The Four Hundred

Privately held BCC Technologies, the third-party disk and tape subsystem manufacturer for iSeries and AS/400 servers, has a new management team and a new name: eStorage. The venture capitalists who had been backing the company, which was founded by David Breisacher, bought him out and assumed control of the company a few weeks ago. eStorage has kept key BCC personnel and has brought in a management team that it says will help it expand its presence in iSeries storage.

When I contacted Breisacher last week, he didn't want to comment on the deal but said that he would be happy to discuss the buyout deal specifically and the iSeries storage market in general after the dust settled down in a few weeks. Financial terms of the deal were not disclosed. The venture capitalists who took control of BCC seem to be Christopher Brown, president of Capital Across America, and James Herndon, founder of the CapSource Fund, although the company may have had other investors. Brown, who is now the chairman of the board at eStorage, was a vice president at First Tennessee National Bank, First Florida Banks, First Union National, and Society National Bank. He is currently running 20 companies valued collectively at over $20 million (this presumably includes eStorage). Herndon served on the board of economic development for the state of Mississippi before founding the CapSource venture fund. After an executive search, they named Keith Sugawara president of eStorage, and he will be responsible for the direction of the company and its day-to-day operations.

Sugawara has been in the IT industry for over 20 years. He spent 10 of those years involved with storage, including a stint at Xylogics, a maker of tape and disk subsystems for Unix servers from Sun Microsystems, and Emulex, which is known now for Fibre Channel host bus adapters these days. Sugawara had various sales and marketing jobs at the $150 million Emulex subsidiary that created disk and tape production for DEC VAX minicomputers. Sugawara also started up his own company, which used to be called XCD and made printer connectivity adapters, which he subsequently sold for $15 million to Troy Group, located in Orange County outside of Los Angeles.

John Gimpl, who was vice president of sales at BCC, has been named executive vice president of eStorage, and Shawn Shenavai, who was vice president of engineering at BCC, retains that title at eStorage. However, eStorage has also named a new chief technology officer, Jon Asahina, who was cofounder of XCD with Sugawara. Asahina was director of marketing at Emulex before that, and he had various sales and marketing positions at DEC before that.

Both Sugawara and Gimpl are adamant that they have no intention of abandoning the iSeries and AS/400 storage market. "We believe that BCC had a solid business and vision, and we will continue to address the AS/400 and iSeries market," says Sugawara. "We think that we can grow market share, and we think that we can differentiate with technology." Sugawara says that, long term, the company wants to leverage the experience that BCC developed in the iSeries market to move into other markets. Gimpl says that some tape products, for instance, can already be used on OS/400 servers as they come out of the box and can be used on Unix and Windows servers with the addition of upgrade features. Exactly what the company plans to do in the storage market is unclear, but a SCSI disk array can be converted relatively easily to work with Windows, Unix, and Linux platforms, if it works with an iSeries. The issue never has been technology, but moving into a new channel with fierce competition. With so many players in the Windows and Unix server markets, fighting with cut-throat pricing, it is hard to justify moving outside of the iSeries market, where BCC was able to command a premium price because of the exorbitant prices IBM charges for disk storage on the iSeries and AS/400 platforms.

Sugawara says that about 75 percent of BCC's revenue came from disk sales, with the other 25 percent coming from tape products, and he does not expect that mix to change at this point with the new eStorage company. eStorage plans to attack the disk market because disk arrays are not the kind of purchase that customers with growing workloads can put off; whereas, with tape technology, customers look at the price of new tape drives and arrays and they can convince themselves to get by with whatever they have onsite at the moment. Sugawara says that he is not worried about IBM's new PCI-X disk controllers, and that eStorage will benefit from the adoption of these disk controllers in the iSeries base as much as IBM will. He says that eStorage has no plans to develop its own disk controllers for the iSeries market, because of the considerable development and support costs it entails.