Q & A with XIOtech corporation: Executives Kathy Snouffer and Tom DiPuma answer business and technology questions. (Strong Networking).

Q: XIOtech has been a hot startup, then part of a giant corporation, now on your own. How has each role changed XIOtech? What have you learned that you can use now?

Kathy: Seagate acquired us originally because they saw that storage is a growth market and XIOtech has a leading technology. With a good perspective and understanding of the competitive landscape, Seagate validated XIOtech's technology. They retain a substantial interest. What has changed most for XIOtech is the opportunities we have and the scope of what we can do in the market. The purchase by Seagate allowed us to grow quickly and to embrace the disciplines necessary for sustained corporate growth. Now we still have a close association with Seagate, and the resources of Oak Investment Partners, and we get the flexibility and speed of being on our own.

To grow a company as quickly as we've grown, and in the changing market conditions, takes a unique kind of product but also a great degree of internal flexibility. At the same time, there are many features of XI XIOtech that haven't changed and those are equally critical. We have always had a strong commitment to our customers and a technology that makes us the vendor with the most dynamic and adaptive storage in the market today. Our commitment to leading-edge technology hasn't changed, nor has our commitment to deliver sophisticated solutions that can be easily deployed and managed.

Q: Why do you think Seagate divested you? From XIOtech's point of view, are there lessons to be learned that other companies can benefit from?

Kathy: The bottom line is that XIOtech is outside of Seagate's core business model. Oak was actively seeking a storage company to invest in, and XIOtech played a key role in attracting that deal. Both Seagate and XIOtech recognized that XIOtech could grow more rapidly and effectively with the added expertise of a company like Oak. Seagate retains a financial and strategic interest in XIOtech and we still have a close partnership.

Oak Partners has spent the past 25 years nurturing companies that have gone on to become industry leaders. Their track record of investment and their extensive strategic and technical expertise in the field lead us to feel confident that we will make it into the Oak "Hall of Fame."

The top lesson we've learned is that you have to be flexible and be able to adapt in a changing environment. When we looked at going out on our own with the investment from Oak Partners, it was clearly the right path to pursue to continue our rapid growth in our market.

Q: Where do you see the business of your technology going? How do you plan to flourish? Where do you want to be in five years?

Kathy: We all know that applications drive storage decisions--but today customers must interpret the application's requirements and then make storage decisions (determine technology and configuration), and then manually implement those decisions. More and more we're seeing that applications are communicating not just with one another (via things like SOAP), but now are beginning to communicate directly with storage--managing it to meet their requirements. But today these are still largely static requirements. Applications, especially those that are driven directly or indirectly by dynamically changing customer requirements, need to have the "language" to communicate in order to change storage requirements in real-time. Likewise, storage that is "adaptive" in nature like MAGNITUDE must have the ability to understand the languages of applications. The first of these new languages are being delivered in 2003, and XIOtech has aligned with OS and application-platform vendors to understand, and in some cases help t o create, the languages that enable a new kind of "sense and respond" architecture for IT.

The XIOtech MAGNITUDE storage subsystem delivers business agility--our storage is the foundation upon which enterprises build their application architectures.

Tom: In five years we want to be saying "we told you so." Business needs are driving the market away from vendor lock in, away from large proprietary systems--just look at Oracle 9i RAG and the whole .NET initiative--to deploy enterprise applications at mid-tier prices. By the way, many of these vendors use the MAGNITUDE daily in their development labs. Why? Because they can't afford our competitors' products? No-- they use it because it's the right tool for the job--end of story. So in five years' time we hope it will be cool on the Storage Cocktail Circuit to be saying, "Yes, we were early adopters. I installed my MAGNITUDE in 200X."

The irony is that storage management is generally complex just when the business drivers--reduce costs, contain manpower, control capital expenses--need it to be most transparent. For example, the need for random physical I/O performance is increasing in ways that many storage systems are simply not architected to handle. All too often, the result is that business agility is suffering at a time when the ever-increasing speed of business demands it most.

With our MAGNITUDE storage foundation, we can take advantage of new technologies as they become available. This is why it's so easy for us to plug into IP storage or Microsoft's Virtual Disk Services (VDS). We predict that over the next five years we will be at the forefront of new technologies in the storage industry and will be able to deliver these to customers in ways they can take advantage of new technologies without adding significant complexity.

Q: Do you see XIOtech as a David among Goliaths like EMC? Or as another Goliath, just smaller right now?

Kathy: We're both. We're nimble, fast, and adaptive like David. But we're also positioned to be the fastest-growing storage vendor for the third year in a row. I've been seeing XIOtech appear in the media as part of the phrase "EMC, HP and XIOtech," and I think that's where we belong.

Q: Is the channel today significant for a high-end manufacturer like XIOtech? Do you see the channel evolving? If so, toward what?

Tom: Yes. We have been evolving our channel partner program in the last year to include increased support for the channel and to focus not only on companies that specialize in storage, but also in application integration for Microsoft, Oracle, Novell, Cisco plus the government and healthcare markets.

We want our customers to be able to implement storage in whatever way works best for them, whether directly from us or through a reseller. With our focus on application-driven storage, we know that resellers who offer integration with applications can be the best choice for customers, and we're eager to support these resellers with education about our products and implementation guides, and access to our resources.

Q: Regarding your partnerships, what do you think draws partners to XIOtech? What draws XIOtech to them?

Tom: XIOtech has very strong partnerships with Microsoft, Oracle, Novell, Cisco and a number of healthcare application vendors. Let me give a few examples of what we've accomplished recently through these partnerships:

XIOtech was the first to demonstrate a working version of Microsoft's latest .NET technology, Volume Shadowcopy Services, and in doing so, automated the most difficult functions in the backup scenario. We were the only vendor to announce a working hardware provider for .NET with Microsoft at the MEC show in October. We recently achieved the distinction of Preferred Alliance Member (PAM). XIOtech is one of only three storage vendors in Microsoft Technology Centers nationwide, signifying XIOtech's concrete contributions to real world, working Microsoft solutions.

We have achieved key certifications and acknowledgements from Oracle for our performance and versatility in an Oracle environment. In early fall, XIOtech demonstrated optimization of the largest Oracle 9i RAC database ever run. We also performed a live upgrade of storage for Oracle's Enterprise Technology Center in Atlanta. We quadrupled capacity without any interruption to their service levels. A senior director there called us the most flexible and scalable storage system he works with.

XIOtech has been a leading SAN infrastructure software provider for Novell. XIOtech has also been a key development platform for Novell 6.0 and clustering, and has more Novell SAN clustering implementations than any other SAN vendor.

These partnerships deliver solutions that customers actually need. Customers know their applications are going to work with our storage they way they expect.

Q: What is the core competency you base your future on?

Kathy: Our core competency is our ability to enable business agility through our dynamic and adaptive storage foundation. We enable our customers to do things more quickly, more easily and with less disruption to the rest of the IT infrastructure.

We virtually eliminate planned and unplanned downtime, including application downtime, and we have the architecture to support high performance for rapidly growing web-based applications with random, dynamic I/O. We view our technology as a means to an end, and the end is always to deliver business value.

Q: How will you market and communicate that competency today, and tomorrow?

Tom: By talking to our customers! We have many fiercely loyal fans who are eager to talk about the difference they've experienced with the XIOtech MAGNITUDE.

Our partners are also a critical component of our marketing, as you can see with the natural alliances that occur around application-driven storage. We also will continue to develop best-practice solutions that speed development and deployment of critical applications--work that will be done with reduced time, capital, and human resources.

Kathy Snouffer is CEO and Tom DiPuma is EVP of marketing and sales at XIOtech Corporation (Eden Prairie, MN).

www.xiotech.com