Terry Cunningham of i365 reinvents the VAR business, starting with storage

note: this piece was originally written for the Orange Business Live blog

Our 4th visit of innovative companies in the Silicon Valley was devoted to i365, a Seagate company. The presentation was delivered by Terry Cunningham, President and GM of i365, George Hoenig, head of products and services and Valerie Fawzi, head of Marketing.

“The world of storage is changing!”

What we are going to talk about here has never been done before, Terry Cunningham said by way of introduction to his presentation.  Seagate has acquired a bunch of technology players before (in the 1990’s) which gave birth to Veritas. 3 years ago, Seagate went to but a few companies in order to build a worldwide leader in storage and services. So, what’s new this time which didn’t exist 20 years ago: The Cloud is the response to that question Terry Cunngham said. The term cloud creates the idea of a secure, reliable place where your idea are safely stored: this is why i365 is calling its project the vault, or even e-vault to be precise.

a ‘channel-friendly’’ business model aimed at SMEs

The product was built from the ground up to be disk and cloud-optimised: it was built for disk and cloud, i.e. Wan optimised, able to withstand a permanent trickle down the wire all the time.  “There aren’t several backup products, one per function like our competitors” Terry added. E-vault powers 38% of cloud data protection according to i365 and serves 30,000+ customers; they are only SMEs (the company doesn’t serve enterprises nor consumers).  The i365 approach is ‘channel-friendly’, i.e. based on indirect sales, therefore enabling partners to take a part in that game and the company is backed by Seagate. This is an important asset because, Terry said, the Seagate backing is a guarantee that customers’ data are protected. These service partners are names “CCSP” which stands for Cloud Connected Storage Solutions Provider.

how can service providers provide backup services to their users if they can’t build the service by themselves?

VARs have problems now as their clients are registering for online backup services by themselves and they aren’t event asked to provide the service. This is where i365 is playing a role. With this programme, the VAR has the first copy but i365 is backing them. Backups are being replicated to other places than the US when Europe is involved (UK and Canada in some instances).

How does it work?

On top comes the eVault cloud. The VAR (Value Added Reseller) provides proximity – with Seagate drives – and can deliver the recovery of the data in just 21 min. But in case a problem hits both client and the VAR (because of the same physical proximity which in that case is an issue), the VAR is able to get back to the i365 eVault cloud to recover the client’s data.

i365 then provides managed services around the data backup. VARs aren’t just looking for back-up but the services that go with it. Many customers have never been in the service business, George Hoenig declared, so the company delivers tools for them to improve their offer.

In order to ensure that the process is smooth and that data is backed up properly with the available amount of bandwidth, there are 3 main steps:

  1. EVault agents enable front-end de-duplication and compression to reduce storage footprint by up to 99%
  2. Encryption is then enforced to secure transmission and vault storage
  3. the back-up is tolerant to network disruptions (a network throttle is put on the end-user’s machine in order not to disrupt the backup process)

The front-end Vault system at service provider end enables multiple customer back-ups and does multi-tenant billing, reporting and alerting so as to let the VAR deliver the right kind of service to its SME clients.

If a disruption of service takes place at VAR level, the data can be restored from the eVault in the cloud by i365. The eVault service is co-branded so that – even though the contractual relationship is taking place between the end-user and the VAR and despite the fact that i365 doesn’t have a contract with the end customer – in the unlikely event that the service provider goes out of business, i365 can direct them to another partner. VARs are free to resell or even offer the service, if they want to bundle that service into another one.

It costs as little as €17,500 to get started with the i365 programme as a VAR and the appliance can be built as the business grows. The monthly licencing fee that goes on top of the upfront payment is assessed on storage usage, includes replication and storage; the fee automatically decreases as the business grows and an option exists with which service providers can pre-pay the licencing fee for a discounted rate. Everything has been made to favour Service Providers and maximise their benefit.

What about Europe?

A pilot has been carried out since the Summer of 2010 and approx. 15 service providers have been involved in that programme, a good proportion of which are located in Europe, and there is a huge potential for this kind of services over there. A Forrester report entitled ‘channel models in the Era of Cloud’ was released on November 3, 2010, in which it is highlighted that 77% of service providers are interested in providing storage, backup and disaster recovery cloud services in the next 12 months.

There are 3 types of service providers which could be interested in that kind of services:

  1. existing backup hosting providers looking to improve their current offering,
  2. hosted service providers wanting to provide additional value add services to their clients,
  3. traditional VARs.

Small VARs have already participated in the pilot, such as Xanadu in the UK, Noeva in Monaco or France’s Champagne informatique (the latter catering the lower end of the b2b spectrum), EspritXB from Sweden…

There are different levels in the channel business model of i365 with 3 tiers of resellers:

  1. value added distributors which market and sell eVault solutions,
  2. value added resellers who design, sell and deploy eVault solutions,
  3. Alliance partners (OEM) who integrate and bundle eVault into their own portfolio

cloud storage is only a beginning

Terry concluded by stating that this was just the beginning of an array of services aimed at putting VARs at the forefront of IT for the midmarket. “The cloud market for this kind of clients isn’t big enough” he added, “and this is because the VAR has been cut out of the deal”.  This is why i365 has decided to make VARs the most important part of that deal: it is the founding vision of i365 and Terry Cunningham warned us that new services would come in the near future to back this vision.

more information about i365 can be obtained directly from their Twitter account (@i365) and from the perusal of their blog at http://blogs.i365.com

fusion-io: flash io-memory, flash results, flash growth

note: this piece was originally written for the Orange Business Live blog

On November 16, we went on our third visit and we paid another visit to Fusion-io (see the account of our June visit to Fusion-io by clicking here). Fusion-io is the epitome of these successful technology companies as can be found almost only in the US and which make this kind of press trips so useful.

a stunning customer base

The company was founded in 2006 by David Flynn and Rick White. In 2007, it unveiled io-memory. In 2008, it launched its first products; but the market didn’t quite understand it. In 2009, it then partnered with HP and IBM and Lightspeed and Samsung invested money in the company. In 2010, WSJ named Fusion-io the no.2 emerging technology company; it is 300 employee-big, based in Salt Lake City, Utah and most of its execs are based in Mountain View, Calif. Fusion-io is a disruptive company. In 2009, it grew by 5 1/2 times. Customers include large names, mostly in the financial markets, such as Morgan Stanley, Credit Suisse but also Web players like Facebook or the West coast hit veteran website Craigslist, and Zappos, Sears, GM, Boeing and Chevron …

the pain-points of data centre managers and Fusion-io’s response

Jim Dawson, EVP worldwide sales at Fusion-io, explained to us the history of the disk drive and went into the details of the pain-points of clients and data centre managers. In 2007, one needs 25 disks to equate the performance of 1 CPU. In 1997, one needed 2 disks to do the same thing. Today, one needs 600 disks to equate the performance of a multicore processor.

This is the main pain-point: customers may not recognise this, but they will notice that 1 in 3 servers use less than 20% of their CPU potential and this is a big threat to datacentre productivity. The trend of SSDs was meant to turn flash and make it look like a disk, and the reason why we had this trend is that it was easy. Beyond that, Fusion-io has developed a new category, a hybrid of dRAM and storage which bridges the gap by providing the new form of storage called io-memory. But what does that mean to customers? Here are a few examples:

  • answers.com: grew from 350 to 3,500 queries per second, replication time increased 31 times (from over 6 hours to a little more than 12 minutes),
  • prime focus: improved data load support 20x in the same rack space,
  • datalogix: query time reduced from 2 hours to 4 minutes,
  • Lawrence Livermore National Laboratory: improved their bandwidth from 176MB/s per server to 4.75GB/s that is to say a 26.9x improvement,
  • Win.com improved their average SQL transaction time by taking down from 345 milliseconds to 88 milliseconds, i.e. a 4x improvement
  • etc.

We are talking about improvements which are 10x or more and this is why this small company from Utah has grown into a 3 digit million $ company in just 3 years! and the end-client benefits are not just about performance, they are also about savings related to power and cooling.

So, why do OEMs like HP and IBM agree to work with Fusion-io even though io-memory is aimed at reducing the number of servers and disks which they sell? In fact, they agree to this because it’s an inevitable change in the industry, that if they don’t do it, someone else will and besides, the servers they sell tend to be a lot more upmarket too. this underlying trend in the market is shown in the following diagram (source: Denali & Garner, February 2010) and shows that PCIe cards, the technology invented by Fusion-io should amount to more than 1/3 of the total SSD market by 2012-2013. The trend was set by Fusion-io and will soon become mainstream.

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