BlueArc sticks to its guns in data center storage

BlueArc's CEO talks about a long IPO process, and why you don't need a grid or cluster to manage Web 2.0 storage.

BOSTON -- BlueArc Corp. CEO Mike Gustafson admitted 2007 was a quiet year for his company, but said he expects to make more noise in 2008 with a pending initial public offiering (IPO) and NAS systems to help organizations manage Web 2.0 storage.

SearchStorage.com met with Gustafson after a BlueArc customer and partner event to talk about his vision for the company and the storage market going forward.

BlueArc filed for an IPO last year, then pushed it out to this year. What's the latest?

Gustafson: We have been quiet and some people have been wondering, 'where is BlueArc'? We are still in registration and are still continuing down the path of an IPO. We are filing amendments [with the SEC] now -- we're actually on our third, based on where we were at the end of our fiscal year in January. We were very pleased with those [financial] results, and when we complete our new revenue numbers and our amendments and audits, the next step is to look at the market conditions. We are on the path.

What do you mean when you talk about BlueArc having been quiet? And why do you think that is?

Gustafson: It has mostly been due to our quiet period because of the IPO. But as a company, when you're in an industry that goes through such dynamic change, we have a role

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and a responsibility to be more active about our vision and be more of a catalyst in the marketplace; to pick fights along the way, to force people more to think in an open-minded way about the alternative that exists with us.

We also need to be more active with partners. We need to find more friends and get more 'at bats' in the industry. We don't want to be niched and blocked into a corner. Many people think we're only extremely high end, but we're relevant wherever data-intensive customers reside and where performance is important. Four years ago, that was a small part of the market, but today that's just about everybody, especially when it comes to rich media and Web 2.0.

BlueArc still seems to differentiate itself from traditional storage companies, such as EMC and NetApp, but what about clustered and grid competitors like Isilon and Panasas that are positioning themselves in a similar way?

Gustafson:Our entire architecture is built around the performance advantage of mounting file systems on FPGAs [field-programmable gate array]. What people don't realize is that even though you can get a massive amount of throughput and capacity on one device if you so choose, BlueArc can come in smaller bites. With the power of our platform you can carve it up securely but share the processing power with virtual servers. That's perfect for a multitenancy, Web 2.0 environment -- you just don't need a lot of devices to do it. In fact, those companies often use five to 10 times the number of devices for the same storage.

EMC, Sun and some others are emphasizing industry-standard components as a cheaper way to scale out and expand systems with future products. How can BlueArc compete with proprietary hardware?

Gustafson: I understand that argument and I understand the logic of that argument, but the applied reality tends not to be what people project. With systems like that you may be able to virtualize and consolidate management, but you aren't virtualizing the number of devices. The [Blue Arc] Titan is a high-performance platform without peer in the industry. When you look at how many commodity devices it would take to get the same I/O, throughput and capacity, it amounts to a big cost both in capital and operational expenditures. Generally, we'll reserve judgment on specific products from those other companies you mentioned until they actually exist and are real, but we have full confidence in our leadership.

You mentioned virtual servers. Is BlueArc competing with VMware in a way?

Gustafson: No. BlueArc defines a virtual server as a group of file systems with its own IP address and secure access control. It's a virtual storage server, not a virtual machine the way VMware thinks of it. We are currently certified with VMware and will be working closely with them.

BlueArc's revenue has increased, but it's still not profitable. Many in the industry believed Hitachi Data Systems would buy BlueArc, but it hasn't. Now you're in the middle of a long IPO process. How can users be assured of the company's stability and prospects for the future?

Gustafson: As far as HDS is concerned, we intentionally signed a five year OEM agreement, and they made a small equity investment. After just one year we're highly pleased with the results. Because of the IPO, I can't say specifically what the results have been, but we've seen double-digit growth in revenue and customers. We share a vision around file services and combining best of breed products from both companies.

We've already been through a lot. We've been sued by NetApp; there have been rumors that we're going out of business for eight years in a row, and we're still here. We've heard our cost of goods is too high, that we're a high-performance niche play and that's all we'll ever be, and we're still here.

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