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Don't Sell Yourself Short in the Telco/NEP Market

Presented by Warren T. Sheffield . Don't Sell Yourself Short in the Telco/NEP Market. What We are Here to Discuss. Sizing the Market Opportunity Network Equipment Providers (NEP) Overview, trends & requirements Telecommunication Overview & trends NEP & Telco buying criteria

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Don't Sell Yourself Short in the Telco/NEP Market

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  1. Presented by Warren T. Sheffield Don't Sell Yourself Short in the Telco/NEP Market

  2. What We are Here to Discuss • Sizing the Market Opportunity • Network Equipment Providers (NEP) • Overview, trends & requirements • Telecommunication • Overview & trends • NEP & Telco buying criteria • Selling into the Telco market • Signals to look for & questions to ask • How Dot Hill's portfolio address these needs • Measuring up against the competition • Customer Wins

  3. Explosive Network Growth 30 Billion packages shipped per year 2 Billion text messages on a peak day 390 Gigabytes of data created every second 50% New data growth each year

  4. Network Participation is HappeningEverywhere Enterprise Consumers Developers Public Sector Collaborative Industry Networks Outsourcing New Business Models Blogs Instant Messaging MySpace Itunes Flickr Online Gaming Java Open Source Linux OpenSolaris Windows Inter-Agency Collaboration Healthcare Networks Political Campaigning

  5. Handsets & Consumer Electronics Voice & Data Fixed & Mobile Comms & IT Media & Network IP-led Convergence Changes The Game

  6. Strategy Needs to Address a Broad Spectrum Innovate the World's Best Technology Address Our Customer's Biggest Challenges Grow Communities, Increase Participation & Opportunity Sharing Creates Communities, Communities Create Value

  7. NEP Overview

  8. NEP Storage Market Trends 2006 • Growth Drivers • SMS & IMS services: messaging, caller • info, caller ID, network connectivity • Others: 3G, IPTV/video • IP Telephony (VoIP) – storage usage • impact between NEPs vs. Telco operators • Regulatory & Compliance • Any impact to NEPs from data retention • compliance requirements for Telco • operators (EU first, followed by ROW) • between 6 months to 2 years • Storage Usage Models • Local DAS to consolidate storage (ie. • Adoption of bladed servers) • Tiered storage & local backup apps • Geo-redundancy (backup) and distributed • storage (central office vs. data center) • Competition • New NEPs emerging (Hauwei & ZTE) • push for lower cost • DC storage • Strong Telco push by EMC • Market Dynamics • Price erosion 10 – 15% per year • NEP consolidation in response to the • carrier consolidation • Technology substitution (VoIP, wireless, • etc.)

  9. NEP Storage RequirementsProviding the right product with the right features

  10. NEP Storage RequirementsProviding the right product with the right features

  11. Telco Overview

  12. Telco Storage Market Trends 2006 • Customer Power • Increasing as Telcos consolidate • Price erosion is 10 -15% per year • Technology Substitution • PC based VoIP impacting wireless & • wireline Telcos • WiFi & WiMax could hurt Telcos if • Internet content companies & • municipalities manage to provide free • Internet access • Supplier Power • NEPs consolidation (Lucent/Alcatel) • DC a requirement • Competitive Structure • Indirect competition increasing from • every direction – even Yahoo offers • voice at 2c per minute – cable • companies, wireless/wireline Telcos, • Internet companies all in the mix • Consolidation in EU and US Telcos • continue and could reduce direct • competition • Growth Drivers • IPTV for Telco's (e.g. ATT/SBC & • Lightspeed in US) • IP Multimedia Subsystems (IMS) • includes storage intensive services • such as Find-me-Follow-me, address • book sharing, on screen caller ID, multi- • network connectivity (cell to WiFi/VoIP)

  13. Listening to Customers Why do customers continue to“vote” with their purchase orders? • Quality of service & support • Open systems choice • Commitment to mainframe customers • Storage expertise & sales competence • Product features, quality & reliability • Technical support • Customer overall satisfaction Customers are looking for suppliers to deliver end-to-end data management, data protection & security

  14. Telco/NEP Buy Criteria for Block Storage

  15. Selling into the Telco Market • NEBS Level 3 complete solutions – not just servers • Storage solutions must address both physical, proximity as well as data service requirements • Understanding the customer's comfort level on technology • Listening to what they say as well as hearing what they don't

  16. Selling into the Telco Market • Being committed to provide a higher level of supply as well as support in the field • Understanding how they outsource certain functions – especially in service • Telco customers require a longer lead time in product changes as well as extended availability options • Change is slow but when you win, you are in for even more opportunities • Being prepared to support their extended product life cycle requirements

  17. Recognizing an Opportunity • When a customer needs • Task-critical application storage • Single Dedicated Apps • Workgroup applications • Rack space utilization • High port count/simplified SAN solutions • Cost effective storage solutions • Ability to grow modularly • A consolidated boot solution • Telco(NEBS) • Gov't (MIL-STD-810F)

  18. Questions to Ask Potential Customers • How are they addressing Sarbanes-Oxley & their needs for data retention • Do they have a plan in place to address the compliance regulations • How are they addressing the continued entrants into the marketplace • Are they working on reducing environmental issues like BPU and/or power consumption

  19. Questions to Ask Potential Customers • Would they be interested in solutions that: • Cut their operating costs (to preserve margins) • Reduce churn to minimize revenue loss • Open opportunities to increase average revenue per unit • Attract new customers • Provide the opportunity for new revenue inside as well as outside the telco market

  20. Who is Effect By the EU Data Retention Directive? • Telephone operators – both hardwire and mobile: Lucent, Ericsson, Nortel, etc • Network providers – ISP: AOL Wanadoo, Terra, Tiscali, etc. • Service providers – Skype, MSN Messenger, Yahoo, Gmail, etc And the Directive is spreading!

  21. What Communications must be retained? • Phone calls to/from – both Fixed as well as Mobile • VoIP services • Instant messaging like SMS and MMS • Internet connections – both dialup as well as others • Emails

  22. What Data must be retained? • Caller #, name & address • Number called, name & address • Date, time & duration • Internet access – IP address assigned, calling #, DSL id • Mobile call- IMSI & IMEI of calling & called parties as well as Cell ID & GEO location • Mobile-prepaid anonymous – date & cell-ID of initial activation of the card

  23. Why are these products easy to Sell? • High port-count = less infrastructure cost & complexity • Simplified deployment, configuration & monitoring • Heterogeneous support • Price/performance • Pay-as-you-grow, server centric, flexible

  24. SANnet II FC Tape Library Customer Saves $45,000 Innovation With the SANnet II FC

  25. Example: Switchless SAN 4 Hosts connected to entry array: EMC: $145,000* Dot Hill: $100,000 Savings: $45,000 • Customers love this highly efficient architecture • Industry-leading high port count eliminates the need for switches • Greatly reduces costs • Simplifies administration • Saves space • No production-level NEBS Fibre Channel external switch is available today *Incremental cost from 2 redundant FC switches

  26. Example: Traditional Telco Storage Deployment Internet • Current Environment • Sun Netra servers (1280s, 480s, 440s, etc.) • Most DAS, 25% utilized • Solaris and Linux • Storage: SANnet II SSCI arrays used • Multi- TB installed – growing at 30-50% • Multimedia messaging service (MMS) applications MMS Server MMS Server MMS Server ... SCSI SCSI SCSI • Challenges/ Requirements • Lower TCO • Migrate to SAN (no NEBs based switches?) • Storage requirements from IP telephony, demand from emerging 3G and 4G cellular networks SANnet II SCSI SANnet II SCSI SANnet II SCSI

  27. Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Node Slot Switch Slot Switch Slot FANS FANS ShMC ShMC New Telco Deployment Internet New Environment • ATCA bladed server platform with built in SAS connectivity (no external HBAs/SIOM modules) • 14 dual ported usable slots = 28 ports • Combination of multi-port SAS and iSCSI connectivity to two Next Generation arrays • SAS for performance intensive workloads, iSCSI for other (boot, low access applications) SAS iSCSI Next Gen iSCSI Next Gen SAS Rack and Stack w/ SAS

  28. Why are these products easy to Sell? • High port-count = less infrastructure cost & complexity • Simplified deployment, configuration ,monitoring • Heterogeneous support • Price/performance • Pay-as-you-grow, server centric, flexible

  29. ASP - $20K through $300K (US) - Low end ASP ~$50K - High end ASP ~$150K • Very large market ~$4B this year alone in APAC - Growing Business Continuity - Growing SATA business • High growth >5% CAGR • High margin business >20% SW $s contribution • Great annuity business ~25% of the revenue stream - Modular architecture HW - Incremental revenue SW - 90%+ sold with services NetWare Linux 4% (shrinking) 10% (growing) Windows 47% (growing) UNIX 39% (shrinking) Enormous Revenue Opportunity

  30. Why are these products easy to Sell? • High port-count = less infrastructure cost & complexity • Simplified deployment, configuration ,monitoring • Heterogeneous support • Price/performance • Pay-as-you-grow, server centric, flexible

  31. Screaming Performance, Low Price • SPC-1, February 2006 • Best price performance* with 11,648 SPC IOPs, $3.71 per SPC-1 IOP • Conducted with mirrored cache for full data protection • SPC-2, December 2005 • Best price performance and performance in its category http://www.storageperformance.org/results/ *following 2/7/2006 reprice of SE3510

  32. Why are these products easy to Sell? • High port-count = less infrastructure cost & complexity • Simplified deployment, configuration ,monitoring • Heterogeneous support • Price/performance • Pay-as-you-grow, server centric, flexible

  33. Flexibility Can be a Vague Concept • There are numerous differing opinions about what exactly “pay-as-you-grow” means… or what it should mean. • Despite vagueness, several items are understood: • Customers wish to spend as little as possible for their initial capacity. • Customers seek simple painless ways to add even minimal amounts of storage to existing volume groups and arrays. • Customers desire a relatively painless way to increase over all performance of their system if they require it.

  34. Example of Tiered Storage

  35. End-to-End Service Delivery Architecture 3rd Partyr Apps Video Location Voice Hosted/Partner Legacy Apps Messaging ExternalApp Servers Telephony ApplicationServer IMSControl Media Server OSA/Parlay GW PAM Group Lists / Location Session & Event Rating HSS Internet & Content Smart Media GW Circuit Switched access IP PBX / Centrex End User Services Network Enablers IP Transport Network OSS Access Networks DSL /Cable WiFi /802.16 GGSNPDSN 2/3G Wireless MSC PSTN Access Point HSDPA PBX End User Devices 2/3G Voice / WiFi(SIP) Handsets SIP, MGCP, H.323 Endpoints POTS Phones Video & Data Endpoints ISDN Phones SmartPhones Data & Game Devices

  36. Why are these products easy to Sell? High port-count = less infrastructure cost & complexity • Simplified deployment, configuration ,monitoring • Create a low cost switchless SAN with up to 12 servers Broad heterogeneous support • Microsoft, Linux, HP-UX, IBM AIX, Novell & Solaris Certified Pay-as-you-grow, server centric & flexible • Incremental “building block” approach (1U/2U) • Scalability from as low as 73GB to 32TB or more Price/performance • World record price/performance on SPC benchmarks (SUN Branded) • SPC-1 ($3.71 per SPC-1 IOP) February 2006 • SPC-2 December 2005 • http://www.storageperformance.org/results

  37. Dot Hill Portfolio OverviewA Segment Leading Portfolio • High Performance Tier 1 Storage - Industry Leading price/performance • SANnet II FC G • Ideal for Tier 2 storage - Scalable, low-cost SATA storage (54TB) • SANnet II FC-SATA • Cost Effective External Direct Attached Storage • SANnet II 320 • Thin Storage & Universal Boot Device for high end servers • SANnet II Blade • High Performance Tier 1 and Scalable, low-Cost Tier 2 with Industry Leading Features • NEPTUNE

  38. Do We have the Requirements Covered for the NEPs & Telco markets?

  39. Competitive Landscape • EMC/Dell • Entry Products (Clariion CX300/300i, AX100/100i) • Recent August refresh • FC/SATA and 2Gb connectivity • Simple, customer installable (AX100) HP MSA1500 HP MSA500 G2 • HP • Entry Products (MSA1500, MSA500) • Modular controller shelf, SCSI or SATA storage • Unified server/storage management • Preconfigured SAN kits, investment protection EMC/Dell Clariion CX-300 EMC/Dell Clariion AX-100 • IBM (LSI-based and Adaptec products) • Entry Products (DS4300, DS300/400) • Refresh expected next spring • “On-Demand Express” offerings IBM DS4300 IBM DS400/300

  40. SANnet II SATA Competitive Details

  41. SANnet II FC Competitive Details

  42. Neptune Competitive Details

  43. Neptune Competitive Details

  44. Some Quotes On EMC CLARiiON • “… EMC CLARiiON, which was the only product to finish in the bottom half of every category,…” • “… EMC had the lowest ranked product in both the enterprise and midrange array surveys.” • “They’re very aggressive in their sales approach, and some of the things they promise don’t necessarily pan out after the product is on the floor.”

  45. Customer Win! • Applications: • Mobile Soft switch (MSS) • Push to Talk over Cellular (PPT/PoC) • Primary Storage Use: • Using SANnet for Quorum Disk in Cluster • Clustered Intel NEBS Servers attached to SANnet II SCSI • Storing Provisioning & Billing Records • Lost Data = Lost $$$$

  46. Why Did We Win? • Organizational Responsiveness • Seamless Evaluation, etc • Trusted Advisors • Telcos do not understand storage • OEM Support Capabilities • Ability to Manage Product Life Cycles and Firmware • NEBS Level 3 Certification • DHS has Unfair Advantage in Carrier Class Storage

  47. Customer Win! Applications: • Next Generation Message Systems (NGMS) • Message and Video application Primary Storage Use: • High availability Telco compliant message/video center

  48. Why Did We Win? Why did we win at Glenayre? NEBS • DHS has Advantage in Carrier Class Storage • High availability documented at five nine’s reliability • Organizational Alignment • Alignment of Peers throughout the organization • Telco requirements • Understanding Telco restrictions • Dot Hill product specs (Depth, Height, Weight) • OEM Capabilities • Ability to Manage Product Life Cycles & Firmware

  49. Design Wins Spiff Timeline • October 1 to March 31, 2007 Goals • Grow Storage sales to $2 million • Average 18 new customers at 11 units each • Generate awareness with current customers for storage Spiff • 18 Design Wins, $9000 • Account Identification/First Order Shipped - $200 • Design Win once $25,000 Shipped - $300 • One Win per Customer • 4 Success Stories, $1000 • First 4 Success Story get $250

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