Isilon back from near death
The storage company's stock dropped from $25-plus per share in 2006 to less than $2 in 2009. Its comeback may have broader implications for the rest of industry.
Last week, Isilon, which designs and sells clustered storage systems and software for digital content, announced the integration of STEC's solid-state disk modules to its S- and X-Series or scale-out network-attached storage (NAS) platforms built on SAS and SATA disk arrays. The announcement was doubly significant.
First, its marks the appearance of SSD implemented as storage for metadata within an NAS platform as opposed to application data. In other words, the Isilon announcement is not an example of tiered storage for scalable NAS. Rather, SSD is used to store file system metadata--data that describes the application data and as such represents a departure from the use of SSD as a high-performance storage tier for application data.
The idea here is to accelerate performance for applications that are sensitive to NAS system latency (virtualized server, quantitative analysis, as examples) by reducing the time required to find data within the scalable NAS subsystem. OneFS, Isilon's core operating system, distributes underlying NAS file system knowledge across clustered nodes bolted together with InfiniBand interconnections. SSD residing within each node accelerates the process of placing and finding data within each node.
Clustered node, scale-out NAS subsystems built around a single namespace or namespace aggregation are becoming more commonplace. Vendors typically develop resiliency for these products within high performance computing environments first, then move them to mainstream business applications. Such was the case with NetApp's evolution of Spinnaker SpinServer to ONTAP GX8. I expect IBM's Scale-out NAS (SONAS), also announced last week and positioned within HPC and big data applications, will follow a similar trajectory.
The next step will be to accelerate performance, or at least minimize the risk of performance degradation, as these subsystems encompass increasing volumes of data. Most if not all are engineered to scale into the petabyte range. Enter the SSD. It is likely we will see both the metadata and the application data implementations as this platform evolves.
Second, the announcement comes only days after Isilon announced its first profitable business quarter. Isilon was founded in 2001 by Sujal Patel and went public (ISLN) in late 2006, opening at $25-plus per share. After two years of poor financial results, and trouble with the SEC that resulted in the company's restatement of 2006 and 2007 earnings reports, Isilon's stock price had slumped to less than two dollars per share one year ago. Sujal Patel had left the company but returned in late 2007 to replace CEO Steve Goldman and turn the company around.
Key to Isilon's rebound has been a diversification of addressable market opportunities. Isilon had established a strong position in storage for media and entertainment applications but only a token presence in other application environments. In 2009, it diversified into life sciences, Internet/cloud, and government. As of the its first profitable quarter, the fourth quarter of 2009, media and entertainment only accounted 32 percent of $123 million in gross revenue.
Isilon has reestablished itself in a growing sector of the storage market, and has come back from near death. As such, its comeback should give investors some encouragement regarding the storage industry in general. Given the number of new technologies entering the market, and the renewed demand for storage capacity after slumping last year, 2010 and 2011 will likely be banner years for storage investors.