Intransa Inhales $8M

Intransa Inc., one of the first companies to generate revenue from IP SAN systems, today secured $8 million in venture capital funding.

Previous investors Advanced Technology Ventures (ATV), Sofinnova Ventures Inc., Sofinnova Partners, U.S.Venture Partners, and a large pension plan participated in Intransas series C funding, bringing its total funding to $49 million.

Intransa CEO Avi Katz says he will use the funding to bolster sales and marketing, secure OEM partners, and develop new products by the end of this quarter. Intransa has sold primarily through resellers until now.

The move marks the start to what many say could be a defining year for iSCSI. But it doesn't look as if success for Intransa or any other player will come without struggle. The December Byte and Switch Insider, "IP Storage Networks," identifies Intransa as one of the most aggressive iSCSI storage array vendors, but the report forecasts that a wave of consolidation will thin out competition in 2004.

The three-year-old company based in San Jose, Calif., is battling both established storage vendors such as EMC Corp. (NYSE: EMC) and Network Appliance Inc. (Nasdaq: NTAP),plus rival startups LeftHand Networks

and EqualLogic Inc. in the fledgling market.As the IP SAN market evolves, it's likely bigger players such as IBM Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ) will get into the game.

Intransa needs to work hard to improve its mindshare against these rivals. In the Heavy Reading Fall 2003 Storage Networking Market Perception Study, only 7.7 percent of 195 respondents identified the startup as an IP SAN vendor. LeftHand had more than twice as much name recognition, and nobody mentioned Intransa as a price or product quality leader. If there was good news for Intransa, it was that 18 percent of the respondents could not name a vendor in the market -- suggesting a market that's still being defined.

The market flux is a challenge in itself. “The problem with all the iSCSI startups is that IP-based storage appears in stealth mode to some people because the first tier suppliers don’t have product yet," says analyst Robert Gray, head of storage systems research for IDC. “The startups have to use their marketing dollars to generate interest in the concept and the technology. That’s a heavy burden for them.”

CEO Katz admits that's part of the challenge: “When you go out with your first products, your challenge is threefold. If you’re a small company, you have to convince people that you’re stable and not a fly-by-night operation. Then there’s education -- you have to convince people that the product is for real. Third, you have to convince them the technology is for real and has a significant value-add.”

In its favor, Intransa appears more stable than a year ago. Katz become the third CEO in six months when he took over last June (see Intransa Lands a Third CEO). Product soon followed (see Intransa Ships IP SAN). Intransa began shipping its IP SAN product in June 2003, and lists BlueStar Solutions, Macrovision Corp., Sandia National Laboratories, Stratex Networks Inc., UTStarcom Inc. (Nasdaq: UTSI), Tessenderlo Kerley, Apara-India, SES-India, Hannet-Korea, and CHS-Slovenia as customers. Katz says he expects to announce new OEM partners and new products by the end of the quarter. Intransa has sold primarily through resellers until now.Intransa's differentiator is its high-end approach to iSCSI. While most iSCSI vendors see the technology best positioned to replace direct attached storage (DAS), Intransa positions its array as tiered storage for data centers. Multiple Intransa IP5000 arrays can be deployed on the network in modular fashion, and software allocates data across multiple arrays to balance workload. Customers also can plug Intransa’s system into an IP network and use it without a router.

— Dave Raffo, Senior Editor, Byte and Switch