Nexsan Steps Out Of Imation's Shadow, Acts Like An Independent Storage Vendor Again

Storage vendor Nexsan has taken control of its own destiny -- and revamped its channel program to boot -- after parent company Imation shed its other assets and became a holding company for Nexsan.

Nexsan, best-known for its midrange disk-based storage arrays, is now the sole asset of Imation, which acquired Nexsan in 2013, said Robert Fernander, CEO for the Campbell, Calif.-based vendor.

Fernander told CRN that Nexsan is a much stronger company now that it has stepped out of Imation's shadow.

[Related: Imation Buys Nexsan In $120M Push To Expand Storage Business]

"We suffered through the acquisition by Imation, and now we're coming through the back end," he said.

Imation acquired Nexsan in a move to bring Nexsan's storage technology with Imation's security offerings, particularly its IronKey series of encrypted storage devices, to the midmarket, Fernander said. Imation also had an LTO tape business, and owned the consumer-focused Memorex brand.

However, after Fernander and other investors were elected to Imation's board of directors last May, they looked carefully at Imation's businesses.

"We saw some businesses like LTO tape declining, as well as a focus on the brand rather than product," he said. "Both were wound down in the fourth quarter. And IronKey was sold to Kingston for its Data Container business."

Everything else was sold off, including Imation's Oakdale, Minn.-based corporate headquarters, Fernander said. "So now we have Nexsan," he said. "Everything else was converted to cash. Now we have the resources to develop Nexsan and make acquisitions."

As a result, Imation is now a holding company, while Nexsan is an operating company wholly owned by Imation. Fernander serves as CEO of both companies.

Imation last month made news when Imation, along with Clinton Group, an investor in Imation, wrote a letter to Violin Memory, a Santa Clara, Calif.-based developer of high-performance flash storage solutions, advising the company to seek a strategic buyer. Both Imation and Clinton Group are investors in Violin Memory.

Fernander denied the move was a prelude to Imation's acquiring Violin Memory.

"Imation acquired some shares of Violin Memory," he said. "It let us put a placeholder with the board to open a dialogue. And we did open it. But right now, I'm working on cleaning up Imation. It's unlikely Imation will acquire Violin Memory. I have no intentions of acquiring Violin Memory."

Nexsan has four lines of business, Fernander said -- NST unified hybrid storage, which combines SSD and disk storage along with both block and file data; Assureon object and archival storage; the E-series of high-performance disk-based block storage systems; and the Transporter private cloud file-sync solution for private cloud storage.

While Nexsan is best-known for its disk-based storage arrays, the company has invested in flash storage, mainly using flash as a high-performance tier on some of its disk-based solutions, Fernander said.

"Today, a lot of vendors are moving from spinning disk to flash tiers," he said. "They may have high-performance storage solutions, but may not be focused on the second-tier or third-tier workloads. Our E-series and [new] Beast series can serve as the second and third tiers for these companies, who therefore don't need to invest in engineering to be in that market."

One of those companies looking to work with Nexsan in that capacity is Colorado Springs, Colo.-based X-IO Technologies, which late last year signed an OEM agreement with Nexsan.

The Transporter business came from Nexsan's late-2015 acquisition of Connected Data, Fernander said.

"Transporter provides private-cloud synchronization capability," he said. "When users sync a file, they connect to a broker in the cloud, which lets their devices locate and access the data without the data being in some cloud. This works well for such use cases as health care, government and financial companies, which are often restricted from using Dropbox-like services because a copy of the data is in the cloud."

Nexsan plans to expand Transporter to include private cloud-based file sync and share tied to the company's NST unified hybrid storage system, he said.

Imation wisely divested itself of everything except Nexsan, which brings unique technical and channel capabilities to the market, said Corey Preville, CEO and owner of CorData, a Herndon, Va.-based solution provider that Preville asserted has probably sold more "tonnage" of Nexsan than any channel partner.

The value of Nexsan has not diminished in the gradual shift in focus from disk-based storage to all-flash storage solutions, Preville told CRN.

"I don't believe disk is going away any time soon," he said. "It's not dead at all, while the performance end of the disk market has been impacted by flash storage -- but Nexsan is not in the performance business."

To succeed in the disk array business, where low-cost, high-capacity storage is important, reliability is king, Preville said.

"We have 8-TB drives, and soon will have 10-TB drives," he said. "When you have that much capacity on a disk drive, the care and feeding of those drives is important. If there's an issue, it might take weeks to rebuild. But Nexsan has paid a lot of attention to care and feeding of the hard drives, looking at vibration and power usage."

While a lot of performance data is moving to flash storage, a lot of data in general is going to disk, said Bill Allen, consultant and chief technology officer at Westlake Technologies, a Thousand Oaks, Calif.-based solution provider and Nexsan channel partner.

"Customers are seeing a level of reliability in Nexsan they can't find elsewhere," Allen told CRN. "Nexsan has unique ways to test drives and manage them. This leads to higher reliability for the drives than what comes direct from the drive manufacturers like Seagate or Western Digital."

For many customers, reliable capacity is still more important than performance, Allen said. "Nexsan has an array which fits up to 60 8-TB drives in a 4U chassis," he said. "What would you have to do to get that capacity in flash? Flash prices are falling, but flash just can't match the capacity of disk. When it comes to managing environments for the lowest overall costs, it will tale a long time for flash to meet disk."

Nexsan as of this month has fully integrated its Transporter technology into the Nexsan channel program, said Geraldine Osman, international vice president of marketing for the vendor.

"This gives channel partners access to the technology, which is complementary to their existing storage technology," Osman told CRN.

Nexsan has also moved from a single-tier channel program to a three-tier channel program, Osman said. The tier at which a channel partner works with Nexsan is based in part on the partner's revenue, but also on how many certifications a partner obtains and on how long the partner has worked with Nexsan, she said.

"We're rewarding partners' investment in Nexsan," Osman said. "And three tiers allows us to better direct our channel support resources."

The tiered channel program is still too new to know its impact, Preville said. "We're hoping to see more marketing and customer support. For now, the level of support depends on the capabilities of our regional sales managers."

The success of the tiered channel program depends on its execution, Allen said. "It seems like a good program," he said. "Nexsan is trying to raise the level of the program as a way of working with partners to grow the end-user business. It wants to educate partners' sales reps on why they should be selling certain lines. Resellers can get lazy. This will push them to keep up to date on solutions so they can grow to the next level."