Springtime Top Ten

Whew, something smells a bit stinky in here, and it isn't the tuna sandwich we left in the desk drawer. Not to be too blunt, but some of the companies on our current Top Ten list smell so fishy, we cant possibly have them up there a moment longer [ed. note: crack a window, man!].

So, just how long can a once fresh-faced startup remain on our list before it starts to smell iffy? Originally, there were six rules to which a startup must adhere to win a place on the list, but we’ve added two more. Why? Because we can. Seriously, though, the days of startups being acquired pre-revenue (or even pre-product) are long gone – which is why we've added the following two rules:

Rule No. 7

Only companies shipping a product get a place.

Rule No. 8Only revenue-generating customers count. None of this wishy-washy beta-testing nonsense, thank you.

So, to the action then. There are four new companies, a brand new No. 1, and some heavy casualties on the hardware side.

Former Byte and Switch poster child Pirus Networks has been so quiet of late, we had to call them up just to check that the company is still around! We were promised major customer announcements earlier this year but the phone never rang and the emails never came. Pirus, you’re dropped. Try out No. 6 for size.

Replacing Pirus in the No. 1 spot is InterSAN Inc., currently one of the hottest startups in the storage management software space. This company just landed another sizable round of funding, has revenue-generating customers, and is selling next-generation provisioning and automation software that would make EMC Corp. (NYSE: EMC) weep (see EMC Mulls Software Buys). A good enough reason for promotion to the top spot if ever there were one.

Next up is the big BlueArc Corp., which regains its original position at No. 2 on the list. BlueArc sunk as low as eighth position in December 2001, when we got tired of hearing about the same one customer (Lawrence Livermore) over and over again. But since then, it's been gradually climbing back up with new customers, a management reshuffle, and some exciting products on the way later this summer. More on that later.Maintaining its position at No. 3 is DataCore Software Corp. It's still pulling in the revenue, and from what we hear it's gearing up to announce another major OEM win. Stay tuned for more on this.

Nishan Systems Inc. slides a couple of places to No. 4, because like Pirus, this startup has been long on promises, short on action. Unlike Pirus, Nishan does have a decent number of paying customers, which we have spoken to, but they just don’t want to talk about it publicly. For this reason, Nishan holds its position in the top five.

Brave new entrants to this list are: Acirro Inc., PolyServe Inc., GlassHouse Technologies Inc., and LeftHand Networks. And hitting the cold, hard floor of the Bit Bucket this time around are SANcastle Technologies Inc., Scale Eight Inc., 3PARdata Inc., and Storigen Systems Inc.

For a detailed description of why we picked these startups and dropped the others, click on the entries below.

Remember, this list could change tomorrow if we feel there are better companies out there that we’ve missed. If you know of one, get in touch. We might not agree with you, of course, but give us a try.Table 1: Top Ten Private Storage Networking Companies

InterSAN Inc. storms into pole position on this list, having made no secret of its plan to become the de facto software platform for managing storage networks.

This kind of posturing is fine – as long as whoever's talking the talk is also walking the walk. InterSAN's investors clearly believe the startup is still on track to pull off its mission, as they poured $17.8 million into the company earlier this month. This round raises the total amount invested in InterSAN to $28 million (see InterSAN Lands $17.8M).

Raising a round of this size is particularly impressive given today's climate of tight-fisted VCs.

InterSAN is in what venture capitalists call the sweet spot of the market. It's shipping software that manages host bus adapters, storage arrays, and Fibre Channel switches from almost all the major vendors in the market, eliminating the headache of managing all of these devices separately (see InterSAN Attracts Major InterEST, InterSAN Hooks Up With Hitachi, InterSAN Supports LSI Logic, InterSAN Supports QLogic, and InterSAN Supports Inrange).So far, InterSAN has announced one revenue-generating customer: financial services company Northern Trust Corp. InterSAN officials say it has a number of Fortune 500 companies evaluating the product, and it hopes to close that business this quarter.

There are a host of other startups and public companies chasing this space, so InterSAN will have to work its socks off to stay above the fray (see Policy-Based Storage).

Its closest rival right now appears to be CreekPath Systems Inc. (see CreekPath: SAM It Am). But this former storage service provider (SSP) has yet to announce any customers, so InterSAN has the edge, at least for now.

Swooping back up to No. 2 is BlueArc Corp., recovering from a plunge to the subterranean depths of No. 8 in former weeks.

Are we just pinging this company up and down for fun, or has it actually done something to deserve this rollercoaster ride?In a word, it's moved up on the list because of customers. Back in December 2001, BlueArc could talk about nothing else but its giant Linux cluster deal with Lawrence Livermore National Laboratory (LLNL). If this sort of thing interests you, you might like to take this slightly used 1972 AMC Gremlin for a spin.

Thankfully, it has other customers now, too – close to 30, in fact, with units installed in sites ranging from a Fortune 100 pharmaceuticals company to the largest film and media empire in America. We are sworn to secrecy on the names of these customers, but we have spoken to most of them: They have the product, and they are certainly paying for it.

BlueArc did let it slip that its largest single order is with none other than Lawrence Livermore National Labs – over 115 terabytes!! Wowwwww, man. (See Livermore Labs Back for More BlueArc.)

Another reason for BlueArc's promotion is its second-generation product family, due out this fall. By the end of the year it will no longer be a one-trick pony, which was cause for concern in such a tight market. BlueArc plans to scale its product up and down market to attract a broader range of customers.

Recent management changes, including the appointment of Jeff Allen as executive VP of business and strategy, all bode well for this company (see BlueArc CEO Steps Down and our interview with Jeff Allen, Senior VP, Strategy & Development, BlueArc).All in all, we sense the ducks on the Arc are in a row.

Hanging in at No. 3 is storage management and virtualization software startup DataCore Software Corp.

Again, customers win the day, and DataCore has an army of them, including hospitals, insurance and financial firms, publishing houses, retailers, and telecommunications companies. Not testing it out. They're paying for the product.

It also has a major, global OEM deal in the pipeline that will put to rest any concern over the term sheet of its last round. Expect this to be announced within the next 30 days. [Ed note: We can't say any more, or we might wake up with a horse's head in the bed.]

Nishan Systems Inc. slides down a couple of places to No. 4, partly because the company doesn't call us anymore, and we hate that.But when we got in touch to let them know we were updating this list, Nishan told us "an army of people were at the end of the phone to provide us with whatever we needed."

So here's what we need:

Until then, a list of paying customers will be fine.

Mesaba Airlines Inc., a regional carrier based in Minneapolis affiliated with Northwest Airlines Inc., is using two Nishan storage-over-IP switches, along with other storage equipment in its network, for disaster recovery and business continuity. Apparently it's a $250,000 buildout, instead of the contract worth millions of dollars this was supposed to be a few years ago.

TRW, a massive conglomerate that is so huge we can't tell what it does, is also a recent customer win for Nishan.'Nuff said. Nishan stays in the Top Five, for now.

It is tough to find winners in the ever-crowded storage management software market, but we think that Acirro Inc., new to our list at No. 5, looks like the one (see Acirro Breaks Cover).

Why Acirro, you ask? First, its product isn't trying to change what companies are already doing, as many next-gen storage startups are suggesting. It's simply offering them an improved way to manage what they already have.

More specifically, Acirro's software provides a way to manage different NAS devices over a wide-area network. It's a globally distributed file system, much like Scale Eight Inc.'s, except Acirro is shipping today and already has a customer under its belt. Which is more than can be said for Scale Eight, still trickling along with its SSP business while simultaneously trying to convince people that it's a software company. Forget it, Scale Eight. Time for a spell in the Bit Bucket. A company with less baggage is stealing your thunder.

Next, Acirro's management team is rock solid. The company recently hired Joel Harrison, industry luminary and founder of Quantum Corp. (NYSE: DSS), as its CTO. It also has Anson Chan, VP and general manager of network management at Cisco Systems Inc. (Nasdaq: CSCO), on its advisory board.Last, and most important in this climate, the company is funded to the tune of nearly $10 million by Raza Foundries.

Poor old Pirus Networks. Once the darling of the storage networking startup world, it's now hunkered down so far it can barely be seeing daylight.

Pirus did get in touch with us, eventually, to say it isn't able to announce those customers it promised. "You should get nasty!" a company spokeswoman admits.

"Buying cycles are still slow," she explains. "Companies are not issuing purchase orders. It's all tries and buys." Yadda, yadda, yadda. [Ed. note: Er... not Yotta Yotta Inc.]

We have dropped Pirus down five places to No. 6, a steep and not altogether unexpected fall.However, the vision of intelligent storage driven from the network was largely pioneered by this company, and that means Pirus remains, at least in spirit, in the upper right quadrant of our heart. [Ed note: Always preferable to the cold, stiff Gartner alternative.]

Its growing reseller channel also gives it a clear edge over all the other next-generation switch startups, none of which are shipping. For this reason, Pirus remains a contender and a key player on this Top Ten.

Hanging on at No. 7 is Alacritech Inc., now shipping its iSCSI and TCP/IP offload cards (see Alacritech Releases GigE Accelerator and Alacritech Ships NIC).

It has announced some flashy benchmark results, but, sadly, these count for diddly when it comes to paying employees at the end of the month (see Alacritech Touts NAS Testing).

To stay on this list much longer Alacritech needs to announce some major OEM deals or significant customer wins – fast.Someone over there better get out the chickens and start doing an iSCSI rain dance, or something, as this market isn't happening any time soon.

The second new company on this list, PolyServe Inc., joins at No. 8

despite its name, which sounds like something you use to mix cement.

It actually sells host-based file clustering software that enables "dozens" of servers to have concurrent read-and-write access to shared data on a SAN. Apparently, this is really hard to do, according some people at PolyServe who told us it's really hard to do (see PolyServe Hits the Comeback Trail).

Not just any old people, though: Most of PolyServe's engineering team came from Sequent, creators of NUMA, the first clustering technology that IBM Corp. (NYSE: IBM) acquired, for $810 million in 1999. [Ed. note: Bodes well, no?]

PolyServe is shipping and has several customers, including the Burlington Coat Factory, which is impressive for a company that only recently launched.Watch this space – this company could be on its way up.

New at No. 9 is GlassHouse Technologies Inc., filling a hole in the storage market for professional services companies that offer consulting, strategic planning, and implementation of storage networks.

Companies have overpaid for storage that's underused and poorly managed. Add to this the daunting number of technology options available to fix the problem, and you have an IT administrator's nightmare. Step in, independent consulting firm, to advise and help sort it all out.

EDS, Accenture, Cap Gemini Ernst & Young, IBM Global Services, and the other major IT consulting firms have yet to really exploit this opportunity. More likely, they don't have the hands-on experience to design, deploy, and support sophisticated storage networks.

Meanwhile, Boston-based startup GlassHouse does and is so excited about this opportunity it's steaming up its own windows. With only 20 people on board, GlassHouse is promising to help customers figure out how much they're paying for storage, how to bring down costs, and how to increase the efficiency of a SAN (see GlassHouse Makes Things Clear).It's a tiny outfit, but GlassHouse already has 22 paying customers. The ones we can mention include Air Products and Chemical, GiantLoop Network Inc.,

Network Plus, RISO Inc., Brockway Smith, Charles River Labs, Hewlett-Packard Co. (NYSE: HPQ), ISO New England, Shipley (a Rohm and Haas Company), and State Street Global Advisors.

Its competitors include Imation Corp., Storability Inc., and Calisma Inc. But for now, we think GlassHouse cuts the mustard.

Startups acquiring startups. We love this. Why? Because it demonstrates two important traits in a young company: One, that it has enough cash; and two, that it can spot market trends and isn't afraid to buy expertise rather than taking years to grow it in-house.

And why is all this relevant to our new No. 10 entrant, you ask? Well, LeftHand Networks recently snapped up North Fork Networks (see LeftHand Grabs North Fork) to move into a new area.

LeftHand was first to market a year ago with a NAS box that operates over standard Ethernet networks and supports both block and file transfers. But the capacity of its so-called Network Storage Module (NSM) was a little on the small side. Prices for a 160-Gbyte NSM system, including hardware, software, and a three-year service and remote support warranty, begin at $15,000, which is pretty low for this kind of gear. Compare it with offerings from BlueArc Corp., Network Appliance Inc. (Nasdaq: NTAP), and EMC Corp. (NYSE: EMC), which start at around $50,000.To move upmarket and improve its appeal to larger enterprises, LeftHand acquired North Fork, which provides it with clustering software that enables it to pool its boxes so they appear as one giant, mainframe-like system. Is that cool, or what? This means companies that wish to start small can do so, but with the assurance that they can augment the system as needed.

The one reservation we have about LeftHand, which is why it didn't make it onto the list sooner, is that its technology is proprietary. That is to say, you can only pool LeftHand boxes into this cluster, which must be managed separately from the rest of your storage. However, this does not appear to be deterring LeftHand's customers, of which there are about a dozen, including MetaSolv Software Inc. (Nasdaq: MSLV), Leopard, and Denver Health.

To move them up the list, though, we will need to see evidence of LeftHand working with partners and interoperating more with other storage technology.

Our first Bit Bucket casualty on this list is SANcastle Technologies Inc., makers of a Fibre Channel and Gigabit Ethernet combo switch.

We thought integration of Fibre Channel and Gigabit Ethernet networks over long distances without disruption or technology changes was a rocket of an idea, but it's turned out to more of a small pocket flashlight.Compaq Computer Corp. seems to like the idea, but it hasn't actually committed to an OEM agreement. And who knows what will happen to that, now that it's being folded into Hewlett-Packard Co. (NYSE: HPQ)? (See Compaq OKs SANcastle.)

Other than that, SANcastle hasn't really seen much action; hence, it drops off the list.

Next to drop: Scale Eight Inc. Back when we first compiled this list, we picked Scale Eight because it looked like the only storage service provider (SSP) with a hope of making it (see SSPs: RIP).

But eventually, after all the other SSPs had already figured out that the business model sucked and morphed into software companies, Scale Eight followed suit (see Scale Eight Smells the Software).

It has also been through a tumultuous year on the management side and still does not have a CEO, from what we can tell (see Scale Eight Shapes Up).Rules are rules, and Scale Eight has broken too many of them. Later!

3PARdata Inc. wasn't a difficult one to strike off. It still isn't shipping its so-called utility storage system and clearly doesn't have any paying customers yet, either.

Its goal, like Cereva Networks Inc. and Yotta Yotta Inc. before it, is to come up with the EMC-killer box -- and maybe it will. But it has an incredible task ahead to convince today's market to actually buy it. Not many people are even buying EMC Corp. (NYSE: EMC) hardware right now, never mind next-gen equipment from an unknown startup. They're looking to manage and get better use out of what they already have.

Eventually, enterprises will need to buy more capacity again. But the question is, when? No one, not even EMC, has an answer to that right now.

Finally, there's Storigen Systems Inc. This startup is shipping its multiprotocol caching appliance, but its two "customers" are still only evaluating the product (see Storigen Systems