Posts Tagged ‘Texas Memory Systems’

Summary: A look at the love, launch and lapse phenomenon encountered by many start-ups, what underlies the lapse, and how to mitigate it happening to your firm.

Over the past 20 years I’ve followed the successes and failures of firms in the data storage and data management arena. I’ve noticed a phenomenon that impacts those who sell enterprise software and systems based on new, or potentially disruptive, technology. In today’s market such technology would include systems based on solid state disks (SSD) as well as some cloud enablers, virtualization/VDI solutions and Big Data solutions

The phenomenon is the love, launch, and lapse phases many start-ups experience. In other words, most tech firms experience a honeymoon period that eventually ends. Here’s what happens:

Love at First Sight: The executives and board members are working their Rolodex to sign up beta customers and these initial customers love you. Additionally, analysts and journalists are calling you and you haven’t even come out of stealth mode. If you are out of stealth you may even have been recognized with a “most promising” or “company to watch” award.

Launch Like a Rocket: You hire a PR agency and announce your venture funding and your new product. You get lots of press coverage, especially in the storage media that you read every day. Additionally, your sales team has a bunch of prospective customers. You may even have some noteworthy customers.

Under these circumstances the typical CEO adds salespeople and minimizes the budget for paid promotions like advertising. After all, the prospects in the pipeline were relatively easy to get and PR is driving the funnel. Given everyone’s enthusiasm the plan presented to the board will likely be high on the revenue forecast and low on marketing expenses.

Lamentable Lapse: However, as the quarters pass the vast majority of “hot” prospects turn cold and the press coverage is no longer generating many leads. Other firms now dominate the editorials. The resellers are signed-up, but not selling. There’s little discretionary budget available for promotional campaigns and the few that are tried don’t produce enough results. The marketers are sent on the fruitless quest to find the “magic well” — a single source for high volume, low-cost, purchase-ready leads. The blame game is heating up so office politics between sales and marketing are becoming a drain on productivity. The PR agency is fired. The VP of sales is replaced. The VP of marketing is replaced. Eventually, the CEO is replaced.

What happened?

The analysts and press are always interested in new technology, new products, and new firms. It’s their job to know what is going on in the market. They trade in that knowledge as well as sell their own services to storage vendors. Almost every technology start-up can get their “15 minutes of fame.”

PR agencies know that, so a few storage specialist PR-only firms have built their entire business on the “launch and leverage” model. I prefer to call it the “launch and lapse” model. It’s a great model for PR agencies. News about new technology, products and VC funded companies is in demand so the agency can usually show great initial results to the client (and to the client’s competitors — the PR agency’s new prospects). However, when the launch is done the “heavy lifting” starts. At that point, the PR agency executive that sold the service turns the start-up over to a less influential account manager and moves on to new business (often the client’s competitors.)

Most new publicity (PR or advertising) will release a pent-up demand for information about what’s being promoted. It’s that pent-up demand for certain information that results in an initial surge of leads, followed by diminishing returns. These diminishing returns are easiest to see with some online adverts. The early placements generate more results than later placements (I know, it’s the opposite of print and what the advertising sales rep tells you.) The initial demand is satisfied so when the publication’s audience is not growing at a sufficient rate, the volume of sales leads falls for the same advert. It’s normal!

Of the leads that come in, it’s not uncommon for a technology firm to see a high number of “false positives.” These look like good leads, but don’t close quickly (or at all) so the close rate is very low. False positives result when the hype surrounding a new technology piques peoples’ curiosity. They want to learn about it so they end up downloading the white papers and otherwise flagging themselves as a lead. However, if the new technology has multiple applications (e.g. SSD in consumer and enterprise applications), is complex (e.g. integrates into larger systems and requires buy-in from many people) or is expensive (e.g. beyond the budget authority of the purchase champion) you should expect a long and difficult sales process that can take months, or even years, of nurturing and selling.

What about the happy customers? Beta customers are not the same as real customers, even if they are big names. Many large enterprises are willing to try new technology. The real test is whether they deploy it widely as a result. Additionally, the start-up probably sold the beta product at a big discount (or gave it away) and the tech support people are the best engineers who’ll drop everything to deal with an issue. Lastly, as good as the executives and board may be at at leveraging their executive-level contacts, that sales model is not scalable or repeatable by ordinary salespeople.

STEC stock value after announcing that OEM customers may choose other SSDsUnfortunately, big OEM deals can also result in an eventual lapse. The big OEMs – HP, Dell, IBM, etc. – have annual design cycles for their server and storage products so the components suppliers chosen this year may not be the same as those chosen next year. Big suppliers like Seagate and Western Digital can keep up with the design cycles, but a start-up is typically so overwhelmed with the initial design-in business that they fail to secure the second and subsequent supply contracts. An established vendor that loses a design-in contract will turn to other customers (often through an established distribution channel), but a start-up often goes out of business (or gets acquired at a low valuation). Others, like STEC, may just lose half their stock value.

In fact, it’s often the lucky start-ups that are overwhelmed with fulfilling the demand of a large customer. They are generating revenue and have proven the end-user demand for their innovation. Others sign promising deals with big OEMs (with all kinds of hooks and exclusivity requirements), but the OEM does not sell nearly as many as forecast.

All of these factors assume that a market exists and therefore the sales issues can be overcome. That’s not a given, but I can accept that it is for most data storage products. There is a growing need for capacity, speed, protection and management of data. However, a market is made up of different types of buyers who require different things.

Enterprise SSD is in the Early Adoper Phase

SSD Market 2011

A new market segment is made up of “Innovators.” These buyers are technology enthusiasts willing to try new ideas at some risk. They like to test new things and don’t need complete solutions. They just need access to new technology. These Innovators may buy the product based on its technological capabilities. However, the larger number of “Early Adopters” have different needs.

Early Adopters are looking for a breakthrough advantage in their business and require complete solutions. A solution is not a just box full of Flash or some other technology. Solutions include expertise in the customer’s environment. Therefore, successful firms sell an augmented product that includes more than their raw technology. For example, Texas Memory Systems, a 30+ year old solid state disk supplier, speaks fluent Oracle. They employ an “Oracle Guru” who works with the DBAs that initially identifies the performance problem that’s ultimately solved by the product being sold.

The challenge for the start-up in new market segments is to solve both a technical problem and a business problem. Solving the technical problem can generate a few sales to the Innovators. However, a business problem must be solved to sell to the Early Adopters and many technology start-ups don’t invest enough to market and sell in this environment.

What Really Happened?

The lapse is a result of the executives doing something reasonable. They believed their own eyes and planned accordingly. Unfortunately, they did not recognize that they could be in a honeymoon period so the number of prospects in the pipeline was significantly smaller than it needed to be and the infrastructure to generate leads was lagging.

The initial good news made everyone optimistic when they would have been better served by hoping for the best, but planning for the worst.

Hoping for the best, but planning for the worst

Technology start-ups often establish just one of the 4-Ps necessary for sales success. They establish the product, but do not establish a working promotion, pricing, or channel (place-of-sale) model. In a nutshell, they do not build a working sales and marketing system before the clock runs out. A working system allows you to execute a process and get reasonably predictable results.

Sales leads are at the core of the system. Since people can’t buy what they don’t know about, promotions are used to create market awareness, build brand recognition, and generate sales leads. These promotion-driven sales leads not only have the potential to drive revenue, they are also critical to optimizing your overall marketing. They are the equivalent of an early warning system.

For example, if you know what you are doing and what to expect (as my firm, Marketingsage, does) and it turns out to be difficult and excessively expensive to generate sales leads then you’ve learned something. Your message is not working for the audience you promote to. If the audience includes your customer prospects and your message talks about your product, you may have a positioning issue or need to rethink the offering.

On the other hand, if you are generating leads at a reasonable price it’s fair to conclude that your message is resonating. Therefore if there is a sales issue, you save time and considerable money by investigating product, pricing or channel expectations first. Without a reliable flow of leads, you have to ask if you’ve generated enough awareness for your offering. The only way to answer that question quickly is run many simultaneous promotions. That’s expensive and a big risk for resource- and time-constrained start-ups.

There’s another benefit to building a lead generation system. If you do enough lead generation you’ll end up with a fairly reliable cost-per-lead (CPL) number and a close rate percentage. Those numbers allow you to plan and budget effectively.

For example, if you pay the industry average of $60 CPL and close 0.5% of leads, you can calculate that you need 200 leads per sale and those leads will cost $12,000. If this year’s revenue target is $10-million and the average customer generates $100,000, you need 100 customers. The 20,000 leads you need for 100 customers will cost $1.2-million in promotions. If the sales lead time is 6 months you need all your leads by the end of June. That means the promotions had to ramp up last year. Of course, that’s a little simplistic, but hopefully you get the idea.

Your numbers may be different, but the scenario presented is typical enough. The good news is: When you have data, you can start to drive down the CPL and drive up the close rate to optimize your system. Additionally, happy customers can be expected to purchase more. Therefore, their 3- or 5-year value is often substantially higher than the value of the first year’s sales and the cost of incremental sales is far lower.

There are many ways to generate sales leads (see The Most Effective Sales Lead Generation Methods for Storage and Enterprise Software) – too many to discuss here. However, the difference between a mature lead generation system and ad hoc promotion is typically the inclusion of online advertising.

Done properly, online advertising is effective, cost-effective and relatively predictable. Unlike other promotional methods you can control the placement, timing, message and call-to-action. This control allows you to adjust and optimize in a relatively short period of time. Additionally, it’s scalable!

Bogging, tweeting, cold calling, trade shows, seminars, etc. all require human resources. Consequently, they can be considerably more expensive for the results achieved than just spending a few well placed dollars on advertising.

Bottom Line for CEO’s, VPs and VCs

Recognize that your firm is likely to experience a honeymoon period. Set realistic expectations so you have a chance of success and can justify the necessary up-front investment in lead generating promotions, not just product development.

Realize that the sales cycle for enterprise storage products can be very long. Think 6+ months for today’s enterprise SSD systems and other new technologies in emerging markets. Add months to get promotional campaigns producing. Add quarters if you need to staff-up, build infrastructure as well as get the campaigns producing.

From day-one, build a scalable lead generation and lead nurturing system so you know that you can generate more/less leads as required from various sources.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

I go to Oracle OpenWorld (OOW) in San Francisco every year because my PR and lead gen. firm, Marketingsage, helps data storage and data management firms market to the large enterprises that use Oracle.  Wednesday Oct. 5 was my day to visit the 2011 expo and this post takes a marketer’s look at the exhibits of some of the most innovative firms who were showing off their high performance storage hardware at the show.

This was the last day of the expo so you might expect it to be somewhat quiet. In my opinion is was far too quiet at any booth that was not front and center in the main hall or giving way a car, iPad, iPhone 5 4S. While that may be bad for exhibitors, it was good me because I got to see most of the high performance storage players. Besides the big guys like Oracle, EMC, HP and Dell, there were more start-up firms this year. Most of them paid big bucks for big booths.

I’ll give the award for biggest-bang-for-the-buck to our friends at GridIron Systems. They did not have a booth. They used a high traffic station in the highly visible Intel booth to show off their TurboCharger caching appliance. This device fit right in with Oracle’s “Big Data” theme because it accelerates (in real-time) the “hot data” that’s in-demand. Users do not have to put their Oracle database, or even the tables, onto expensive solid state disk (SSD) to get SSD performance. That makes the GridIron hardware somewhat special in the value-for-money department. I know all that because Marketingsage just started helping GridIron with its PR 🙂

Start-up, Pure Storage had a big bright booth and lots of people wearing their distinctive shirts. They also scored a visible spot in the Samsung booth. Their solid state disk is special because it uses real-time deduplication and compression to reduce the amount of data that’s actually stored on more expensive SSD. Therefore, they claim the cost of their system (when available) will be lower than purchasing hard disk drive-based systems for the same volume of data.

Fusion-io had the most visually impressive information walls backed by a mini data center. They also had some pro-active salespeople willing to grab passersby. I can respect that. Fusion was touting “a tier on a PCIe card” and they are getting some impressive Flash capacities on relatively small cards. The other vendors went out of their way to point out that this PCIe-based storage is not shareable.

STEC had a front row booth in the corner of the main hall. They had a small theater where they did a good job introducing their rather large Kronos PCIe card. They subsequently gave out t-shirts to those who filled in their sales lead survey. Customers can use a single STEC Flash drive to replace a hard drive in a server or they can array them for rack mounted enterprise environments.

Violin Memory also stumped for a big front row booth. Interestingly they only used half of the booth for meeting attendees. The other half was hidden and off-limits. Violin prefers to call its SAN-attached SSDs “memory arrays” and they see them as primary storage to be used in an “all silicon data center” without hard disk drives. Meanwhile, Quantum was at the back of the same hall proving that tape is still an important part of today’s data centers. I was impressed  by Quantum’s high performance StorNext system. It’s used to quickly ingest and provide shared access to REALLY BIG files, like satellite and geology images, and manages all of the storage complexity of  managing and archiving to hard disk or tape.

Our friends at TMS exhibited their SSDs at OOW years before some of the other SSD firms even existed. They had their usual spot in the middle of the main hall. And as usual, you could be standing next to the booth and not notice it. However, Oracle users seek them out. TMS had a small theater where their genuine Oracle Guru talked to Oracle users and developers about how to accelerate Oracle. TMS does not confuse OOW with SNW (Storage Networking World) and their no frill SSDs are always fast.

I went all the way across the road to see Kaminario in the lower traffic West hall. They had a small 10×10 pop-up booth, but they were getting their share of visitors. They probably deserve the runner-up prize for the biggest-bang-for-the-buck booth among SSD vendors. Kaminaro’s SAN-attached SSD lets customers choose DRAM and/or Fision-io’s Flash memory.

Nimbus Data Systems was at the show as well, but their small booth looked like a parking space. It was 80% sports car, 20% SSD. No, you could not win the car. I was laughingly told by another vendor you could win the privilege of sitting in it for a while.

We would have liked to seen WhipTail, SolidFire, Nimble Storage  and some of the other serious vendors of high performance enterprise storage systems. Alas, they were not at this particular show.

Other SSD Posts

If you like to read about the marketing of SSDs you can join the mail list for this blog (top left sidebar). You’ll get an email when a new post comes on line. Here are some recent SSD related posts:

Storage start-ups: What CEOs, VPs and VCs should know about the honeymoon period

A Strategic Marketing View of Flash Memory Products

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management and enterprise software products. He can be reached by email at blog [at] Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

In June 2011, IT Brand Pulse group conducted a survey of IT professionals. The respondents were asked which vendors they perceived as the leader in Solid-State Drives. The top-level chart they published is interesting, not because I believe this is a list of actual SSD leaders, but because it represents the perceptions of the IT people surveyed.

Sometimes perception has little to do with reality, but it’s at the core of a brand and it does influence purchases.

Why are these particular firms on the list? I think some are on the list because they were in the news, not because the respondents used their products. On the other hand, many of these firms were not in the news and there are a host of well publicized firms not on the list.

The answer may be in the report, but the ~$3,000 is beyond the budget of my curiosity. Nevertheless, I’d love to hear some opinions from fellow SSD marketers.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management and enterprise software products. He can be reached by email at blog [at] Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

One of my favorite storage events is the annual Flash Memory Summit in Santa Clara, CA. The 3+ day summit attracts design engineers, product managers and hands-on business executives who buy and sell flash memory components, solid state disks (SSD) and related tools. I’ve attended the summit for years and each year it gets bigger and the presentations get more professional — as does the market for products that rely on flash (think smart phones, tablets, cameras, computers and enterprise data centers).

Standing Room Only

I attended session after session for all 3 days with my enterprise storage product marketing hat on. I did not consider that odd until a (storage) industry colleague pointed out that my business (Marketingsage) is a PR and lead generation firm.

I mention that because, unlike the PR and lead gen. posts on this blog, this posting looks at the categories of enterprise flash-based products and touches on the high-level go-to-market strategies. The posting is also laden with acronyms that require some product knowledge (other PR people can find a dictionary on the SNIA web site ;-).  I’ve been marketing and selling storage related products for 20+ years (hard drives, virtualization, SaaS, SSD). If that’s not your thing you can stop here.

Component SSDs for Enterprise

Despite the poor economy, there’s a real market for both the server-side SSDs and SAN-based SSDs.  The 2011 market is estimated to be worth $1-billion. Seagate has reportedly shipped 1-million hybrid flash-enhanced HDDs. Intel reportedly shipped 500,000 SSDs in a single quarter. Surveys estimate that 56% of enterprises either have an SSD or are currently evaluating them. Analysts estimate the market unit CAGR is expected to be over 50% through 2015. Impressive numbers!

John Moon of Seagate

The big numbers refer to SATA, SAS and PCIe SSD that go into servers or are arrayed in storage systems, not necessarily to the storage systems themselves. They are mostly components of more complex solutions that deliver thousands of IOPS.

Form a marketing point of view these SSDs are sold in the same way we sold high-end HDDs when I was at Seagate and IBM. Everyone wants the OEM business. Those that miss an OEM design cycle will sell through distribution/resellers. It’s not quite so black and white yet because some notable Early Adopter end-users are purchasing directly from the SSD manufactures to build their own high performance servers, but it will get there in 5 years or so.

STEC and Fusion IO are the SSD firms that everyone is watching. However, Virident had its tachION PCIe card at the summit. LSI had its WarpDrive. Marvell also had a PCIe card, as did our friends at TMS. It seemed like almost everyone had 2.5-inch SATA or SAS drives, but Anobit had a 3.5-inch “enterprise” SSD.

Frankly, the SAS, SATA and PCIe devices are fast looking like commodities. However, as competitive as this market is getting I envy the marketers. I personally find product and channel marketing strategy to be the most mentally stimulating. The fact that it’s very hands-on, difficult and requires experience makes it enjoyable. Unfortunately most will fail because the typical OEM-dependent manufacturer is not “wired” to succeed in other channels.

Standalone Memory Array SSDs for Enterprise

Woody Hutsell, “The” enterprise SSD sales expert

At the high-end of the enterprise market are standalone SSDs that deliver millions of IOPS. These devices typically sit in the SAN. I heard an analyst estimate that some 70,000 units have gone to enterprise customers, but I can’t add context to that number.

Standalone SSD are increasingly popular alternatives to large racks of HDD-based RAID because flash prices continue to make them more economical. Nevertheless, these enterprise SSDs are a big-ticket purchase. As such they are currently bought by large enterprise, government and military organizations that have mission critical (usually Oracle) databases managing very high transaction volumes (think stock exchanges, telecom, etc.) and/or a very large number of simultaneous users (think Facebook, Google, etc.) SSDs are also becoming essential in virtualized data centers, including the growing number of cloud-based infrastructure providers.

Until recently, my firm (Marketingsage) spent the last 8 years helping Texas Memory Systems market these Fibre Channel and Infiniband SSDs.

Despite the SSD hype, the enterprise SSD system market is clearly still in the in Early Adopter phase where visionaries seek breakthrough advantage (speed) and require complete solutions (help with Oracle or VMware integration). Of course, Oracle (who bought Sun) has the advantage and is well positioned. However, I think SolidFire, WhipTail Tech, and Schooner Information Technology also get the need for an application-based approach. They target those providing Infrastructure as a Service (IaaS aka cloud) with significant know-how and feature rich SSDs.

Enterprise SSD is in the Early Adoper Phase

When the mass market arrives, the risk-averse pragmatists and conservative customers will favor vendors with a recognizable brand, case studies and lots of certifications/endorsements. These customers will seek value products — good-enough speed, application specific features, assured interoperability and a competitive price. Of course, the mass market is global so a well established channel is required to hold real market share. Advantage Oracle, HP, Dell, IBM, EMC…the usual big gorillas.

From a marketing point of view the high-end enterprise market requires a well-oiled machine. Unlike the OEM sales model, there are tens of thousands of potential customers, not just a handful. These customers are application centric, not necessarily storage centric, so the marketing communications strategy is different and lead generation is critical. Additionally, the sales cycles are long and purchase decisions involve many people so a sophisticated nurturing system and lots of sales tools are required.

SSD Caches for Enterprise

With the high price of SSD in mind, there’s a renewed focus on hybrid or cache implementations. The concept of caching is not new and sales of older RAM centric cache appliances are (privately) reported by several vendors to be very weak. However, I believe the new breed of higher capacity flash cache implementations can carve out a distinct market segment.

The new cache systems are using automated tiering where “hot” files, hypervisors and volumes are served from fast SSD (or RAM) while lesser used files remain on cheaper HDD. The Pareto principal (80/20 rule) is assumed to apply, dramatically reducing the amount of expensive SSD required to deliver similar performance to an all SSD system.

GridIron Systems‘ TurboCharger is a promising high-end Fibre Channel appliance that sits in the SAN. It will compete in the standalone SSD market with all the same challenges and rewards (high margins) that come with solution sales.

At other end of the market is the $1000 class LSI MegaRAID controller card. This card uses off-the-shelf SATA/SAS SSDs and cache for standard HDDs. Of course, it’s a component product, but it has a nice retail-friendly box.

Micro Tiering Cache Software. This shiny new, not-quite-shipping, segment is very interesting because Linux or Windows installed driver software are used with SAS, SATA or PCIe SSDs and hard drives to automatically cache IOs. VeloBit, Nvelo, FlashSoft and Enmotus are now beta testing their software in real-world customer environments. Like the LSI hardware controller cache software prices start below $1,000. 

As a marketer I can see several ways for these firms to succeed. The OEM component and system integrator strategies are a winner with so many commodity-like SATA, SAS and PCI SSD on the market. However, I was once director of marketing at a software firm that turned its driver software expertise into a valuable branded line of high-speed storage hardware products. That’s a completely different strategy focused on a brand. Anyone remember FWB’s Hammer storage line? Maybe not, but if you were a high-end Mac user in the mid 1990 you probably read the reviews.

Challenges Marketing Enterprise SSD

Once the product strategy is set, the day-to-day challenges are all about messaging and execution. Most prospective customers still think of SSDs in a generic way: they’re fast, but expensive. As they learn more they have to decide on what type of SSD implementation is best for their situation — server-side or SAN, cache or primary storage. They’ll have to weigh the pros and cons of MLC, eMLC or SLC. They’ll face the FUD of the performance specifications — are the performance claims reliable, sustainable and will they degrade with use? They’ll also take longevity in to account because SSDs wear out and under some conditions will even lose data.

Whatever the vendor’s position there are a lot of cases to be made, and countered. That means technically credible (not “fluffy”) sales tools like write papers, case studies, videos, sales presentations, websites, brochures, etc. More importantly, the value propositions need to be made to potential customers, not just the SSD pundits.

At the end of the day buyers will choose the vendors they believe they can trust. Those will include the brands they personally recognize from editorials, advertisements, trade shows, sales pitches (personal and email) and experience. They’ll also rely on recommendations — resellers, consultants, analysts and their peers on social media sites.

User references will trump hype with customer prospects, the press, analysts and investors. So if a marketer is to really contribute to a firm’s success he or she need to deliver a steady stream of sales-ready sales leads. With the multi-quarter sales cycles associated with enterprise SSDs, August leads are often next year’s sales.

Of course, Marketingsage can help! 🙂

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management and enterprise software products. He can be reached by email at blog [at] Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).