Q&A: Stratus CEO looks to bring high availability to the masses

David Laurello sees opportunities to expand beyond Stratus' market niche

For decades, Maynard, Mass.-based Stratus Technologies has earned high marks from customers for delivering fault-tolerant computing, with specially-architected servers and 24/7 monitoring services aimed at keeping business-critical apps up and running. But with the rollout of Stratus Avance - software that brings FT capabilities to standard servers - and the growing demands virtualization is putting on computing infrastructure, CEO David Laurello is pouncing on an opportunity to expand far beyond Stratus' existing market niche.

In this installment of the IDG Enterprise CEO Interview Series, IDGE Chief Content Officer John Gallant spoke with Laurello about bringing high availability to the masses and how Stratus is aiming to become your cloud infrastructure provider.

Give us a brief overview of what Stratus does and what makes the company unique. Stratus provides the highest level of uptime assurance in the industry. Customers with the most business-critical or mission-critical applications choose us because we provide the highest level of uptime for those applications. Mission critical, business critical - our customers can directly relate downtime to lost revenue. We do this through a set of resilient technologies and unique, predictive and proactive availability monitoring.

Let me just talk a little bit about each of them. We have two basic platforms. We have a fault-tolerant server [called ftServer] that is fully redundant and is the premier uptime server in the marketplace. It's an open system server so it supports Windows, Linux, it supports virtualized environments, VMWare, HyperV, and provides over five nines of uptime, so less than a minute of downtime across our base. We also have a high-availability product called Avance which is more for the SMB market. We're taking our 30 years of experience and expertise in uptime and bringing it to the SMB market where we see the need for uptime growing and continuing to grow. As virtualization expands, there's a need for a higher level of uptime in those environments.

Let's clarify something: When we talk to customers they talk about a wide variety of applications as being mission-critical and requiring five nines availability. But when does somebody really need this kind of technology? What's the point at which somebody is a good target customer for you? Customers that have a compelling need for continuous availability are our best customers. A lot of customers have availability as a priority, but price is sometimes their number one priority. For example, we have customers that tell us a minute of downtime relates to $50,000 of lost revenue. The customers that understand their business and understand the impact of downtime on their business are the ones that are our best customers.

What do you pay for that compared to using, say, the standard white-box servers that people are running today for their business apps? Before I do that, I want to talk about our proactive monitoring because I think that's very important. It's really the total solution. It's the [hardware] technologies and it's the service -- the proactive monitoring -- that really provides that high level of uptime. The monitoring that we do, we touch over 500 points in an ftServer and over 150 points in the Avance server, monitoring the workings of numerous elements within the system. We have a very good indication before a problem actually causes downtime and we are able to take corrective action. We talk about failure prevention, not failure recovery. It's the combination of those two elements that really provide the highest level of availability. Now, in terms of your price question, you have to look at the two offerings. In the ftServer space, we have servers that start out at an entry price of around $10,000 and go up to $60,000, which is very competitive compare to, say, a cluster of robust servers -- very, very competitive. We compete against clusters and for customers who have that compelling need for availability we win. The monitoring service is another yearly charge that's usually a percentage of the system price.

FtServer is a unique, premier offering. Avance is a software product that runs on standard servers and the price is $5,000 for a license. The beauty of Avance is that it has the same ... predictive fault monitoring as ftServer and runs on standard servers, has integrated virtualization and you can think of it as a virtualized appliance. We think it will move us into a much larger market opportunity.

In terms of the architecture of the servers, how are they different from traditional servers? The ftServer is a fully redundant server. All the components are duplicated, including the CPU and memory. But the components run in lockstep so each server is executing the same instructions. If there's a failure, the other system just takes over the activity of running the application so there's no fail over mode. If there's a problem, it's automatically detected, calls home, failed component is sent out, hot swapped, and the system continues to run. It's totally transparent. What's unique is that even though it's fully redundant, it looks like one server to the application.

It's very simple to deploy and use and maintain the server because any application that runs on Windows or Linux can just run on our servers. There's no need to make any changes to the application, so you can take a Windows-based application, put it on an ftServer and you now have an application running in a mission critical environment.

Give me a sense of the size of the company. We're a private company and we don't disclose our financials, but we've got 10,000 customers located around the world. We're sub-$300 million of revenue, product and services and we do business in numerous countries.

Talk about virtualization and the big changes that data centers are going through. What effect is that having on your market opportunities? Over the past 10 years, Stratus has been evolving our offerings to be open systems to reduce our price points and at the same time the market has been evolving, embracing technologies like virtualization and cloud. Virtualization, when it first got started, was really around consolidation. I'll use the VMWare terms: Stage one -- consolidation, saving money, saving power, saving real estate costs. In stage two, you start thinking about mission-critical applications moving to virtualized environments and now you've got multiple applications running on fewer servers. The availability requirements now go up ... dramatically because you now have multiple applications running on fewer servers, so those servers have to be up. So virtualization provides, I think, a wind behind our back. We've been working with VMware on a number of go-to-market initiatives. Recently, we launched our $50,000 guarantee [see below]. With mission-critical and business-critical applications migrating to virtualized environments, we're well positioned to provide the kind of fault tolerance and availability that they need.

Does that market shift take you beyond the kinds of customers that you normally work with into the general-purpose computing market? Absolutely. The FAA runs their scheduling application on our system and they virtualize their environment. They're running on our ftServer. We have other examples.

Also, you mentioned cloud. Our customers, when we talk to them about cloud, they're concerned about security and, more important, their data. We support one of the largest credit card authorization companies and that data is their intellectual property. They're very nervous about public clouds. But private clouds, where virtualization is the framework or the infrastructure within, there's excellent opportunity for us. We actually had a recent win at Columbia Memorial Hospital where they were looking to create a private cloud environment for their electronic medical records and they purchased four ftServers running VMWare. They have about 20 VMs running on the servers and they service about 25 locations and 300 doctors/clinical workers who access that cloud. That's an example of an institution that wanted to move to a private cloud, but the electronic medical records needed to be available 24/7. They could not afford any downtime. Ten years ago you didn't have hospitals talking about fault-tolerant computers -- the need for availability just wasn't there. But the advent of virtualization and cloud computing is providing an opportunity for us.

How do you see this market evolving over, say, the next year or two years and how do you capture that opportunity? We see adoption of virtualization, especially the stage-two virtualization, really starting to take off now. Across our base, all of our customers are virtualizing. We're also seeing that across the SMB market customers are virtualizing. We're reaching out to both the new SMB market and our enterprise customers and talking about what you need to make these virtualized environments highly available or continuously available.

So what's the biggest issue that you run into with customers? Is it market recognition or is it the sense that this high-availability stuff is just too expensive for them? I think there is definitely a little bit of 'Stratus who?' because they haven't heard from us in a while and that's mainly because we do business in a very small market segment -- almost a niche market for these people that have this compelling high availability need. But now that we've started to move out we've actually been able to leverage our brand because people know of us, they just think of us in terms of the 90's.

They recognize us as a company that provides premier uptime solutions. When you take that brand into the SMB market you get the acknowledgement of, 'I've heard of Stratus, but you make systems that are too expensive.' And then we get to say, 'No, no, we have a $5,000 offering that could provide availability, virtualization, or we have an ftServer with a $10,000 entry price point.' We're re-educating the market. It's a convergence point that over the past 10 years Stratus has been working on developing technologies and products that are open and have lower price points and, in parallel, the market has been evolving with virtualization and cloud computing. The place where they come together is the need for availability and uptime. We're there to service that; we're well positioned right now.

With Avance it seems like you have a terrific opportunity to partner with someone who has a wider reach into the server business who could bring that technology out to more customers. What are you doing on that front? Avance has been out about two years, in essence in a beta version. This past May we came out with ... our first really well-tuned and tested revision. The place where we're getting the most traction is with system builders. It's been a cooperative effort among Intel, Stratus and the system builders. If you add together all the system builders in the world, they're the fourth largest server manufacturer.

Define system builder for me. They're people that take the building blocks from Intel and put them together with their own brand name. They're not branded with HP, IBM, or Dell.

They tend to be vertical industry oriented? They tend to serve different markets. One may have a medical practice or a manufacturing practice, and they put solutions together. What we offer with Avance is an opportunity for them to deliver a highly available virtualized solution that can compete at a lower price point against the IBM's and HP's.

Would you enter into a strategic relationship with any of the bigger vendors? Any opportunity with an HP, Dell or IBM? Right now we support Dell and HP servers and we bring them to market pretty much on our own. We don't really have any selling relationships or go-to-market relationships with them yet. That could happen over time. I think that what would be required before that would happen would be for us to establish the market a bit more and get some more traction in the market.

Right, but there isn't anything that would competitively preclude them from doing that, they don't have similar offerings. The similar offering would be clusters running VMware. With Avance, [we] have an advantage over those offerings in that we don't require external storage so we're a lower cost point. So we also have the advantages of our unique and predictive monitoring.

Talk about your partnership with VMware. Give me the scope of it and then let's talk specifically about this $50,000 guarantee. We're working together to go to places where customers are moving to stage two virtualization. With their stage one offerings, I don't think there really was a lot of synergy between what was being done by customers and what Stratus had to offer. But as VMware moves to stage two and moves to mission-critical applications, customers are asking for higher levels of availability, they're looking for fault tolerance. We've been able to target key customers and go into the market together. We met with [VMWare CEO] Paul Maritz a couple of months ago and, while I won't get into too many specifics, I will say there is a sense from both of us that there's an opportunity here -- that they see moving into that mission-critical, business-critical as the next natural evolution for virtualization. To do that, they need a very robust fault-tolerant solution and they see that with Stratus.

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