli claims sales were about $100 million last year.) The Magnitude 3D is gaining traction in the healthcare industry, he says, with customers including Washington University Medical Center and Kansas University Medical Center.

XIOtech missed the mark with its original Magnitude, which failed to sell well because it lacked failover capabilities (see XIOtech Fixes a Failing). The company rereleased the product with a distributed clustering architecture and now seems to be doing fine. But it wasted a bit of time at the outset.

XIOtech seems to have done its homework, however. As it rolls out the entry-level product, it's also taking a new sales approach. While most of XIOtech’s previous sales were direct, the new system will be sold only through XIOtech’s Dimensional Partner Program. XIOtech announced the channel program last November, soon after Andreoli arrived from McData Corp. (Nasdaq: MCDTA), where he headed the SAN switch vendor’s sales operation (see Ex-McData EVP to Head XIOtech). Andreoli says XIOtech has 20 value-added resellers (VARs) in the program and hopes to add at least eight new partners this year.

XIOtech is privately owned by Oak Investment Partners, which purchased 80 percent of XIOtech in 2002 from original owner Seagate Technology Inc. (NYSE: STX) (see XIOtech Snatches Rash of Cash). Andreoli says he doesn’t see any change in the company’s management arrangement any time soon.— Dave Raffo, Senior Editor, Byte and Switch