Compellent Technologies Inc. joined other storage vendors in saying the customer budgets thawed a bit last quarter.
In Compellent's case, storage efficiency features in its StorageCenter SAN provided some of the heat leading to the thaw. Those efficiency features included Compellent's automated tiered storage. However, industry analysts are waiting for Compellent to scale out and add more enterprise features.
Compellent reported revenue of $32.2 million, up 31 percent from the same quarter last year and 12 percent from the second quarter. Net income was $2.3 million, up from $1.5 million in the second quarter.
"Spending was significantly better than two quarters ago, but users are still being careful with their budgets," Compellent CEO Phil Soran said on Wednesday's earnings call. "The good news for us is that they can't quit storing data."
Compellent added 136 new customers in the quarter, up from 115 in the previous quarter. Soran said customers were responding to the company's message of storage efficiency, including such features as thin provisioning, thin replication and import, and especially automated tiered storage.
Largers vendors including EMC Corp. and IBM Corp. have begun talking about adding similar features to their systems as solid-state drives (SSDs) have come on the scene. EMC says it will ship the first version of its Fully Automated Storage Tiering (FAST) software this year, while IBM says automated tiered storage software will arrive in the first half of 2010. Compellent, meanwhile, has had the ability to automatically migrate blocks of storage based on access patterns since it's been on the market, and began supporting SSDs in July.
Customers have also told SearchStorage in the past year that they chose Compellent's SAN for provisioning flexibility and faster performance thanks to automated tiered storage, storage virtualization software, and a fast track option that puts higher-performance data on the outside tracks of the disk drive. Others were swayed by Compellent's inclusion of snapshot and replication features for disaster recovery in its base price.
Taneja Group analyst Jeff Boles attributed Compellent's growth during the downturn to market focus. "I think we're generally getting better reports on business and earnings amidst still-pressing storage demands," he wrote SearchStorage.com in an email Wednesday. "Frankly, I think when you have someone who is more focused in their market and the messaging like Compellent … they've demonstrated better results during [the] downturn."
Compellent now has $109 million in cash, and forecasts revenues for the fourth quarter to be $34 to $36 million, another increase over the third quarter. "Now is a really good time to invest for future growth," Soran said, adding that Compellent intends to add more sales and engineering staff in early 2010.
In an interview with SearchStorage following the earnings call, Soran said growth through acquisitions is not among Compellent's plans for increased investments in the business, but was mum on exactly what planned "organic growth" will look like.
Analysts look toward the next act
One of the areas where storage industry analysts say Compellent should focus next is developing its strategy around scale-out storage systems. This has become a trend in block storage in the last two years, with scale-out SANs on the market ranging from Hewlett-Packard Co. (HP)'s LeftHand Networks iSCSI SAN to 3PAR's InServe, IBM's XIV and EMC's Symmetrix V-Max.
"Technically speaking, Compellent's next act will have to be in the realm of scaling their architecture as they try to grab share in the enterprise space," Analytico Inc. analyst Tom Trainer said. "However, their next act may be to ride out this economic period, keep the sales pace up, and produce an evolved product over an extended time, at the end of 2010, or sometime in 2011."
"Better remote replication. Better scale-out clustering." emailed Wikibon analyst David Vellante when asked for the next items on Compellent's to-do list. He added, "With loosely clustered systems you need a more complex software layer to do recovery, which is why people don't run their banks on these systems. But they can only go so far up the food chain into tier 1."
As for remote replication, he wrote, "what they do is take snapshots on a periodic basis and then copy snapshots over the network. As such, the RPO is never as good as, say, an [EMC] SRDF. Compellent's approach is more efficient (i.e. less bandwidth), but it's not tier-1 class."