We focus on the high-end market. The average selling price of one of our Fibre Channel storage servers is $125,000. To our customers, we are the enterprise building block for their storage cluster. While we design some of our software in-house, we realized we couldn't be all things to all people. We made the decision to partner for the fundamental building blocks of storage management such as backup and replication. Veritas has those products. We buy them on an OEM (original equipment manufacturer) basis. We've certified each other's products. What we bring to the customer is the full solution. To the customer it's all MTI products, but Veritas is the author. We get leading-edge storage management software. Veritas gets a high-profile company bringing their product and company to market. MTI reportedly undersold EMC with its Vivant V25 system. Is it your intention to lure customers in with the price and then hopefully impress them with the technology?
We compete with EMC, but we'd like to think we offer better value. EMC is expensive to buy and own. If you had a million (dollars) to spend on storage, why buy EMC when you could buy MTI for a third of the price and get a better solution? We have customers who are using 100 terabytes of storage -- large telephone companies, airplane manufactures, banks and insurance companies. Huge customers. All the bread and butter companies are going with Vivant. We don't have the marquee name or marketing appeal of an EMC. But at the end of the day, with budgets getting tighter, it favors us. Again, if you can save a fourth off the purchase price why wouldn't you when so many others have? We offer better overall value. What actions are you taking to regain momentum?
We took some big write offs. We've adjusted that and now focus on selling to our traditional markets�biotechnology, finance. Our business is slowly coming back and we'll start making money soon. We have a very strong balance sheet. What will be the next product to revolutionize the way businesses manage storage?
The next revolution will be when someone figures out a way to automate information that has never been automated before. I've been doing this since 1981 and I know there are a couple of constants. Capacity gets larger; the computers get faster; performance is a constant. People want higher reliability and greater reliability. People expect ease of use. Storage is a quiet revolution that over years has evolved into an elegant piece of technology. In 1981, I was selling a 300 megabyte disk drive for $36,000. Today, 20 years later, I can hold a 144 gigabyte in the palm of my hand and sell that for a fraction of the cost. I believe that today's storage is the heart of the enterprise. In 1981 storage was a peripheral. Now, computers are peripherals. At the end of the day it's the application software that drives everything. Storage will continue to grow as long as someone has the desire to automate information that they don't think someone hasn't already done. MTI recently reported a $5 million loss. Can you pinpoint the reason for the drop?
Last year we did $227 million. If you look at the last six years we sold over $1 billion in product and service. We have a large installed base. Those numbers were primarily due to a shift in market segments. We have a lion's share of the dot-com business. When that marketplace went bust, our revenue took a hit. We got left with a higher infrastructure cost. Name three things storage administrators can say to their IT managers holding the purse strings that will convince them to invest more resources into storage?
Availability. Connectivity. Performance. What is the number one issue facing storage users?
Understanding the possibility of what they can do. Lots of users don't understand how to bring in larger storage architecture. That's a challenge. Once they do make the decision, they don't know how to fully optimize it. There's been a big change from stand-alone machines to clusters, a big change in the way storage is shared today. That's one of the quiet revolutions I was talking about. What is the number one issue facing storage providers?
Teaching customers to respect what they've purchased to a certain degree. There's so much capability in our Vivant architecture, for example. How do we teach them to maximize the investment? How do we help them to keep their investment protected? Is that getting easier?
It's gotten much easier. We've all gone through the learning curve together. Any predictions as to when this intense demand for storage resources will peak?
It's not going to peak. It's just going to continue. Depending on whom you talk to, analysts predict the storage market will grow beyond $100 billion. The Internet changed our lives. We expect�our children expect-- information on demand. Just like we expect the lights to go on when we flip the switch. When children today become executives, they're going to expect that they have immediate access to every bit of data. That's going to continue to drive the market. If they're not buying for that, what are they buying for?
You'd be surprised. They're buying for cost per megabyte. The availability of information is so paramount it's vital that they pay for a solution that's going to give them some guarantees.