When Dell Inc. last fall announced the $1.4 billion acquisition of storage software maker EqualLogic Inc., it sent ripples throughout the industry. To the handful of small companies that offer storage management software, the deal, the largest in Dell's history, meant that a large player in personal and enterprise computing could be about to offer some stiff competition.

For Dave Dupont, CEO of Sanrad Inc., and the company's investors however, it offered a good deal of validation. Founded in 2000 and incubated and seeded by The RAD Group, an Israeli technology incubator, the company has raised a total of $28 million. Its latest round arrived in June 2006 in the form of a $10 million round from Foundation Capital, Sequoia Capital and RAD.

Sanrad offers a storage networking device, but it is designed from off-the-shelf components. The secret sauce, not surprisingly, is its software, which enables customers to virtually manage storage. Its technology is based on Internet SCSI (Small Computer System Interface), or iSCSI, which lets customers use IP networks to manage storage while simplifying maintenance and reducing costs. There was a boom in iSCSI companies in the telecom bubble days of 1999 and 2000, after which interest faded and IT spending dropped off in the area.

Interest has revived in iSCSI (pronounced "eye-scuzzy"), and while Sanrad focuses more on the enterprise than EqualLogic, which targets small to midsize businesses, the Dell acquisition only serves to further legitimize the technology, Dupont says. Sanrad's technology also incorporates storage virtualization, which essentially enables the pooling of various storage devices into what appears to be a single device, thereby easing  management of the storage network.

Dupont declines to talk about Sanrad's profitibily or revenue, or whether it would seek more funding, saying only that "in private companies one is always open to capital." He recently spoke with Tech Confidential about the storage virtualization software sector.

How does storage virtualization relate to server virtualization?

They are complementary. Server virtualization is about virtualizing CPUs and the applications that run on them. We are closely aligned with that. In storage virtualization, you want to do the same thing with data that you do with servers.
But with servers, various platforms, like VMware's, enable customers to create a kind of super server. We aren't a super-storage device, we are a storage network device. We virtually manage storage.

We've recently seen big exits for investors in EqualLogic and Compellent, which just went public. What are your investors thinking? You've been around for eight years, which is around when most investors in private companies start thinking about liquidity.

It's appropriate to mention that the company was in the incubation stage with very little capital for awhile. The last two rounds were $8 million and $10 million. The bulk has come since 2004.  This doesn't conform to the eight-year time horizon. The EqualLogic acquisition in particular and the activity in iSCSI has our investors quite excited.

We're in a different space. It's to be expected that the part of the market we are focused on would develop more slowly than EqualLogic's or LeftHand Networks'. We play in the enterprise space, and it's only been in the last two years that you have started to see things change in terms of the minds of enterprise storage managers.

The EqualLogic acquisition is great for me because it legitimizes the technology from a customer point of view. I never hear anymore that it's only suited for small and medium-sized businesses.

What do you think about Dell getting into this part of the storage market?

It's an interesting move. This will be the first product Dell truly owns in storage. This is a departure from their model. They needed to do something, but this is a particularly bold move.

I know many channel partners hate them. Dell has a history of embracing them and then moving away. They've been very successful with their direct approach. They should be looking for more products to fit through that model. I personally am less than sanguine that Dell will succeed with this.

Is EqualLogic a direct rival, and, if so, does its joining a bigger corporation pose a competitive threat for Sanrad?

EqualLogic was successful in small and medium-sized businesses. If you just needed a little storage on the network, it wasn't a bad choice for small organizations with modest capacity requirements. They are essentially an integrated iSCSSI array that sits on a network. Calling their solution a network is stretching the term.

For enterprise customers, you are looking at a different situation. There's a desire for sophisticated storage capability, real-time replications, replication across long distances, and the ability to use different kinds of storage for different purposes. - Olaf de Senerpont Domis

See November 2007 story from Tech Confidential
See October 2007 story from Tech Confidential