Compellent clicks with its tiered data storage system

Compellent Technologies CEO Phil Soran has been in New York City this week telling the company's recession-defying story at an industry conference. He also met with East Coast investors, some of whom apparently were buyers.

Shares of the fast-growing data-storage provider closed Friday at $12.29, up 19 percent for the week and nearly double its price since bottoming at $7.15 per share Nov. 21, the 52-week low for many U.S. stocks. Compellent remains below its 52-week high of $15.20, reached in August.

Soran and his technology team are on their second pioneering venture into the data-storage industry over the past 20 years. Compellent also has been mentioned as a prospective acquisition for Dell or another computer-technology manufacturer that wants to diversify and grow faster.

"We are focused on our business as an independent company, growing our customer base and taking market share, and not who might want to buy us," Soran said in an interview from New York on Thursday. "Why are we growing in a tough economy? There's a flight to efficiency. Data is growing at 50 percent annually. Companies can't quit buying storage. But they can buy it more efficiently. And we have gone in and saved up to 75 percent of their existing capacity for them with our tiered system. And we have saved up to 70 percent of the energy costs for data centers."

The Compellent pitch is pretty simple. The company finds that as much as 90 percent of most of the data stored by companies is inactive -- that is, it is accessed less than once a month.

Pay less to store idle data

"We'll still store that inactive data, automatically on fast storage, but it only costs a tenth of our first-tier storage," Soran said. "That feature will save companies about 75 percent of their storage budget."

Compellent's system is geared to prioritize data based on historical usage and essentially lets the buyer purchase only the first-tier capacity it needs today. The less-used data is then stored on less-expensive tiers.

The tradeoff? It takes a bit longer for employees to access data that is stored on subsequent tiers.

The other attraction is a "green one" that Soran says is real, because the energy-conserving features save big green dollars. One new customer last year, the U.S. Capitol Police in Washington, called Compellent after the local power company told the agency that it couldn't supply additional juice to its data-center operations.

"They implemented our storage system [and] now save 50 percent on their data-center power consumption and they have 50 percent more headroom to grow into," Soran said.

Compellent achieved profitability in the third quarter and is expected to roughly break even in 2008 on sales-and-service revenue of about $90 million, nearly double that of 2007.

Compellent is expected to earn about 20 cents per share on revenue of nearly $120 million in 2009, according to the average analyst estimate compiled by Thomson First Call.

Compellent has sold 1,000 of its storage-software systems that use off-the-shelf hardware. Customers include Kyocera, Associated Bank, the FBI, IWCO Direct, MIT Medical and Joe Gibbs Racing, among a diverse client roster that amounts to no more than 11 percent in any one industry.

The company has been recognized for growth by Gartner, the industry consultant and research shop; for technology by InfoWorld and for its contribution to electrical-energy savings by environmental groups.

Xiotech grows

Xiotech, a neighboring firm that Soran started in the early 1990s, has also started to grow under new management in recent years. With about 400 employees, Xiotech had revenue growth of about 28 percent through the first three quarters of 2008, according to a spokesman. It also added new accounts at a double-digit level.