Xiotech cuts 100 staff

Incoming CEO Casey Powell cuts Xiotech's headcount by 25% and refocuses the company on developing storage applications instead of hardware.

Xiotech Corp. will eliminate nearly a quarter of its headcount -- about 100 jobs -- to reach its goal of turning a profit this year.

A key part of the plan to cut costs, instigated by the company's new CEO Casey Powell, involves moving away from proprietary processors that take time and money to design.

This week Xiotech announced its Magnitude 3D 3000 storage array, which uses Intel processors instead of the company's proprietary hardware built for its older products. A Xiotech spokesperson said it will discontinue development of its first-generation products although will continue to support these customers.

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"Development of anything based on proprietary technology is being discontinued; that's any of the previous Magnitude family," said Michael Stolz, executive vice president of marketing at Xiotech.

The company has moved some of its people who worked on these products into other areas, but by and large they have all lost their jobs, according to a source close to the company. "Pretty much all the development in Rochester, N.Y., has gone," the source said. Xiotech confirmed there have been layoffs, but declined to comment on the numbers.

Xiotech established a software team in Hyderabad, India, last year and has grown it steadily since. More development will be moving offshore, according to the source.

Channel sales and support staff associated with the older product family also got the axe. In a press release issued Tuesday, Xiotech said it will be concentrating its sales on the East and West coasts of the U.S. as well as adding a dedicated government sales team. A company spokesman said Xiotech will continue to work with its channel for mainstream business, while training its direct sales organization for more specialized opportunities.

Xiotech will be left with around 300 employees after the layoffs.

Powell is following an industry shift away from proprietary platforms and technology toward open, industry standard systems that promise lower costs and more flexibility. The rapid adoption of Linux and clustered Intel-based servers in the data center is testament to this shift.

Powell joined Xiotech as CEO in February. SearchStorage.com spoke to him about his plan for the company, which includes hitting profitability this year and eventually taking Xiotech public. For a full transcript of that interview click here.

The Magnitude 3D 3000 supports up to 224 total drives, for both Fibre Channel and SATA, and offers 2 GB of protected memory per system. It can be upgraded from older Magnitude 3D systems on the fly and offers application-based cache to the system. Users can turn this on or off as application and performance needs dictate, the company claims.

Xiotech's Stolz said the company is now focused on the applications it will develop for the 3D 3000. "We want to add more and more to the application layer to solve storage management problems around backup and recovery, DR, compliance and ILM … we have a road map to add all this functionality," he said.

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