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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:

  • 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

The majority of the feedback Carr has received so far from Plasmon’s customers in response to these changes has been “overwhelming positive”.  These customers had previously made sizeable investments in Plasmon technology as a long term archive solution so they were “excited” to hear that Alliance had picked up the technology, will support it and continue to develop it. He says, “They looked at us as some kind of savior.”

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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