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Optical delusion: Plasmon's ignominious end

AST snaps up the pieces

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A Colorado-based storage systems business, Alliance Storage Technologies, has bought the assets ashes of Plasmon Inc.

The deed was done on January 5 and the assets bought from the Silicon Valley Bank of Santa Clara, which had a court authorise the appointment of a receiver when Plasmon defaulted on a $10m credit line from the bank. This was because expected financing from a private equity firm, Brownstein Schnel Holdings of Los Angeles, didn't arrive and the money ran out.

Privately-held AST has bought "all of the assets of Plasmon, including the full line of libraries, drives, media and related technologies. Alliance will continue to provide support, sales and maintenance services for all of the Plasmon product lines. In addition, our manufacturing facility will continue to produce new products. Alliance's focus is to ensure customer satisfaction, and continued confidence in UDO."

Its ability and commitment to produce new products is unknown and the previous UDO roadmap in doubt. The purchase price has not been revealed. Twenty-four US Plasmon employees who left after a round of layoffs in October and November were hired by AST, and it plans to hire up to 20 more in the next three to six months for optical disk drive library manufacturing and testing. That's 44 out of the 130 Plasmon employees that used to work in Colorado Springs.

AST's owner and president Chris Carr, is quoted thus: "Our intention is to continue to produce and develop the product lines that Plasmon developed and provide excellence in maintenance and support services for all our current and future products." That's a comfort for US Plasmon customers. Ones elsewhere are not so lucky.

We might assume that the brave new archiving software platform strategy espoused by ex-Plasmon CEO Steve Murphy is defunct. What's left are UDO optical disk libraries which now become the products of a niche optical storage supplier.

So ends Plasmon's brave but doomed attempt to create its own proprietary UDO follow-on technology from magneto-optical drives. Devised and engineered in Silicon Fen, it cost the company dear, causing it to lose Nigel Street, the MD who had championed the idea, and to get substantial re-financing from Hanover Investors. Existing RAID storage operations were exited as UDO products got all the focus, as did the US geography where, it was determined, Plasmon had to succeed to be viable.

Plasmon's investors appointed new CEO Steve Murphy, and a new marketing strategy was devised to mitigate the UDO drive costs with a substantial layer of archiving software. Murphy continued the focus on the US with Plasmon Inc. becoming the effective headquarters of the group. He supported the addition of hard drives as an alternate storage medium and the energetic setting up of alliances with archive and storage vendors. But this marketing activity could not generate new sales fast enough to withstand the falling sales revenues from legacy products.

There was never enough finance to sustain the operation while it built up sales of its new products and Hanover pulled the plug last year. UK Plasmon Ltd went into administration and Murphy tried to get an equity-funded buyout of Plasmon Inc so that the firm could go forward.

He tried once and failed, then tried again and succeeded in principle, getting financial committments even as the recessionary storm clouds were gathering. Plasmon Inc. announced its independence in October last year. The champagne corks were popped too early, though, because the money men couldn't find the cash.

Now Murphy's dreams are no more and the whole saga of hope and struggle since Hanover gave up has turned out to be the death throes of the company. A lot of people invested a lot of personal effort, committment and loyalty into Plasmon over the years and it has pretty much come to nothing with a whole bunch of staff redundancies, investor losses and dashed hopes.

Some ex-employees talk of golf course excesses by senior management, and some channel members talk of Plasmon management backsides and elbows being in the wrong places. There's a fair amount of bitterness around, and that's to be expected.

In the event, the business and enterprise optical storage market is a niche. What there is can be satisfied by DVD and Blu-ray. Like tape, optical storage has been sidelined by the hard drive and the simplicity of having your archive medium be the same as your mainstream storage medium.

The existence of a long-term, professional optical archive storage market has been shown to be a delusion. It does not exist. Optical disks don't hold enough data, don't perform I/O fast enough, and the high-capacity UDO drives were just too expensive. UDO was a bridge too far. ®

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