Overland Storage Inc. has a new management team and business model as it battles for survival with a product strategy...
By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.
built more around disk storage systems than tape libraries. That's the message executives are touting as they explain how the company plans to claw its way back to competitiveness in the enterprise data storage market.
CEO Eric Kelly remains in the post he's held since replacing Vern LoForti in January 2009. Jillian Mansolf, formerly of Snap Appliance, Dell Inc., Maxtor and Data Robotics Inc., is the new vice president (VP) of worldwide sales and marketing. Chris Gopal, most recently of Dell, has been named VP of operations. Ravi Pendekanti, formerly with Hewlett-Packard (HP) Co. and Sun Microsystems Inc., is now VP of business development and solutions. The team is still looking for a new VP of engineering and a new chief technology officer (CTO), Kelly said. Only chief financial officer Kurt L. Kalbfleisch remains from Overland's former upper-management team.
In addition, Mansolf said 80% of the worldwide sales and marketing organization has been replaced in the last six months.
The product strategy isn't as new as the management team. Overland executives have been talking about shifting from a backup-focused vendor to an end-to-end storage line for years. A big step in that direction came when it acquired the Snap NAS business from Adaptec in 2008. Kelly was CEO of Snap Appliance when Adaptec bought it in 2004, and while serving on Overland's board, he advised the company to buy the Snap business. Along with Snap, Overland is keeping the NEO family of tape libraries but Mansolf said the REO virtual tape library (VTL) line is still being evaluated. REO lost its data deduplication when its OEM partner Diligent Technologies was bought by IBM in 2008.
"More than likely, once we figure out the deduplication situation, we'll put a Snap brand on it," she said of the VTL platform. "It's easier than having six different brands."
The Snap Server NAS platform has also been through its ups and downs. Adaptec paid $100 million for Snap, and sold it to Overland for $3.6 million four years later. So far, it hasn't had much impact on Overland's revenue and earnings.
Overland reported Wednesday that it lost $2.6 million last quarter, an improvement from losses of $3.7 million in the previous quarter and $5.2 million in the prior year. But the improvement came mostly from a cut in spending due to staff reductions and a new contract manufacturing process; its operating expenses went from $12.6 million in the final quarter of 2008 to $8.6 million last quarter.
Its revenue of $20.4 million was up slightly from $19.3 million the previous quarter, but down from $28.9 million year over year.
Overland ended last quarter with $5.7 million in cash. That's up from $4 million the previous quarter, thanks to $3.8 million in financing it secured in October. But with $5.7 million in cash and a loss last quarter of $2.6 million, Overland obviously doesn't have a lot of time to start seeing positive results.
Storage analysts say there is still hope for Overland. "Obviously anything like this is a challenge," said David Hill, principal analyst at Mesabi Group. "'[The new management team's] previous knowledge of the product set and ability to use the channel give them a chance. I can't give any predictions on percentage of success, but I think they have a chance, at least."
Benjamin Woo, VP of IDC's enterprise storage systems research, isn't counting out the Snap Server NAS brand yet, but says integration among Overland's products will be the key to its chance of survival. "Bundling will become very critical for them," Woo said. "They need to be coming up with good recipes for resellers. They're a prime candidate for something like a 'mini data center' across 4U, pre-populated with Microsoft and Hyper-V."
What went wrong for Overland?
Overland has been in a downward spiral since it lost its most lucrative OEM tape deal with Hewlett-Packard in 2006, leading to the ouster of CEO Christopher Calisi. That was followed by years of floundering in which it tried and failed to launch a disk-based backup and replication product called Compass and also signed, then lost, its partnership with Diligent.
But Kelly points to a decision made by management a few months after Overland bought Snap as one of the company's biggest mistakes. Kelly was on the board of directors at the time.
"[The board] told the [Overland] executives not to get rid of [Snap's] sales and marketing organization," Kelly said. "Six months later, they did exactly what we told them not to do."
Kelly led a subcommittee to work with the management team on its business plan. After three months, he said, "It became pretty clear they had no idea what they were doing."
In retrospect, the board should have stepped in sooner, Kelly said, "but the balance sheet was fine and they had promised the Compass product. So the board was waiting, and then 12 months in that just blew up." Kelly said Compass was a good idea in theory, but the actual technology didn't perform well enough.
Given the damage done to the Overland brand in the last four years, and the emphasis on the Snap brand going forward from executive appointments to products, why not call the whole company Snap going forward? "That's something that we need to address internally and figure out what to do," Kelly said. "It's a natural thing to consider, but Overland has a good brand in tape, and when we first came in the question raised was 'Who really bought who?'"