6000+ Customers Prove Optical Isn't Dead Yet; Alliance Resurrects Plasmon
Last fall Plasmon and its UDO technology and G-Series optical libraries appeared all but left for dead. Years of mismanagement had left Plasmon in dire financial straits and when a refinancing deal in the fall of 2008 for $20 million led by Plasmon's-then CEO Steven Murphy fell apart in the midst of the worldwide credit crunch, Plasmon's end was imminent. It was only after Plasmon went into receivership in early 2009 that Alliance Storage Technologies, led by its CEO and President Chris Carr (himself a former Plasmon engineer), entered the scene and breathed new life into this dead and dying company.
Plasmon is a remarkable story in that it has a large customer base (6,000+ customers with over 17,000 optical libraries sold worldwide since 1984), a viable and functioning technology (UDO), the expertise and distribution channels to support its optical libraries and a defined market niche with customers that definitely want and need optical. Despite all of those factors working in its favor, it was still not enough to overcome the years of mismanagement that led to its ultimate collapse in November 2008 that DCIG reported on in a blog at that time.
All of that changed on January 13 of this year when, just a few days after Plasmon went into receivership, Alliance Storage Technologies stepped up to the plate and acquired Plasmon along with all of its assets (copyrights, drives, media, parts, patents, trademarks - you name it, Alliance got it.) While exact dollars were never disclosed, word is that Alliance picked up Plasmon at fire sale prices.
Plasmon's ultimate demise and subsequent acquisition by Alliance Storage Technologies is probably the best thing to happen to Plasmon in a long time in two ways. First, since Alliance Storage Technology acquired Plasmon out of receivership, Alliance was able to acquire Plasmon without also assuming all of its debt.
Second, Alliance's CEO Carr had resold and serviced Plasmon technology (UDO and its optical libraries) since 1998 so he had a pretty good idea what he was getting himself into. Besides, it's also obvious that Alliance had done pretty well along the way in terms of selling Plasmon technology so he knew a little bit about running a business and was savvy enough to be in a position to snatch up Plasmon when it became available.
A little over 6 months have now elapsed since Alliance's acquisition of Plasmon. During that time, Alliance has been busy behind the scenes shoring up Plasmon's channel and customer relationships. In talking with Alliance's Carr, he described the initial wave of service issues after Alliance acquired Plasmon as a "tsunami" since there was a lot of consternation out there among its customers. "Once customers heard that Plasmon was going under many were trying to make a mad dash off of its technology," says Carr.
To address these concerns, Alliance:
One aspect working in Alliance's favor is that its archiving technology like the archiving data it hosts is designed to last for decades if not centuries so customers are not apt to quickly change technologies. Even once it became widely known that Plasmon was going under, many existing Plasmon customers went into a holding pattern until they knew what the final fate of Plasmon's technology was going to be.
Since Alliance quickly stepped up after Plasmon went into receivership (Alliance acquired Plasmon only four days after Plasmon formally announced it had entered into bankruptcy), it was able to stem the tide of customers abandoning Plasmon for competing archiving solutions.
This wasn't easy. During the past six months, Alliance has been contacting customers and channel partners and re-assuring them that the support and development of Plasmon products will continue in an attempt to stabilize current and prospective customers and channel partners. But on the surface, it appears Alliance has accomplished that during this time since rumors of Plasmon customers defecting to competing technologies have largely subsided.
The bigger question is, however, "What does Alliance hope to gain by saving a company with a technology that is heavily under assault by disk?" Bill Gallagher, Alliance's Director of Strategic Accounts and Regional Sales Director, stepped up to answer that question.
Using disk, customers face a refresh cycle of about every 3 - 5 years. This is not the case with optical. Gallagher explains, "When companies acquire our technology and use it in a true archival sense, they view it as a much, much longer term investment of technology and capital."
Alliance still has Plasmon system in accounts like Citibank, Bank of America and Wachovia that are over 20 years old, use 12 inch optical platters and are still in production. These organizations made investments in this technology because it has characteristics that disk and tape simply do not have. For instance, optical can withstand the "bucket test" where you can put the media in a bucket of water overnight, pull it out, clean it up, insert it into the optical library and it will work. Gallagher says, "When optical is used in the right archival setting, it makes for a very permanent, long-term investment so these customers were relieved they could continue to use it for these purposes."
It was easy to assume Plasmon and its technologies were left for dead. I certainly did until I received a call a few weeks ago that let me know it had re-emerged and that it was still alive and kicking. It obviously took a company like Alliance that knew something about the inner workings of Plasmon (the good and the bad) to see that enough good yet remained in Plasmon and its technologies to justify resurrecting it.
So while I don't expect to ever reference Alliance/Plasmon and optical technology with the same breathless excitement that I might reserve for "deduplication" or "cloud storage" it is interesting to note that even as the storage industry is undergoing huge changes, there are some legacy technologies that remain relevant in this rapidly changing world in which we live.
Previous DCIG blogs on Alliance/Plasmon:
Plasmon is a remarkable story in that it has a large customer base (6,000+ customers with over 17,000 optical libraries sold worldwide since 1984), a viable and functioning technology (UDO), the expertise and distribution channels to support its optical libraries and a defined market niche with customers that definitely want and need optical. Despite all of those factors working in its favor, it was still not enough to overcome the years of mismanagement that led to its ultimate collapse in November 2008 that DCIG reported on in a blog at that time.
All of that changed on January 13 of this year when, just a few days after Plasmon went into receivership, Alliance Storage Technologies stepped up to the plate and acquired Plasmon along with all of its assets (copyrights, drives, media, parts, patents, trademarks - you name it, Alliance got it.) While exact dollars were never disclosed, word is that Alliance picked up Plasmon at fire sale prices.
Plasmon's ultimate demise and subsequent acquisition by Alliance Storage Technologies is probably the best thing to happen to Plasmon in a long time in two ways. First, since Alliance Storage Technology acquired Plasmon out of receivership, Alliance was able to acquire Plasmon without also assuming all of its debt.
Second, Alliance's CEO Carr had resold and serviced Plasmon technology (UDO and its optical libraries) since 1998 so he had a pretty good idea what he was getting himself into. Besides, it's also obvious that Alliance had done pretty well along the way in terms of selling Plasmon technology so he knew a little bit about running a business and was savvy enough to be in a position to snatch up Plasmon when it became available.
A little over 6 months have now elapsed since Alliance's acquisition of Plasmon. During that time, Alliance has been busy behind the scenes shoring up Plasmon's channel and customer relationships. In talking with Alliance's Carr, he described the initial wave of service issues after Alliance acquired Plasmon as a "tsunami" since there was a lot of consternation out there among its customers. "Once customers heard that Plasmon was going under many were trying to make a mad dash off of its technology," says Carr.
To address these concerns, Alliance:
- Kept Plasmon's original manufacturing lines in Colorado Springs, CO
- Kept the same production methodologies
- Retained the same people involved with the technology
- Re-invested its earnings to restock its inventory
- Continued to enhance and develop the Plasmon archiving software
- Re-certified with GE and IBM
One aspect working in Alliance's favor is that its archiving technology like the archiving data it hosts is designed to last for decades if not centuries so customers are not apt to quickly change technologies. Even once it became widely known that Plasmon was going under, many existing Plasmon customers went into a holding pattern until they knew what the final fate of Plasmon's technology was going to be.
Since Alliance quickly stepped up after Plasmon went into receivership (Alliance acquired Plasmon only four days after Plasmon formally announced it had entered into bankruptcy), it was able to stem the tide of customers abandoning Plasmon for competing archiving solutions.
This wasn't easy. During the past six months, Alliance has been contacting customers and channel partners and re-assuring them that the support and development of Plasmon products will continue in an attempt to stabilize current and prospective customers and channel partners. But on the surface, it appears Alliance has accomplished that during this time since rumors of Plasmon customers defecting to competing technologies have largely subsided.
The bigger question is, however, "What does Alliance hope to gain by saving a company with a technology that is heavily under assault by disk?" Bill Gallagher, Alliance's Director of Strategic Accounts and Regional Sales Director, stepped up to answer that question.
Using disk, customers face a refresh cycle of about every 3 - 5 years. This is not the case with optical. Gallagher explains, "When companies acquire our technology and use it in a true archival sense, they view it as a much, much longer term investment of technology and capital."
Alliance still has Plasmon system in accounts like Citibank, Bank of America and Wachovia that are over 20 years old, use 12 inch optical platters and are still in production. These organizations made investments in this technology because it has characteristics that disk and tape simply do not have. For instance, optical can withstand the "bucket test" where you can put the media in a bucket of water overnight, pull it out, clean it up, insert it into the optical library and it will work. Gallagher says, "When optical is used in the right archival setting, it makes for a very permanent, long-term investment so these customers were relieved they could continue to use it for these purposes."
It was easy to assume Plasmon and its technologies were left for dead. I certainly did until I received a call a few weeks ago that let me know it had re-emerged and that it was still alive and kicking. It obviously took a company like Alliance that knew something about the inner workings of Plasmon (the good and the bad) to see that enough good yet remained in Plasmon and its technologies to justify resurrecting it.
So while I don't expect to ever reference Alliance/Plasmon and optical technology with the same breathless excitement that I might reserve for "deduplication" or "cloud storage" it is interesting to note that even as the storage industry is undergoing huge changes, there are some legacy technologies that remain relevant in this rapidly changing world in which we live.
Previous DCIG blogs on Alliance/Plasmon:
Plasmon Scaling Back Operations. Where Does UDO go from Here?
Corporate Archiving at an Inflection Point
Archived Storage Market Forecast to Grow to $23 Billion by 2010
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This is more PR and Propaganda vs. blogging.
Gallagher states they have retained only 1 of every 5 service customers.
Where have all the rest gone so quickly and why?
What were the circumstances of Carr's leaving Plasmon years ago?
Why are all the employees under such strict non-competes?
Why did Carr fire a service admin who kept a notebook of suspicious activities since the Carr era?
Not Impressed,
You sound a little bitter. None of the points that you make are referenced in this blog so why do you even bring them up.
Further, DCIG does not cite rumors as fact. Do you have any documented support that is available for public viewing on the Internet to substantiate these claims that you are making?
Jerome
I know it is an American thing to talk about time on the basis of seasons such as "fall of 2008" but perhaps in a globally connected environment you just might consider using universally applicable terminology.
Your "fall" is known a "autumn" in many parts of the world and in the southern hemisphere it suggests the wrong time of year. Or do you mean the "fall" of the financial markets in 2008?
If you start talking about "summer" it gets worse because the southern hemisphere summer spans two years.
I agree with the first comment, this is more of a PR job than objective blogging / reporting (or whatever you call it nowadays). Sounds like a very one sided interview and making a lame case for a dying white elephant. I've been in the optical space 26 years and I'll tell you Plasmons problems go way back. It's a failed company and no matter who bought the ashes, it's not an "if" but a "when" it's all gonna come crashing down for good. Plasmon partners advised on industry standardization of their UDO platform years before anyone even know what blu ray was. Their UDO research dates way back to early days of DVD. Arrogance, illusions of infallibility, greed and mismanagement is what did them in. The market opportunity has passed...it's a corpse waiting for the final blow.
From the poorly tactful PR job above, not one element of objectivity or a mention of competition, current market conditions, current economic climate, the challenges they face, the fact that they've been dumped by IBM, Xerox, and the Kodak connection. Or even the misinformation that the corpse was acquired at a fire sale....among other clearly misinformed points above. I see mention of some major companies above......did you double check this? Perhaps can you confirm the recent wide decommissioning of their machines at BOA?.......I could go on but this post is clearly a poor PR job at best.
JC
JC,
Thanks for taking time to stop by DCIG's site and leave a comment.
I'm afraid I cannot agree with many of your comments. There is no doubt Plasmon had and still does have its challenges but maybe you did not get the memo that it is no longer Plasmon but Alliance Storage Technologies. While Alliance kept the Plasmon name, Plasmon as a company is gone.
Further, I just spoke to Alliance in the last few weeks and they are doing quite well. Apparently there are still a number of local, state and federal laws that leaves optical as the only viable option for data storage. Granted, no one is ever going to confuse Alliance with Microsoft or Cisco but to say that Plasmon is going out of business or a "corpse waiting for the final blow" is a gross misstatement and one that you should be very cautious about making publicly.
In that sense, you contradict yourself. Plasmon is a failed company as the final blow was dealt to Plasmon over a year ago when it went into bankruptcy. This is why Alliance was able to acquire Plasmon's assets at the fire sale prices it did. To the best of my knowledge, that is not misinformation but fact though if you have other information, you are certainly welcome to share it here.
In regards to your allegation as to if this blog is more of a "PR job than objective blogging/reporting". Please note the upper right hand corner of DCIG's website. DCIG does not claim to be objective in its blogs (though it certainly tries its best). Our stated purpose is to provide "an inside, informed look" at what goes on inside of various companies in the technology space by giving these companies who choose to take advantage of (i.e. pay for) DCIG's blogging service the opportunity for a third party to cover their products and services and blog about them. Smaller technology companies often have a difficult time receiving regular coverage from third parties and DCIG provides them an economical mechanism to accomplish that.
Finally, in regards to the recent decommissioning of their equipment at BOA or that IBM, Xerox and Kodak have elected not to continue with Plasmon, I have no information on those particular events. However, in light of Plasmon's recent bankruptcy, does it really surprise you that a number of major companies would abandon them if this is in fact true?
Jerome
From the defensiveness of this blogger/author I'll have to take sides with the commentators on this one......
MRG
Is Plasmon going to support Blu-ray????
I have some older D-480's that I would like
to update with newer DVD devices... And
what about networking this stuff... The ideas
are endless...Hope the new company has some
bright people around still... Will await somebodies
opinions....