Analysis

posted on 14 July 2008 06:14

DataDirect Networks would have us know that it is a very successful company and is pretty determined to have an IPO in six to nine months, conditions permitting.

It has helped establish a substantial and expanding market niche for highly scalable and fast access storage systems - extreme storage for extreme environments - for rich media companies involved in applications like movie post-processing. This type of storage application is now being used in high-performance computing (HPC) and web 2.0 businesses which means that the market DataDirect addresses is expanding.

Co-founder and CEO Alex Bouzari said DataDirect started in the late 90's; "We saw the nature of data changing. ... The rich media world would become digital end to end." Images and video and audio would all transition from analog storage to digital storage. The founders and early engineers talked to people in high performance computing and rich media environments and confirmed that the storage infrastructure would need vast scalability and real-time access.

Files were going to be huge and creative workers needed real-time access to them as they carried out their work. DataDirect Networks (DDN) developed its technology from the ground up, basing it on an appliance idea and a parallel architecture. It took three years of development and the first DDN product was shipped in June, 2000, to NASA who used it to store satellite download data. NASA is still a customer and 1,000s of TB of DDN storage is installed there.

In the 2000 - 2005 period DDN set itself a goal of establishing itself in the HPC and rich media markets. It's now a market leader in HPC with 40 of the top 100 supercomputer sites using its kit. The company has many hundreds of customers amongst broadcasters, post-production houses and newsroom editing shops.

Since 2005 unstructured data has started to become a significant and growing phenomenon elsewhere. User-generated content is now of huge concern to Internet service providers and Web 2.0 companies. So internet content creation and distribution is now a market area that DDN sells into.

DDN also sells into large enterprises as they realized they faced substantial unstructured data growth and the storage products they were using for small and random I/O environments did not suit unstructured data storage.

DDN has been operating profitably since 2003 when it reach the $25 million annual revenue mark. In 2007 its revenues reached $100 million. The next milestone is $500 million.

Bouzari said: "The world is coming to us. We're looking at expanding the company and growing top line revenue. ... We're seeing a major paradigm shift. Some 85 percent of all data being created is unstructured. Traditional storage architecture products from 800lb gorilla companies can't handle this."

DDN is direct about wanting an initial public offering (IPO): "We believe an IPO is probably the right step on the way." He thinks it could take place in the next six to nine months "depending upon market conditions." A level of market stability is needed.

Asked about product developments he mentioned solid state drives (SSDs): "That's an additional media we're developing right now with an offering by the end of 2008 or beginning of 2009."

DDN appliances can have multiple tiers of disk. The next logical step is to add SSD to the existing tiering. Bouzari added: "We're still evaluating the right SSD. Our system is cache-centric. There is already a flash memory cache in the appliance."

The point about DDN helping to establish a market is quite correct. We can class EMC's Hulk/Maui combo along with HP's ExDS9100 and IBM's XIV purchase as three major competitor initiatives that have at last some of their roots in DataDirect Networks' success. Other competitors are Atrato, BlueArc, Isilon and NetApp (ONTAP GX). Panasas and Ibrix provide HPC-class parallel file systems. Dell may become a competitor in the next six to nine months.

The extreme data storage area is set to boom and Data Direct Networks is set to scale its revenues in synchrony with unstructured data growth.

^{[Chris Mellor.]}