Nishan Guns for IPO

Robert Russo, Nishan Systems Inc.'s new president and CEO, has outlined his plans for the company, which includes hiring new executives, doubling the company's field sales force, raising more investment, and -- by mid-2004 -- floating Nishan on the public market (see Nishan Appoints CEO).

Prior to joining Nishan six weeks ago, Russo was senior VP at VA Software Corp. (formerly VA Linux) a company that also battled with how to turn market hype into reality. He helped build it into one of the largest independent Linux companies in business today [ed. note: though this may not really be saying much, as VA Software is still very much in the red].

Before that he served as a senior VP of worldwide field operations at Synopsys Inc. (Nasdaq: SNPS) where he was responsible for an organization of approximately 1,100 employees. He increased revenue from $170 million to nearly $800 million over a six-year period. Prior to that, Russo was general manager at Cray Research (Nasdaq: CRAY) and VP of north American sales for the now-defunct Stardent Computers.

It's just as well that Russo is accustomed to media hype and negative publicity from his days at VA Linux, because he's likely to get a bucketload of it as he embraces the dormant IP storage market.

In an interview with Byte and Switch Senior Editor Jo Maitland, Russo talks about whether the market attention and hype surrounding Linux bears any resemblance to the overblown predictions for IP storage in the past year, as well as Nishan's plans for an IPO.It sounds as if he's serious about running a public company. Unfortunately, the current stock market climate still sucks. Time will tell if Nishan can maintain this drive through what analysts believe will be another tough year.

Read on, as Russo discusses:

Byte and Switch: Are there any similarities between the early Linux market and IP storage networking?

Russo: Linux is an open-source, free endeavor. It was hard to establish value with Linux. That bears little comparison to the storage networking market, which is all about adding value... There is lots of intellectual property in storage switches and SAN technology in general.

There is a comparison in the growth potential of the two markets, though. There is a golden opportunity in IP storage. I believe there will be phenomenal growth in this market, as we are seeing in the Linux space.Byte and Switch: What are your growth predictions for Nishan specifically?

Russo: We are going to do about $25 million in sales this year, which I expect to increase to $100 million in 2005.

Byte and Switch: Whoa! Those are some crazy numbers. You do know the IP storage market barely exists today, right?

Russo: Of course. But there have been macroeconomic factors at work here. IP storage opens up the market to millions of companies that cannot afford today's expensive SAN technology. Transporting storage data over more affordable and more easily managed IP infrastructures makes sense to these companies. My sales estimates are without a large OEM influence, too, so they are actually conservative.

Byte and Switch: Does this mean Nishan is going to be signing some OEM deals?Russo: One of our goals this year is to support and focus on what our partners need. We do not compete with Brocade Communications Systems Inc. [Nasdaq: BRCD] and McData Corp. [Nasdaq: MCDTA], or EMC Corp. [NYSE: EMC] and Hitachi Data Systems (HDS). We want to help them sell more of their products. This is a big departure from where this company was in the past.

Byte and Switch: Yeah, that's right. Nishan was going to rid the world of Fibre Channel switches -- but that didn't exactly pan out, did it? Are you sure Nishan didn't annoy Brocade and McData so much they won't talk to you anymore?

Russo: That's not how business works. If we can help them, they will work with us.

Byte and Switch: What do you make of Cisco Systems Inc.'s [Nasdaq: CSCO] entrance into the Fibre Channel market?

Russo: It's an interesting move, as it forces EMC and HDS to wake up and see what's coming after them.Byte and Switch: Why those companies? Cisco's in the networking business and says it has no intention of ever getting into the disk market.

Russo: I don't believe it. The market is too big for them to ignore.

NEXT: Funding and IPO Hopes