Stratus is one of the oldest, and possibly one of the most obscure, computer companies in the industry. Known for continuous computing, it boasts that its servers never go down. We spoke to CEO and President Dave Laurello to find out how the company has managed it and how it plans to survive the challenges of the 21st century.
Part 2 of the interview, in which Laurello talks about open source is below, part 1 is here.
Q: No-one likes systems going down - say for an hour on very rare occasions - and it may cost but how many people really need that level of reliability that can't be provided by other cheaper technologies? Who really absolutely needs 24 by seven availability?
A: if they're not sure if they need it, they're not a target customer for us. That's why we're focused. Sometimes you can get drawn into opportunities but you have to walk away or you waste a lot of time.
If their availability needs can be met by other technology then we shouldn't be talking to them. We are a niche player - it depends on the pain people have had when their systems go down for half an hour. If it costs lives or money, that's where we have a strength. But they have to make that call.
Q: Why aren't clusters better than a Stratus approach?
A: They don't work. If you talk to end users or partners, we can quote them as saying it doesn't work at the hardware or application level. Our whole value proposition is continuous availability with lower TCO; our systems don't go down.
Clusters failover, and one of the subtleties of that is that they can lose in-flight data. When a cluster is in the middle of an operation and it fails over, you have to re-run the instruction. But if the cluster was in the middle of processing real-time data, that's gone, you can re-run the instruction but you've lost the real-time data.
Telcos for example run in-memory databases and that has to be maintained so our system of continuous availability delivers that. With a cluster, the application has to be cluster-aware and if you're a user, you have to build a level of scripting to deal with the fail over. With our box, any application just runs.
Q: If it's such a great approach, why aren't there any others doing it?
A: That's our challenge. The real challenge is around Geoffrey Moore's Crossing the Chasm approach. An IT manager will say when you offer them a Stratus box that they buy from HP, Dell or IBM and get them to compete against each other. It works, and I'm VP of IT, they'll say.
So instead, we don't sell to IT people but to the business person - the VP of Operations who's accountable to the business. We're in business development mode right now and it's a slower mode of selling and growing the market share, but we are still growing. It's not a commodity, we're re-defining the market.
Q: You've mentioned Dell but I can't imagine a company less like yours than that. How would you compare the two?
A: One of the interesting things is that when [Kevin] Rollins became CEO [in July 2004] he instituted a direct sales force focused on segments and it seems to be pretty US centric in that model but I don't know for sure. It's definite that they have a practice around the US Federal Government, public safety and others, focused on the end users, so their model is evolving.
Q: Who of your competitors do you run into most?
A: The company we run into the most is HP, its Tandem business, which used to be Compaq - and they're the people we beat the most. But Tandem is like our legacy business, their customers are very loyal.
Q: How many of your legacy VOS customers are migrating to the newer platforms?
A: They do that - but I hope not a lot - as the VOS business is great business for us. What I hope will happen is that, as their transaction needs increase, they'll move to our V Series product, which is VOS on ftServer. They can take as long as they want, they're valued customers, we have service contracts with them, they buy upgrades within that legacy product line. When they hit the wall they start to migrate.
Stock exchanges across the world for example are very interested, but most of our new sales are to new customers which is healthier for us. If I were just playing within a legacy base, then it would be hard for me to sit here and say that this is a sustainable business because, once I've tapped them, I'm done.
We have places where what we are selling to legacy customers is new applications, departments and divisions. Those who decide to move on do so because they're rewritten their systems and applications.
Q: What's your approach to open source?
Linux v Windows is driven by new application development. We own a lot of the credit card transaction processing world but, if you say to them that they need a new application and you want to develop it on a proprietary platform, they don't want to know. That drives you to an open OS.
There was concern that we wouldn't be able to get the same level of availability as on VOS [Stratus' proprietary OS] but in fact it's higher. The reason is that we benefit from economies of scale. Our platform, though the architecture is unique, 95 per cent is off the shelf. Our IP is a small part of the hardware - some middleware and a standard OS.
We don't come down in favour of Linux or Windows. Linux has faster rate of growth but a smaller piece of the market. At some point, both will be going after mission-critical applications.
Q: Isn't Linux already there when it comes to Web sites?
We go into the manufacturing sector but Linux isn't there - it's Windows all the way. In financial services, though, Linux is stronger. The challenge for Linux is ensuring that it doesn't turn into OSF with eight versions. If you've lived through OSF, you know the realities when push comes to shove.
Q: What are your criteria for success?
A: Focused on dominating market segments we're in - manufacturing, financial services, pharmaceuticals - we'll just keep adding segments as we want to be the trusted advisors for continuous availability. The way we get there is the segment by segment approach
Q: What are your next market segments to attack?
A: In public safety for example, criminal records need always to be there, they need to despatch police cars safely, we're looking at that. In mfr it's wide open, such as process control in pharma as well as energy - food, gas and oil, they all have processes that need to be monitored 24 by seven. There's a host of opportunities out there for us.
The whole concept of selling to segments is communities: we need to talk to members of each individual community. So when they get together over dinner, one might say 'oh yes, we use Stratus for that,' and the others think, 'what are they doing that we're not doing?'. So the community chat works really well but not in the mass market. By selecting our community we start to get a reputation well before we deserve it. They're very competitive, and they start to move together. Few want to be first though.
Q: You're encircled by the other big iron vendors. How can you bust out of that?
A: I see us moving to become more solutions-led, delivering products and services focused on solving customers' availability problems, involving not just hardware and OS software. Things like availability assessment, helping companies with change management - things that we've become expert at. We'll offer those solutions with partners - but I don't mean we're going to become like Unisys.
In the context of becoming a trusted advisor to a customer, there may come a time where customers say to us that there is something they want to do, and we find we don't exactly have the right or the whole answer. We'd be open to bringing in partners.
However, any company in our position has to be careful not to get defocused. It's the enemy of successful companies and it's so tempting, you start doing a little bit of this and a little bit of that, and soon you start acting bigger than you are and you lose that entrepreneurial spirit. We just want to stay focused.
Everybody's strength is their weakness, and it's a cultural challenge as it's hard for a 25-year-old company like ours to act like a start-up - but that's our challenge. Focus is the way to deal with it.