Wednesday, March 24, 2010

Overland Storage Inc.: Eric Kelly, President and CEO

Eric Kelly has served as President and Chief Executive Officer of Overland Storage, Inc., since January 2009, and as a board member since 2007. His most recent corporate position was Vice President and General Manager of storage systems solutions at Adaptec, Inc. Prior to that, he served as President and CEO of Snap Appliance, which was acquired by Adaptec. Two years earlier, Mr. Kelly engineered the purchase of Snap from Quantum Corp., having recognized the inherent value in Snap, where the main product he drove became the volume market leader in network-attached storage (NAS) appliances. Mr. Kelly earned an MBA from San Francisco State University and a B.S. in business from San Jose State University.

Please give us a brief history and background of Overland Storage.

Mr. Kelly: It's our 29th year of business. Overland (OVRL) originally started off as a tape company, and the business was really designed around providing products to a major OEM, which was HP. At one point, HP represented about 65% to 70% of Overland's business. The other piece of Overland's business was a very fast-growing and well-supported distribution channel around the world. And with those two pieces of the business, it grew very well. Our fiscal year 2009 ended in June, and we reported a little over $105 million in revenue. We have over 1,000 partners worldwide.

We support and sell solutions in more than 60 different countries and have over 300,000 units installed around the world - over 100,000 units across tape-based products and over 200,000 across our disk-based product lines. Through an acquisition that we made back in June of 2008 - we acquired a company by the name of Snap Appliance that was part of Adaptec - we now have two very strong brands, the Overland brand and the Snap Appliance brand.

In the 29 years Overland has been in business, technology has changed drastically. Talk a bit more about what your business strategy is today and going forward.

Mr. Kelly: Our strategy today is to provide effortless data protection and data management solutions end-to-end, from online to nearline to archival, all the way to the cloud. We're doing that through a seamless management layer that is very simple to use, very easy to install, and it stems from the ease of use that Snap Appliance delivered to its customers for many years. I'll use the example of whether you have an iPhone or an iPod, or now the iPad, you have a very seamless, very easy to use, very intuitive interface. In the storage arena, ease of use is a very strong requirement that we hear from both our customers and our partners. For example, the product that we announced a couple of weeks ago, our iSCSI SAN product, SnapServer SAN, uses the same effortless management interface that we have on our SnapServer NAS products.

Tell us more about your main product lines and particularly the latest technological advances you've made.

Mr. Kelly: We have a network-attached storage product line, SnapServer NAS. The intelligence behind that is GuardianOS, which is our network-attached storage operating system. There are very few of those out in the industry that have been around as long as we have; we were probably one of the original network-attached operating systems. You now have NetApp, you have Microsoft and their storage server product line, and then you have EMC and maybe a few others that have enterprise-class operating systems in that arena.

With the product that we just announced, SnapServer SAN, we feel we're changing the playing field in terms of delivering enterprise solutions to the mid-tier customer base at a different price point and value proposition. We offer required enterprise features, such as snapshots, replication, support for VMware, and we also have what people have come to know as thin provisioning - we call it "auto-provisioning," but it's a similar architecture. We're able to deliver all of that at a sub-$15,000 price point.

You mentioned having 300,000 units around the world. Talk about your customer base. Is there a typical Overland Storage customer? And what's the range of your customer base in terms of the company and industry size? Are they in the U.S. versus overseas?

Mr. Kelly: We have a two-tiered, go-to-market strategy. We work 100% through our reseller partners, our value-added resellers. In terms of the geographic makeup, about 60% of our revenue is in the U.S., 40% is outside of the U.S. And of that 40%, probably 90% of that is in the European region. We have a pretty broad customer footprint geographically. We're not tied to any one vertical, so whether it's oil and gas, utility, technology, education, government, retail, health care or the financial market space, we have a fairly even distribution of customers. It allows us to not have ups and downs just because one vertical happens to be stronger in one quarter than another. It also gives us a good distribution in terms of geographic presence. As for the typical customer, we have several types. One is the distributed enterprise.