Pure Storage is in for a turbulent few months ahead of its IPO and will have to consider a number of "rightsizing" measures to become profitable, according to channel onlookers reacting to the news.
Earlier this week, the flash player unveiled plans to float in a filing to the US Securities and Exchange Commission (SEC). The document unveiled its sales and income figures to date, which revealed rocketing sales but losses which widened at a similar rate. For the fiscal year ending 31 January 2015, Pure made a loss of $183.2m (£117.2m) on sales of $174.5m.
If Pure wants to attract external investment on the stock exchange, it will need to take a number of steps to become profitable, according to Ian Parslow, senior vice president of sales at MTI, which is a partner of Pure rival EMC.
"Based on the figures they're currently believed to be trading at, they are going to have to drive some pretty aggressive efficiencies in their business because shareholders are looking for profits," he said.
"So they have got a lot of work ahead of them there, which might mean an interesting bit of rightsizing of their business. It might mean less heavy discounting in order to win business as they strive towards profitability. They will have to see that they are spending the investments in the right place – any organisation needs to keep an eye on that. It is very easy to become overweight in terms of staff and the costs of that brings it to bear. I suspect they will be considering quite carefully if they are getting returns on their staff investment at the moment.
"That also is going to cause some challenges because the market is very congested and very competitive and there are much larger organisations than Pure that can afford to buy the business, shall we say. I refer to the likes of HP and EMC to mention but a few.
"But I think it is a very positive move for Pure. If it is a successful flotation, it will allow them to get more investment, which will allow them to invest heavily in a new road map, which is nothing but positive for the industry because the rest of the vendors will also have to be innovative around bringing new technologies to the market."
Competition heating up
The flash market is fiercely competitive, with Pure regularly taking shots at the likes of EMC and NetApp. Even younger start-ups than Pure Storage have given the company a taste of its own medicine by making icy comments about products.
One such firm is Kaminario, an all-flash upstart itself. On hearing the Pure IPO news, its chief technology officer Shachar Fienblit took a different approach and heaped praise on the firm.
"We congratulate Pure Storage," he said. "This IPO is a great milestone for the all-flash array market that is expanding very fast. The all-flash datacentre vision is becoming a reality. [But] Kaminario wins 75 per cent of the proof of concepts against direct competitors, including Pure Storage."
Truth is out
Cloud Distribution's director of storage solutions Bruce Hockin said Pure's disclosure of its performance will help customers get a clearer idea of which vendor to work with.
"I think it just goes to show that until a company files for a public offering or is already listed. you don't really know how it is performing, especially vis-à-vis the competition," he said. "Pure's relative success is based as much on their brand and culture as it is their product and they should be commended for that; they've played the game well."
MTI's Parslow added that the storage giants Pure will be joining on the stock exchange have significantly more clout when it comes to investment.
"I don't think the amount of funding they have got so far – via investment – will be enough to run a business as well as develop new technologies," he said.
"So they are going to need that external investment to get significant funds to allow them to remain competitive and allow them to continue this disruptive stance they are taking in the marketplace. Even then, the R&D budgets of organisations like HP and EMC are vast – you're talking billions of dollars... every year.
"These guys are frankly a minnow in comparison and they are going to have to compete."
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