Candera's Closed

A major restructuring failed to save SATA appliance maker Candera Inc., which has officially closed its doors.

Sources differ on when the company actually closed; One analyst, who asked not to be named, says it closed late in November; the company's PR agency was only told it closed this week.

"I'm not making any comment at this time," says CEO S. "Sundi" Sundaresh. But he acknowledges the company's shut down and that the assets of the Milpitas, Calif.-based firm will be sold. To whom, and for how much, remains to be seen.

The news is no surprise. Despite scoring $59 million in funding, Candera couldn't seem to get any sizeable sales of its intelligent tiered-storage SATA appliance underway. Layoffs a year ago, followed by new product, more channels, and more layoffs failed to do the trick (see Candera Cuts Again, Candera Cans SAN Hands, Candera Back for Seconds, and Candera Closes $12M Round).

There were signs of stress in the ranks. Nilesh Shah, who founded Candera as Confluence Networks in 2000, left the company in September. The VP of sales, Duke Lambert, jumped ship for startup NeoPath Networks in November, after joining Candera in August 2003.What went wrong? According to at least two analysts, Candera failed to deliver all the elements of its storage solution at the same time. As a result, "You had a hugely expensive plain vanilla storage controller," says the analyst quoted above. Replication and other tools lagged the hardware release.

Another factor appears to be Candera's inability to sign a sizeable OEM deal. Analyst Arun Taneja of the Taneja Group consultancy, said of Candera last month: "It doesnt matter how good the product is; it’s tough for an unknown to make it alone."

Instead of wooing prospective partners, Candera insisted on doing its own applications, tying the vendor to a challenging schedule and making it appear that the startup favored its own software and controller over those of potential partners, Taneja said last month.

In contrast, one competitor, Troika Networks Inc., which also makes an appliance that augments SAN efficiency, has emphasized its partnerships with Agere Systems Inc. (NYSE: AGR.A) and StoreAge Networking Technologies Ltd. as key to its future plans (see Troika Turns a Corner).

Another competitor, Maranti Networks Inc., which like Candera had its own controller, used its deployment of components from Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC) as a way to trumpet its own hardware (see Maranti Integrates AMCC). This kind of shoulder climbing wasn't part of the strategy at Candera, which tended to bill itself as a do-all solution.Meanwhile, competition for SAN streamlining, whether through appliances or virtualization components for switches, continues to grow (see Report: Switch Is Best for Virtualization and StorageTek Plans Virtualization Device). Given the increased stakes, it's likely we'll see other casualties besides Candera as the market evolves.

— Mary Jander, Site Editor, Byte and Switch