Pain for gain

What's been happening at Plasmon? Back in May, Nigel Street, the experienced CEO, was let go. (He actually resigned as a director on July 18th.) UDO has not taken off as board members hoped and RAID sales weren't satisfactory.

An interim CEO, Rod Powell, was put in place and he came from Hanover Investors who bought nearly a quarter of Plasmon's shares earlier in the year, and supporting fundraising that netted the company £8 million to fund development. Hanover and Powell are both US-based and Plasmon decided it needed to cut costs and be more hands-on in the USA, which is its most important market.

A recent statement said: "shipments of UDO2 based Archive Appliance solutions and libraries commenced at the end of April 2007 and quickly reached production quantities. Customer reaction has been positive and the full range of these products is now available in capacities from 30GB to 76TB. GE Medical commenced shipping UDO2 Archive Appliance solutions in June 2007 and IBM launched its UDO2-based product range towards the end of July 2007 as scheduled. Overall sales to date are in line with management’s expectations as customers transition to the new UDO2 products. Overhead costs have reduced significantly as a result of the major restructuring activities completed last year."

As expected the RAID product line is being de-focused. Plasmon has been restructured around a global sales and marketing organisation to better capture the sales growth potential of the new Archive Appliance and UDO2-based products.

As a reminder UDO2 offers 60GB capacity. The roadmap goes out to UDO3 at 120GB and UDO4 at 240GB. The competitive optical storage landscape has the conflicted mess that is Blu-Ray and HD-DVD fighting for consumer and low-end juke box storage and, at the high end, InPhase's 300GB holographic disk with its expensive drive and slow I/O rate of 20MB/sec. Plasmon should be doing very well with UDO. The consensus seems to be that it is not being either marketed or sold effectively enough, especially in the USA.

Competitive situation

The general competitive situation for optical disk as an archive storage medium has improved with the rise of green awareness and the obvious point that an off-line optical disk isn't using any energy, unlike a hard disk-based archive. Optical disk data access is also faster than tape as it is random and not sequential. That doesn't cut much ice with tape users who are lapping up the 800GB capacity LTO4 and 400GB LTO3 drives quite happily. Optical provides true write once; read many (WORM) capabilities whereas tape WORM is software-based. Probably the difference is not that important for most WORM buyers though.

We might say that UDO has the archive market to win: holo is too expensive, holds too little and is slow. No-one is going to commit to Blu-ray or HD-DVD until a clear winner emerges and neither holds enough in single-layer form. Tape is not going to erode optical sales; it's too slow even though it does have the capacity edge. Optical can store for decades; tapes need refreshing.

The market is there; $2billion for archive products with, Plasmon believes, 80 percent of archive data currently held on disk. It's growing in leaps and bounds due to legislation, compliance and e-discovery. (Here's a firm grateful to lawyers for increasing its addressable market!) Vertical markets like health are particularly attractive.

(Part 2 here)