Tuesday, March 22, 2011

Xiotech Relocates to Colorado Springs.

The folks in the Colorado Springs Economic Council must have performed back flips when Xiotech announced that they were moving their headquarters to Colorado Springs. Colorado Springs has been struggling for years to attract technology companies but despite their effort the results have been a frustrating litany of disappointments including HP’s acquisition Compaq and subsequent reduction in local technology opportunities and Agilent’s lackluster presence only overshadowed by Intel’s shrinking commitment to the area.

Xiotech are sounding very bullish with Brian Regan their CMO being quoted as “ We are positioning ourselves for a lot of growth in a short period of time” – hopefully his bullish perspective is realistic. The engine of their growth is the ISE (Intelligent Storage Element) now integrated with SSD technology enabled by a dynamic, self tuning, storage tiering. If they can live up to their claim that they have increase performance by 15 to 20 times but at a cost 20 to 50% less than competitive equivalents then perhaps they have a shot at realizing the aggressive growth forecast by Reagan.

Challenge #1 however is raising more venture funding, approximately $30M is the goal. Their success will break the current venture capital drought in Colorado Springs where according to the Gazette no local start-up company in the area has attracted venture funding in the last two years. The funding being sought is earmarked to increase the local staff from 60 to about 100 (Cheers from City Hall!!) and positioning Xiotech to double revenues to $200M within three years (2010 revenues tagged at $100M). Ambitions abound - according to the Gazette the executive team have an eye to a public offering by mid 2012.

Being a local to Colorado Springs I am certainly wishing all success to Xiotech, but do they have what it takes to capture success? Their technology is sound, they are the leaders in self healing, self maintaining storage, their integration of SSD’s with a unique, dynamic approach to storage tiering is impressive and let us not forget their respectable install base.

So will they secure the funding, will they be able to build the ecosystem necessary to fuel a dramatic growth in sales and will the financial climate support a 2012 IPO? I sure hope so, being a local cheerleader what else would I say!!!

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