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EqualLogic CEO says IPO on the way

EqualLogic's CEO talks about the company's plans to go public, its intent to add 10 GigE to its products and why he thinks not all iSCSI products are created equal.

EqualLogic Corp. CEO Don Bulens joined the company in early 2005, hailing from a background in networking and software, including stints at AT&T and Lotus Notes. This week, he sat down to talk with about iSCSI, his company's core business and a hot topic in the market of late, as well as EqualLogic's outlook on developing its business and product line.

How many customers does EqualLogic have today?

Don Bulens: Over 2,000 -- 350 in the fourth quarter alone.

Is the company profitable?

Bulens: Yes, I believe so -- it's been profitable since at least the second quarter of 2006, and possibly in the first, but I can't say for sure since we haven't closed our books yet.

Given the success of storage IPOs [initial public offering] in recent months, is the company planning a public offering? What's the approximate timeframe?

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Bulens: We are preparing for life as a public company. We have always built our business to prepare for that. We focused on becoming profitable with the expectation that would become part of the requirement [for going public], of course, that's not true anymore as Isilon and Riverbed illustrated recently. But we're participating in the fastest growing segment of the disk industry, and depending on whether you use Gartner's data or IDC's, we're either second or third in market share, and we're profitable. I can't make an explicit commitment to time frame.

What's EqualLogic's top priority on the product development side?

Bulens: Our first and foremost priority is always on how can we make our systems easier to deploy and manage … We have a number of customers now who are at well over 100 terabytes (TB) in deployment and the challenges for ease of management for a deployment of that size are at a new order for our first wave of customers.

We're looking at enhancements that increase the performance characteristics of our systems -- there is a 10 Gigabit Ethernet (GigE) development effort under way; we don't see it as central to the market we are relentlessly focused on, which is the midtier enterprise, but in the interest of serving our higher capacity customers, it's certainly part of our plan for the 18-month horizon.

Given all the attention it's getting lately, what doesn't the market know about iSCSI?

Bulens: It's taken for granted that it's less expensive and easier to manage, but people think less expensive and easier means there is a tradeoff on performance, capacity, or reliability, and the fact is some of the early iSCSI market products reinforced those fears. A recent customer of ours was suffering incredibly disruptive problems with another iSCSI product in his Exchange environment -- basically, the IP SAN would break. It was an earlier generation iSCSI solution that kept breaking on them and the performance was terrible … So this customer deployed us, got Exchange back up and doubled his performance. ISCSI's image is tarnished by some of the poorer, earlier solutions on the market like that one; not all iSCSI products are alike.

So do you have insight into whether the legacy Fibre Channel (FC) storage vendors are really behind iSCSI yet?

Bulens: When your Fibre Channel high-end and midrange product lines are growing at tremendous rates with fantastic profits and driving extensive professional services engagements, you're not going to be anxious for that to go away -- it's just in their shareholders' interests for them to clutch on to Fibre Channel as long as possible. When we acquire a new customer, we are beating Fibre Channel proposals, not iSCSI proposals, from one of the large systems companies still leading in the market with Fibre Channel.

What makes your product higher performing?

Bulens: Obviously 4 Gbps is better than 1 [Gbps]. But the speed of the wire is not a primary factor in storage system performance -- instead, we use the Internet's law of a large number of small pipes, rather than a small number of large pipes, as a fundamental part of our architecture.

We heard one analyst describe EqualLogic as like a mini-EMC Corp., focused solely on iSCSI: high-end, proprietary and the most expensive solution on the market. Would EqualLogic agree?

Bulens: I don't think our customers view us that way at all. We have very small single-system customers who view us as an indispensable part of their storage infrastructure, moving from DAS [direct attached storage] to much higher utilization and an easy to back up and recover platform with networked storage. And oh, by the way, they have every product function that the highest end EMC Clariion customer has, bundled into a much lower cost product that's easy to manage, has great support and is easy to scale when they wish. We have a frameless solution. You can buy as you need -- you don't have to project your storage for three-to-five years and buy a large expensive frame and then grow into it. You can add capacity online with no disruption on an as-needed basis.

Really, I think people view us as a tremendous value. No one wants to go into a car dealership and say, yes, I'd like power windows, yes, radial tires, yes, disk brakes … if you're buying a car, you assume all those kinds of features are part of the core purchase. That's not true buying an EMC array -- customers have to carefully select each and every feature or pay for it terribly down the road. I disagree [with the analyst's assessment] and think our customers would disagree strenuously.

How does EqualLogic plan to overtake the market leaders?

Bulens: It takes a long time to catch up with multibillion dollar companies with established brands, but we are doing it one customer at a time. Fortunately that rate is accelerating for us rapidly. For every other storage systems company, the rule book is sell direct to large enterprise and then go down market with the channel. We're focused on the midmarket, leveraging expertise from a rapidly growing, enthusiastic channel.

Who are your channel partners?

Bulens: We have over 450 partners in a growing community worldwide. Increasingly, our partners are those deploying virtualized server infrastructures. Our greatest growth from a channel perspective is in parallel with VMware. Every VMware deployment is setting up a prerequisite for shared storage, but when systems integrators are meeting with the IT organizations, all the enthusiasm is for deploying the new server infrastructure -- they don't want the SAN [storage area network] deployment to get in their way.

LeftHand Networks has pursued a different strategy to EqualLogic, racking up OEM deals with HP, Intel and others. Why don't you have any OEMs?

Bulens: We are not pursuing an OEM strategy. Our approach is to deliver [a] fully turnkey appliance-based solution that eliminates field integration requirements and results in less than an hour into production time with the majority of our customers.

So your architecture prohibits you from these kinds of deals?

Bulens: It's a choice of how to deliver our turnkey appliance with all the enterprise software functionality bundled into one system. Our early research in founding this company, and our experience working with customers says that's what the midmarket wants. No midsized or small IT department wants to be in the storage integration business.

Some users we've talked to say they find multiprotocol network NAS [network attached storage] and iSCSI systems the way to go, rather than choosing between the block and file interface. How does EqualLogic address those customers?

Bulens: It's a trivial integration for our partners to be able to deliver unified solutions to our customers, some of them using a Microsoft-based NAS head with our solution. That said, the majority of high-performance apps are going to be block all the way. With high-performance applications, block-level performance is valued with a premium by companies of all sizes.

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