SANgate Shuts Israel R&D

Data migration appliance vendor SANgate Systems Inc. has closed its Israeli R&D center in Even Yehuda, laying off 22 engineers in the process, company officials confirm.

SANgate, based in Southborough, Mass., has decided to relocate a handful of its engineers to the U.S., where it is beginning to see sales trickle in, say company execs (though there's no word on who these customers are yet).

George McHorney, SANgate's CFO and interim CEO, met with workers in Even Yehuda today to inform them of the company's plans. Only four employees have been asked to transfer to the company's U.S. headquarters, leaving SANgate's total headcount at around 25 employees. There will be some layoffs in Southborough as well, but SANgate was unable to provide details on this yet.

"In these times, anything you can do to streamline the company is of value," says Paul Feresten, VP of marketing and business development at SANgate. The decision also reflects the company's recent move to sell only open systems data migration appliances. "Israel was mainly the legacy mainframe stuff," says Feresten.

Like many storage startups, SANgate has been though a rough period in the last 12 months attempting to carve out a new market during the IT spending crunch. The effort has taken its toll on the company's management team, now operating under McHorney, its fourth CEO (see SANgate Loses Third CEO and SANgate Gets New CEO ).Finding a permanent CEO is on the agenda, but SANgate says its focus is on product delivery and its selling effort. "Right now, a new CEO is not critical for us," Feresten says.

Its product direction has shifted a couple of times over this period. Its latest design, the SANblaster S1000, is an offline (or out-of-band) data migration appliance (see SANgate Ships Data Migration).

SANblaster competes with software from DataCore Software Corp., FalconStor Software Inc. (Nasdaq: FALC), Fujitsu Software Technology Corp. (Softek), NSI Software, Legato Systems Inc. (Nasdaq: LGTO), and Veritas Software Corp. (Nasdaq: VRTS), all of which offer host-based software for data migration and replication. In addition, several hardware vendors have their own software, such as EMC Corp.'s (NYSE: EMC) Symmetrix Remote Data Facility (SRDF) and Hitachi Data Systems (HDS)'s NanoCopy.

SANgate says it views companies like Veritas and Legato as potential partners rather than competitors. "In the future we want to do backup/restore and mirroring but will partner for this technology," says Feresten. It's hoping that as network-based storage takes off, its appliance will become another platform for software vendors to piggyback on.

SANgate has cash reserves for another year of operations, and it began generating its initial revenues this month. However, the company is still in the process of closing an additional round of funding -- any day now, executives say. It has raised $25 million to date from Jerusalem Venture Partners, and Battery Ventures