This week I am spending a couple of days at Compellent’s annual C-Drive conference in Minneapolis, MN where about 500 users, value added resellers (VARs) and Compellent sales reps are in attendance. Since a couple of years have passed since I attended the last one, I thought I would make the 6-hour drive from Omaha to Minneapolis to catch up on the latest going-ons with Compellent and gain some insight as to how they plan to recoup after their latest earnings stumble.
Ever since Compellent went public a few years it has arguably been a shining star in the storage space watching its sales and earnings grow for nine consecutive quarters. But after its latest Q1 2010 financial misstep, it was obvious leading up to C-Drive and during my time here that the focus of everyone associated with Compellent was to put this latest quarter behind them.
Suddenly Compellent couldn’t do enough to make all of the analysts, bloggers and reporters happy in the hopes they would put a positive spin on everything going on at Compellent so this past quarter remained firmly planted in the past. In talking to a number of analysts, bloggers and reporters, they said that Compellent bent over backwards to accommodate them in whatever way possible to make sure they attended this C-Drive and demonstrate to them that this last quarter was not likely to be repeated.
In Compellent’s defense, it does have a lot to be positive about. Over breakfast yesterday I spoke with a financial analyst from a Chicago based firm and we were both puzzling over why Compellent struggled in what should clearly be a market that is favorable to them. The server virtualization market is expanding which should drive the need for external storage systems like Compellent’s while more cloud service providers (of which they were a number at C-Drive) could not say enough positive things about their experiences with Compellent storage.
However the latest fiscal quarter was clearly weighing on Compellent CEO Phil Soran’s mind as his opening remarks at the customer and analyst portion of C-Drive on Wednesday morning focused on how it was impacting Compellent’s employees. The tactical response has brought, in his words, “a sense of energy” among the employees. He described the company’s employees as having a “chip on their shoulder” and that they were determined to prove that the latest quarter was only an aberration and not the start of a downturn for the company long term.
He pointed out that many of the features that the Compellent Storage Center introduced years ago are now becoming must-have features on midrange array storage systems across the industry. In 2003 it started shipping thin provisioning (over 50% of all midrange arrays now support Thin Provisioning according to DCIG’s research); in 2005 it introduced Automated Tiered Storage which has become a one of Compellent’s defining features and, in 2008, it introduced Live Volume, a business continuity automation feature.
He then went on to expound upon the five features that are core to Compellent’s design and help to differentiate it from the industry. Its granular data management laid the foundation for it to do automated, block-level storage tiering and he sees it as instrumental as it looks to do deduplication of data on primary storage in the coming years.
It eliminated the concept of “fork lift” upgrades and pointed to customers like InstantWeb and Ohio State who have taken advantage of this feature. These two organizations have had Compellent storage systems for 6 and 7 years respectively and are still upgrading those systems to current features without needing to replace the underlying storage system. Ohio State just added SSDs to its Storage Center while InstantWeb has gone through 6 generations of server technology while using the same Compellent system during that entire time.
Soran also listed Compellent’s data movement engine, open systems hardware that facilitates the rapid introduction of new storage and storage networking technologies and an integrated software architectures as key reasons why it has the right foundation in place for future growth.
In the near term, he sees Compellent’s storage virtualizaton, thin provisioning, automated tiered storage, Instant Replay and Live Volumes features as what users are looking for and should contribute to Compellent quickly rebounding.
Going forward, Compellent is increasing its investment in R&D so it can more quickly innovate and deliver on new features that the data center of tomorrow will need. He saw the ability for Compellent to provide an even more scalable architecture, do data life cycle management, data deduplication of primary storage and management of unstructured data as being high priorities for Compellent. However he also commented that he does not expect data deduplication to provide huge capacity savings on Compellent systems, adding at most a 20% savings in storage capacity.
So where does this leave Compellent as a company going forward? Overall, I’d say it is in good shape and this last quarter was more than likely just a blip on the radar screen. Yes, it has been a humbling experience for them but who doesn’t need a little humbling from time to time?
I look at key areas that keep customers loyal for long periods of times:high satisfaction rates, use of advanced software technologies like replication and positive case studies as reasons for encouragement. In this respect, Compellent is firing on all cylinders. It reports 95% user satisfaction rates, 68% adoption rate of its replication software among its customers and users willing and ready to speak out about the benefits of Compellent’s technolodgy.
If anything is hurting Compellent is that it historically tends to shun outside analysts, bloggers and reporters that can help raise the awareness about the benefits of its technology. But based upon its above average outreach to this audience at this event, even that mindset may be changing.