Saturday, December 5, 2009

The Unfortunate Demise of COPAN Systems.

Sad news this week as another storage company closes its doors. It had been rumored for a number of weeks (months) that IBM would be acquiring the skeletal remnants of what once was a vibrant, innovative storage company and relegating them to a development unit under the umbrella of the IBM archive activities. Apparently that was not to be, but it remains to be seen how the COPAN BoD will conduct the fire sale of the COPAN assets. They may yet end up with IBM.

While it is little consolation to the many former COPAN employees who invested significant sweat equity, the concept of MAID will at least continue as a legacy of the innovative thinkers at COPAN. While COPAN was the only company that faithfully followed the original concept as defined by the team at the University of Colorado there are many other variation of the MAID theme that have exploited the concept, delivering varying degrees of energy efficient storage.

So why did COPAN fail? It is not as though MAID technology was ahead of its time, quite the contrary, the timing was excellent. Energy efficient storage, green storage or however you choose to describe it was very topical, and in segments of the data storage market it resonated well. The concept has been proven to be valid with most storage vendors offering a MAID option for their tier2 and 3 type storage. So again why did COPAN fail?

Myopic market research:
COPAN managed to move well beyond the nascent stages of a start-up where inspired founders had identified a need, a solution and early market traction was realized. However COPAN’s leadership became intoxicated by the trend of explosive data growth and the blossoming data storage opportunities. Copan cleverly coined the term “persistent data” to identify the data type that would best match the storage characteristics of MAID. What they failed to recognize and mitigate were the limitations that restricted the market that was legitimately available to COPAN. In short they missed identifying the sweet spot and the prerequisites of the market that resonated with their solution. In short a myopic marketing failure.

Product development guided by internal perceptions and biases:
Internal development at COPAN was divorced from the realties of the market. For a company whose core competence was in the uniqueness of the MAID, COPAN’s investment of significant human and financial capital in trying to develop archive software was questionable at best. Perhaps a more pragmatic approach would have been to align with a company who had a core competence in archive software. Another failure to apply basic marketing principles and practices instead of relying on the unreliable wisdom of the executive “gut”.

Incomplete product:
COPANs strength was its core MAID technology. Attempts were made to grow the ecosystem of application partners but there was not sufficient resources applied to make this effort meaningful. By not having the support of a broad ecosystem of enabling applications it was difficult for the end user to understand how to apply this technology to help them meet there data management challenges. Complete solutions make it easier for users to understand why they should buy; incomplete products present reasons why they should not. The COPAN offering was an incomplete solution.

Undifferentiated product:
The COPAN product was well differentiated. The weakness was their not understanding, focusing and exploiting its sweet spot. A consequence of an incomplete or erroneous market understanding and a sole reliance on the internal body of experience and knowledge.

Overly optimistic sales plan:
Nothing wrong with being optimistic about a companies sales plan but it must be tempered with realism. With a leadership team that was steeped in EMC, IBM, STK and HP, COPAN had a sales plan that resembled the practices and ambitions of these larger companies; problematic for the much smaller COPAN.

Marketing planning was far from a strength at COPAN and it was this deficiency, fueled by strong executive ego’s, that created imbalance and much internal friction It is interesting to note that all too often CEO’s, VC and senior sales executives think that the primary role of marketing is demand generation. Yes, that is an important marketing deliverable but not the only one. Such myopic perspectives are short sighted and damage the long term prospects of the company. Such was the case with COPAN.

I have observed over time that there is a relationship between the degree of discord and the functional heritage or preference of the Chief Executive. Personally this is a particular frustration having witnessed functional ego’s destroy better than average opportunities, such as with COPAN.

No one will argue that revenue is the life blood of an enterprise, but any sales have to be affordable and the sales infrastructure sustainable. In the case of COPAN sales had excessive ambition, unfettered freedom and an unsustainable burn rate that, at least from my perspective, all contributed to COPAN’s unfortunate demise.


While far from a comprehensive liteny of reasons that led to the demise of COPAN these comments reflect the perspective of a former employee and industry analyst/observer. To organize my thoughts I liberally drew from one of my earlier blogs.

Just checked the COPAN WEB site, it is still up. Looks like the lights are still on but nobody is at home.

9 comments:

Anonymous said...

Bill,

Think you will be writing another obit soon for another storage start-up that has many of the same problems that COPAN had. This one though has burned through more than 1/2 billion dollars and still burning cash. With profitability 4+ years of shipping product, their destiny is out of their hands in the rapidly consolidating storage market. Who will bottom fish on them when its said and done?!

Anonymous said...

While all the points raised in this post are accurate, there is only one reason Copan failed... the cost was way, way too high - ridiculously high with very little relative value next to other disk vendors.

Steven Hill said...

Very astute analysis there Bill, unfortunately myopia at the helm seems to be a problem at a number of companies these days. Current economic problems aside it's always been a challenge to price such a brilliant product concept with such a niche application. Long term storage on disk is a problem that disk vendors have been avoiding forever, and believe me, I've asked.

Unlike the pretenders out there, Copan's MAID technology was an ingenious solution with all the underlying data-protection logic to made disk a truly viable archiving platform. But like many shining ideas - no one seemed to care all that much. The enterprises that could afford MAID couldn't justify the cost of a dedicated, long-term disk archive as long as they had tape and other relatively cheap methods for dumping little-used data.

Lack of a functional archiving strategy is the dirty little secret in most IT shops and someday it will come back to haunt us, let us hope that IBM will pick up the ball and integrate MAID technology into their product matrix. I've always thought that Copan was a company that was destined to get purchased at some point; and whether they were too stubborn, waited too long or got bit in the butt by the economy is academic. I can only hope that their technology stays around in some way, shape or form.

BillM said...

Anonymous 1: I hope that this is not the case. Writing on such topics is far from fun.

Anonymous 2: Pricing is probably one of the contributing issues. However I suggest that pricing was an issue created, or at least severely aggravated, by a misalignment in product positioning. If the market segments your are trying to sell into does not perceive the products value then its price will always be too high.

Stephen: Thanks Steve. I agree, COPAN did (does) have innovative, or as you put it ingenious technology. Deep archive I suggest will remain in the domain of tape but with the increasing need for active archiving where data findability and accessibility is increasingly becoming a requirement, disk will find its place as technology advances cause the value cost ration becomes more attractive.

I hope IBM does indeed pick up the ball.

DrDedupe said...

Bill you make many good points. Wrapping a company around a single feature is indeed difficult. Data Domain did it with dedupe but had a more solid marketing plan than Copan. One thing I'd argue, however, is that Copan and MAID are in fact ahead of its time. Todays disk drives are not designed for spin up / spin down. Also given the frequency that this occurs, the 25% limit imposed by Copan became a bottleneck. Hybrid drives, i.e. disk drives with large front end r/w caches will obviate the need for frequent spin up but these drives are a few years away from maturity. More here:

http://blogs.netapp.com/drdedupe/2009/12/evolution-of-the-storage-brain-chapter-1-and-then-there-was-disk.html

BillM said...

Dr DeDupe: Thanks for the comment. However I am not sure I agree with your thought about drives not being designed for a start stop considering that the operational profile of drives used in laptops or desktop is frequent power cycling. In fact it is my understanding that Seagate tests their drives to 50,000 start stop cycles which is significantly above normal operational expectations.
Good comment on Data Domain. However they did have the advantage of delivering a solution that resonated with a much larger population and were not in a niche as was COPAN. That said, they did execute very well.

Rod E said...

Bill,
you clearly thought marketing was a major issue but as that was your department - do you not feel you were partly to blame? I don't recall you speaking up when you were there too much.

Actually, I agree with most of your analysis and imho there were two major problems with COPAN:
1. Bad management - start-up require different skills than those honed by EMC, STK etc. There were few people who had done it before.
2. Lack of product development _ the product never moved on in 4 years. As it was built - the COPAN box was great as a VTL but de-dupe killed that market. File archiving is a massive market but the COPAN execs and engineering never did the work to develop a file interface and build the box into an archive box with a tier 1 spinning cache and tier 2 maid.

Sad but inevitable when you employ the wrong people. We had no sales strategy and kept changing the focus from Enterprise to SMB back to Enterprise, without a plan. A very weak CEO, completely out of his depth didn't help.
A real shame....

Anonymous said...

I thought the major issue of Copan was lack of a true product development visionary. I don't want to diminish the talent that was there but I never saw a leader that could drive development and engineering and bridge it to marketing and sales.

I don't think Copan was ever anything more than a decent concept. Execution was awful. I did a short stint there in 07 and was immediately alarmed after I got onboard as there was really nothing there product-wise that was halfway marketable. Very niche, high entry point, hard to use, many restrictions, expensive. Situation was so bad I considered their management, in general (not everyone mind you), to be untrustworthy, incompetent, and unethical, and still do so. You couldn't believe anything they said back then and it looks like you still can't. I believe the last CEO has ruined his name in the industry.

I don't think anyone does themselves a favor by talking about an association with Copan. The company was a mistake that is best left forgotten.

I wish everyone luck. It is best so that everyone can get on to something that can be successful. Better days ahead. Good luck.

vincek said...

Copan put ver little effort into making a realia le product. I know they had on at the NY stock exchange that constantly had problems. The engineering manager (Magged) was in way ove his head. It was almost like a kindergarten class. Everyone knows cusomer satisfaction is priority one. Copan would go to the stock exchange installation with the wrong parts or excuses about how the problem was too complex to fix on site

I was a technician at Copan. When I brought up quality issues I was told to keep my mouth shut or it could cost us future business. Our test units in the lab had so many trays of dives swapped out the connectors were extremeny unreliable. I had notebooks full of data on these issues. When I brought them up to maggot I was fired. It was very easy to see from my vantage point why this inept company went the way of the Commodore 64. I will sign
my name because I have nothing to hide or be ashamed of
Vince Kiel