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ExaGrid Systems looking for solution providers serving the small-medium enterprise market, the organizations that fall between the Fortune 1000 and SMBs.

The privately held company, based in Westborough, Mass., and coming off its tenth quarter of growth, replaces tape libraries with a disk-based backup solution in the 1-100 Terabyte range, and has 2,000 systems installed at more than 500 customers, says CEO Bill Andrews.

"We’re going in and replacing tape backup." He says 43 percent of his customers actually replaced tape both onsite and offsite, while the remaining 57 percent have stopped using tape onsite although they still do offsite tape backup.

The secret to their success is that they’ve driven the costs of their solution down to where it is almost as inexpensive as tape, but with the performance and reliance of disk. Andrews says their only real competitor is EMC’s Data Domain, but they beat them in three out of every four bids. While he strongly praised EMC as a storage leader, he says their in-line processing solution is inferior to ExaGrid’s post-processing solution, which performs its de-duplication process after the backup has been written to disk. Data Domain tries to do it while it is happening, which slows down writing to disk, which slows down backup, which extends the backup window, he explains. "We will beat them hands down on performance."

Using post process results in faster backups, faster full system restores and faster offsite tape backup, he adds.

The technology is important, but Andrews credits their channel for a lot of their success. The company has hundreds of VARs, five of the six top DMRs, including CDW and Softchoice, but they’re looking for more.
ExaGrid counts on the channel for their expertise and tight customer relationships. "The channel is crucial to us. They own the customer," he says. Internally, employees call the company ExaWho, says Andrews. "The customers trust them."

He says this market has come down to a two-horse race, and ExaGrid is winning.

"Most of our VARs don’t like EMC. They find them arrogant… crush them down on margins… and take deals direct." He says it’s been a godsend to ExaGrid that EMC bought Data Domain. "We’re bringing on VARs daily."

If the technology and EMC are key factors in the company’s channel success, Andrews also points to the financial benefits of partnering with ExaGrid. "Our channel program is very tight. The channel is all about what discounts are you going to give, and how are you going to protect margins." So in addition to charging up to 30 percent less for comparable Data Domain solutions, margins can be 30-35 percent higher.

Both the channel and customers benefit, he says. Customers can get good products at good prices. "VARs want a product that just works."

Andrews expects disk-based backup to continue to erode the tape backup market. He believes the SMB market is either going to a service or an inexpensive disk appliance. In ExaGrid’s mid-market, tape will be gone in the near future. "In the next 3-4 years it will be gone onsite, and a little later, offsite."

There are more than a dozen different problems with tape, ranging from performance to wear and tear on the media, says Andrews. As long as you can come in around the price of tape, disk will win, he says.

If tape is on its way out in the SMB and the mid markets, it’s still got a strong hold on the enterprise market with its petabytes of backup data and multiple data centers.  He figures there is at least another decade of tape in the enterprise, but ultimately, it will go away. "Tape is gone everywhere in our lives in the consumer world." Eventually, it will be replaced in the business world, he says.