What's in Store for Compellent?

One of Compellent’s first resellers was Convergent Storage Solutions. “We feel very connected to Compellent, because we were there when the product was being born, so to speak,” Dusek says. He estimates that one-third of his company’s $6 million in annual revenue comes from Compellent sales. Those customers typically serve up to 4,000 users, be they employees, customers, or partners. Dusek’s customers like Compellent’s product because “it offers the same interface for an entry-level 1-terabyte system up to a 150-terabyte system,” he says. “And when you expand, you use the same foundational blocks all the way through.”

Besides letting other companies sell its products, Compellent also has others manufacture much of it. It selects leading architectures from the off-the-shelf hardware manufacturers, such as Intel, SuperMicro, and Seagate. It then sources these components from two vendors—Xyratex, based in the United Kingdom, and Bell Microproducts, headquartered in San Jose. Soran terms Compellent’s “virtual manufacturing strategy” a competitive differentiator. These components are manufactured and tested to its specifications, then are merged in transit into one shipment to the customer’s facility, where the system is then “assembled.” This eliminates unnecessary costs for Compellent.

So far, it’s been a mostly smooth route from Xiotech to Compellent. “Anything big, we all decide together,” Soran says. “We figure that we think so differently that if the three of us can agree on a strategy, it’s probably a good idea.” (There was one bump in the road. In 2004, Xiotech and Compellent exchanged lawsuits. Compellent asserted that Xiotech was preventing Compellent from bringing its product to market, while Xiotech claimed violations of trade secrets and employment agreements. The two companies settled in mid-2005.)

Soran believes Compellent’s deliberate growth strategies are a good match with a more stable, skeptical, post–tech boom investment climate. “We want to be predictable in our profit and revenue growth so that we have the resiliency to handle bumps and ups and downs in the market,” he says. “We want to provide sustainable gains.” According to Carr, even though some investors are still willing to bet on unprofitable early-stage IPOs because of those companies’ sheer growth potential, being profitable before going public is a wise course. Says Carr, “It says something about the marketplace valuation of your product.”