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FalconStor prepares FreeStor for flash, clouds

After another quarter of declining revenue, FalconStor CEO Garry Quinn says the troubled company will focus on delivering storage software for flash array vendors and cloud service providers.

During FalconStor’s earnings call Wednesday, Quinn said the vendor will introduce software called FreeStor 10 in 2015. He said FreeStor “will be focused on this new software-defined marketplace that uses an intelligent abstraction layer to be completely hardware agnostic.”

The target markets are flash array vendors without their own software stacks and service providers looking to provide storage services to customers with legacy hardware.

Quinn said FreeStor will address data migration, continuous availability, protection and recovery and optimize data deduplication. Its partners or their customers can turn on the services they require.

The software will be based on development work FalconStor has done under an OEM agreement with flash array vendor Violin Memory. FalconStor is developing software that provides the above services for Violin arrays.

Quinn said the software can be sold with a FalconStor branded management console, a private labeled interface or without any management console. He added that it will work with web browsers, tablets or smart phones. He expects to announce the new products on Feb. 19, 2015 – the 15th anniversary of FalconStor’s inception.

“We’re moving in a different direction,” he said. “The focus of the company is to move into a new market that is more attractive, less confusing and allows FalconStor technology to get its fair opportunity in the marketplace. There are many, many, many people with point solutions in the business continuity and disaster recovery space, and the idea of moving more to the platform approach opens up opportunities for FalconStor to OEM its technology in the flash market.”

FalconStor will continue to sell its existing deduplication, continuous data protection and storage management software through resellers but future product development will focus on FreeStor.

The new direction comes after what Quinn calls “a complete miss” in the Americas region last quarter. While revenues increased from the previous quarter in the rest of the world, they were down 16 percent in the Americas. Overall, FalconStor revenue of $11.2 million was down from $11.3 in the previous quarter and $14.7 million a year ago. The company’s loss from operations was $2 million in the quarter, actually an improvement over the $2.8 million loss in the previous quarter.

Quinn has sought ways to turn FalconStor around since he became CEO in June, 2013 after his successor Jim McNiel resigned. McNiel’s predecessor, ReiJane Huai resigned as CEO in 2010 after his role in a customer bribery scandal became known. Huai committed suicide in 2011.

Quinn considered selling FalconStor but could not find a suitable buyer so he is changing its market focus.

FalconStor’s business issues may not be completely behind it. The company received a letter from the U.S. Securities and Exchange Commission (SEC) in September asking if it has done business in Cuba, Sudan or Syria – countries the United States has identified as state sponsors of terrorism – through its partner Hitachi Data Systems (HDS).

On the earnings call, Quinn said FalconStor’s agreements with HDS and all other partners include agreements that they conform to U.S. laws.

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