Bankrupt Ciprico May Sell RAIDCore Assets

Dot Hill says it is negotiating to buy the company's software-based RAID technology

September 3, 2008

3 Min Read
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You've all heard the old joke: You can identify pioneers because they're the ones with the arrows in their back. That joke isn't funny for bankrupt storage vendor Ciprico of St. Louis Park, Minn., which has learned that developing a new technology before the time is right can be an expensive and painful experience.

Ciprico, which offers a variety of storage hardware, software, and virtualization products, has been in business for around 30 years. In 2003 it brought out an innovative software product called RAIDCore that was meant to move RAID (Redundant Array of Independent Disks) off its own card, with its own CPU and memory, and to use the power of the main CPU in a server or workstation to handle the RAID processes.

But the cost-saving product didn't materialize as expected. "The problem is it ate up too much of the processing power of the server CPU," says Ciprico CEO Steven Merrifield. "Today, of course, with high-speed front ends and dual-core, quad-core, and 8-way processors, this approach can perform much better and be much more cost-effective."

The advances in multi-core chips didn't come soon enough for Ciprico, however, which filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Minneapolis on July 28. It listed assets of $6.9 million and debts of $7.8 million. The company has about 45 employees.

"We weren't able to raise money, and we lost the race and ran out of money before we were able to get the new version of the product to market," says Merrifield, who joined the company in December 2006. "It is a great piece of code, and where the market is headed. Software RAID is more relevant today."Ciprico's flagship RC5400 controllers and the RAIDCore software can be used with SAS or SATA drives and are available in both four- and 16-port configurations. The controllers also can be matched with the company's Virtual Storage Technology software for a more complete system. The company continues to develop the technology, which is designed to work with hardware from a wide variety of vendors.

"Revenues for older products fell faster than anyone thought they would, and before we could get new products to market," Merrifield told The Minneapolis Star Tribune. He also said sales of an existing disk drive controller to Hollywood special effects companies were hurt by a strike of entertainment writers.

"But there are people who are interested in the new technology, and we hope the bankruptcy filing will get people to the negotiating table with a firm proposal," Merrifield is quoted as saying in the newspaper story.

The company is exploring what Wall Street calls "strategic alternatives," including the possibility of selling some assets or more. "We could sell the entire company. We could sell parts of it. We could do some licensing agreements for some of our technology," he told Byte and Switch. "We could exit bankruptcy or we could not. It remains to be seen. We're looking at all the alternatives."

Some storage vendors are sniffing around. Dot Hill Systems Corp. issued a release on Aug. 27 stating that it was negotiating with Ciprico to purchase its RAIDCore and NAS intellectual property assets. Dot Hill wants to own all of RAIDCore and is seeking a joint ownership of Ciprico's NAS assets, the release said. Dot Hill also said it was negotiating to provide Ciprico a loan of up to $225,000."We are talking to a number of people, not just Dot Hill. There is an open bidding process," says Merrifield. "I think this process will move very quickly."

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  • Ciprico Inc. (Nasdaq: CPCI)

  • Dot Hill Systems Corp.

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