Persist Packs Away Email

Backup startup Persist Technologies Inc. leapt out of stealth this week, with an already-shipping appliance that it claims solves the problem of backing up email messages (see Persist Punches In).

Many companies are facing flooded inboxes and clogged backup servers as email volumes continue to explode, and business realities and regulations force companies to store their emails more securely and for longer periods of time. Persist says it addresses these problems with its AppStor appliance, which is purely dedicated to backing up and restoring reference data like email. The appliance can also be used for backing up other reference data, including office documents, medical imaging, and multimedia files.

"Reference data occupies about 50 percent of total storage today, and it gets very costly to keep that in expensive storage," says Persist CEO Paul O'Brian. "Were offloading all the excess onto our appliance... This is not only about being able to keep the information, but also about being able to make that information available."

The Pleasanton, Calif.-based startup’s appliance is based on proprietary software integrated with PC hardware from vendors like Dell Computer Corp. (Nasdaq: DELL) and Hewlett-Packard Co. (NYSE: HPQ) and incorporates the database structure needed to index and search the archives.

Persist says its appliance has been shipping since last December and is already pulling in revenues from three paying customers. [Ed. note: Wow! That's about one every two months!] In addition, the company says between six and eight companies are currently testing the box. Current customers include E*Trade Financial and the United States Army.The release is timely, industry observers say. According to a recent Enterprise Storage Group Inc. report, the majority of the more than 10,000 laws and regulations governing industries in the U.S. have to do with data storage. Many of those laws have to do with how and how long a company has to store its emails.

Meanwhile, a recent report from The Radicati Group Inc. anticipates that email archiving vendors will see their revenues skyrocket from $126 million at the end of this year to over $1 billion by 2007.

"There’s a tremendous, huge, huge market need for this," says Sara Radicati, president and CEO of The Radicati Group. "And the need is driven mainly by compliance requirements."

ESG analyst Peter Gerr agrees. "Companies like Persist... have found not only a need, but also the proper time to bring the product to market," he says.

Of course, Persist isn’t the only company to have recognized this market opportunity. Email archiving and restoring is a crowded space, including players like AttachStor Inc., CommVault Systems Inc., Computer Associates International Inc. (CA) (NYSE: CA), Educom TS Inc., EMC Corp. (NYSE: EMC), KVS Inc., Legato Systems Inc. (Nasdaq: LGTO), and Veritas Software Corp. (Nasdaq: VRTS) (see Legato Mines Iron Mountain and EMC Banks on Archives).Persist, however, persists that it has taken a unique approach to the problem. Unlike software-based email archiving products, which need to be loaded on existing hardware and run with existing database applications, AppStor offers a completely integrated package. "This eliminates the need for an à la carte solution," Gerr says. "I think that’s a compelling value proposition."

But Persist certainly will face all of the typical startup challenges -- namely, getting its foot in the door and getting customers to pick its technology over that of the more entrenched players.

Still, the company already has a number of OEM partners, including HP, RLX Technologies, and IBM Corp. (NYSE: IBM); and it has partnered with Zantaz for archiving, and Akonix Systems Inc. and IMlogic Inc. for IM integration.

"I think they’ll face less of a challenge than traditional startups because they’re so focused," says Gerr.

One possible drawback to the company’s technology is that each appliance currently has to be managed independently. Persist says it will eventually allow a user to manage an entire enterprise’s email backup worldwide from a single location.The startup, which was spun out from financial services ASP Zantaz in February 2002, says that its box automatically recognizes, reads, and interoperates with any application used to create digital content, and is compatible with a wide range of applications through such standards as SOAP, SMTP, IMAP4, and HTTP. In addition, the appliance can manage both structured and nonstructured content and offers "self-healing" features, built-in mirroring, and fault tolerance, the company says.

The technology, according to O’Brian, supports more than 500 simultaneous queries, and allows users to retrieve their documents in less than 3 seconds.

"They offer excellent search capabilities," Radicati says. "It’s important to be able to find the data once you’ve stored it."

The 40-person company received an $11 million funding round in February 2002 from ComVentures, ArrowPath Venture Capital, Red Rock Ventures, and Athena Technology Ventures. "We’re still working off that [funding]," O’Brian says, but adds, "We’re always working on another round." As for when it will reach the break-even point, the company says it has set its sights on the first quarter of 2005.

Persist's AppStor appliance starts at $45,000 per terabyte, with quantity discounts available.— Eugénie Larson, Reporter, Light Reading