Minnesota's Digital River Inc. and clients deal with outage

  • Article by: JOY POWELL and NEAL ST. ANTHONY , Star Tribune staff writers
  • Updated: February 26, 2012 - 11:50 PM

The Minnetonka firm's hardware malfunction is mostly repaired, the company said.

A three-day hardware failure at Digital River Inc., a Minnetonka-based software company that runs online transactions for hundreds of websites worldwide, hurt some of its smaller customers but didn't affect the global commerce of its biggest clients, company officials said Sunday.

Tom Donnelly, chief operating officer for Digital River, which builds and manages online businesses for retailers, electronics manufacturers and others, said the malfunction began Thursday when a disc failed at one of Digital River's eight U.S. data centers. The company had the necessary disc array hardware to fix the problem on hand and installed it as soon as it could, he said.

By Sunday afternoon, most of the problems were addressed except for glitches on a couple of smaller platforms, including one in Asia that sells into the United States, he said.

Donnelly said no major customers were affected because they pay for backup systems that kicked in. However, an unspecified number of small businesses were affected in the United States and China, he acknowledged.

It took until Sunday for "two small systems to be rebuilt, and I don't have a good estimate of the number of small businesses that were affected," Donnelly said. "As of now, all of our major systems have largely been restored."

Donnelly said he doesn't expect the company to have further comment on the service outage because it expects no material financial effect resulting from it.

Sam Richter, a onetime marketing executive with Digital River who now runs his own sales and marketing consultancy, said Sunday, "It's frustrating, but I guess these things happen in the Web world."

Rob Breza, an analyst at RBC Capital Markets who follows Digital River, said he believes the service failure was significant for the affected small businesses, but he estimated that they constitute a small percentage of Digital River's overall business.

"We've seen Google go black for an hour and everybody freaks out, so you see it with the best of companies," Breza said. "But when it comes to e-commerce companies, they have to meet their contractual obligations. Digital River has redundant backup plans for all their systems, but I just wonder how many of these small customers chose not to pay for backups in place.

"If it were Microsoft's website that went down, we'd have a story, but Tom Donnelly is saying it's a small part of [Digital River's] business."

In an online statement to affected customers during the outage, Digital River said that since Thursday afternoon, it had been experiencing "an abrupt and extremely rare hardware malfunction that impacted a disk array in one of our data centers. Our vendors have never seen a situation like this before.

"As a result, some of our service areas have been impacted, including the services to the platform that supports your 'DirectTrack' system," the company said.

"As a result, your system is unable to be accessed or process transactions at this time. We anticipate this will be the case until the hardware problem has been fixed. We have all our best technical experts working along with our vendors' top engineers -- and they are doing everything possible to fix the problem as quickly as possible."

On Sunday, Donnelly offered apologies to affected clients.

"I'm disappointed," he said of the failure, "but happy that we've recovered."

nstanthony@startribune.com 612-673-7144 Joy Powell • 651-925-5038

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