Case study

Dec. 2001

SANGate
Case Study

Hillel Freeman Amir Lapidot Michael Weinberg

Moty Yamin Zvi Topol Oded Ran (OdRP)
Case study

Agenda
Dec. 2001

The problem and the solution

Technology
Market Analysis
Customers
Competitors
Weaknesses and Threats
Company Overview
Conclusions
Case study

Case Study Goals

Dec. 2001

Understand the “starting-up” process

Investigate and analyze a field
unknown to us
Identify the weaknesses and threats
the company’s facing
Case study
Dec. 2001

SANGate’s Mission Statement

“Provide infrastructure for

data integration between
Mainframe and Open Systems
storage networks”
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The Problem
Dec. 2001

Mainframe
Performance and
Internet
bottle-necks

Open
Vendor-
System
Server
?
Independence
Interoperability
between MF and
SAN:
Storage Area Network ? Storage
Open System
Storage
Disk arrays vendor A
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The Solution
Dec. 2001

Mainframe

SANGate’s ESA Internet

Open
System
Server

A dedicated, special-purpose server

which performs as a storage router
SAN:
Storage Area Network

Storage
Disk arrays Storage
vendor A
vendor B
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Product’s Strengths
Dec. 2001

ESA – Hardware/Software solution

 Interoperability between OS and MF

 Vendor-independent compatibility
 Increased performance and scalability
 Infrastructure for further development
 Significant ROI for customers
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Product and Technology

Dec. 2001

ESA based upon a patented

communication chipset
Technology is confidential

Unique knowledge
ESA
of MF comm.
Up to 1 GBps
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Market Overview
Dec. 2001

Storage Market:
Amount of data doubled annually (IDC).
Divided to MF (70%) and Open Systems
SAN Key players: EMC, IBM, Compaq, Sun, HDS.

Storage Management:
$9 Billion sales in 2001 (of which 80% for
Mainframe)
Segmented to software-only and
software/hardware appliances solutions
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Target Market Analysis

Dec. 2001

Large firms using MF computer: 4000-5000.

Company currently aims Fortune’s 1000 list.
S/390 Mainframe units installed: 32,000
(each with 16-256 ESCON ports).
Average installation per S/390: 4 units.

Potential deployment: 128,000 units.

Average unit price: $120,000
Target market: $15,360,000,000
S/390s distribution is growing at ~30-35% annually.
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Business Model
Dec. 2001

3 main types of customers:

Large Fortune’s 1000 Firms
OEMs: BMC, CA
Resellers: MF firms, IBM
Aims for strategic partnership
Possible future M&A or IPO
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Pricing Model
Dec. 2001

The target of the pricing model:

Enabling SANGate to position itself primarily
as a software company
ESA price: $80,000-$200,000
Data integration applications:
As a service – the price will be based upon a
certain price per volume moved
License over 3 to 5 year period for a fixed fee
Software updates
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Competitors (1)
Dec. 2001
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Competitors (2)
Dec. 2001

Major competitors with data integration solutions

for Mainframe and Open System:

EMC:
Fujitso
hp
NewFrame
SANlink
SRDF
(Amdahl):
(Or-Yehuda)
TDMF
Start-up
Data replication,
Software
Host-independent
company
based solution:
mirroring
purchased
data integration
data hp
andsharing
by
point-in-time
software
for
between
$350M
copying
Hardware/software
DBs
for EMC
in Mainframe
storage systems
and
appliance:
Open Systems
enables data
Vendor-independent
integration
Referrable
Supports 24x7
customers
for different
data mirroring
Open System vendors
Only-mainframe
Feature-rich
Only
‘Gorilla’
database
company solution
orbacking
only-Open System solution
Doessuffers
Still
Only EMC
not support
storage
from performance
S/390
systems
to date
supported
bottlenecks
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Milestones
Dec. 2001

1995-1998 Single entrepreneur

1998 Technological breakthrough
July 1999 First business plan
Oct. 1999 Second business plan
Jan. 2000 $8M First round (JVP, Battery Ventures)
May 2001 $10M Second round
Sep. 2001 Beta deployment
Nov. 2001 CEO sent home by court’s decision
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Present status
Dec. 2001

Two sites:
Even-Yehuda (Israel)
Southborough (Mass., USA)
76 employees
No CEO!
Development completed only for Mainframe
Beta exists, ver 1.0 expected: 2002 Q2
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Weaknesses and Threats

Dec. 2001

David and Goliath: competition against

industry’s gorillas (EMC, IBM, HDS).
SAN’s a hype? (EMA survey)
Company failed to predict technological
developments: FICON case.
No support for Open Systems today.
No referable customers.
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Conclusions
Dec. 2001

The company has a unique product and

selling proposition for a large, existing
market opportunity .
Business model (direct sell) is risky against
the market’s ‘gorillas’:
Strategic partnership is recommended
Open Systems and FICON support are
key features that should be developed
Referable large customers is a must
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Dec. 2001

Back to Case Study Goals

 Understand the “starting-up” process

 Investigate and analyze a field
unknown to us
 Identify the weaknesses and threats
the company’s facing
Case study

Thank you.
Dec. 2001