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FalconStor takes another run at hosted storage

Beth Pariseau, Senior News Writer
FalconStor Software Inc. has acquired an online backup and storage services developer and signed an Internet service provider (ISP) partner in Taiwan in its second stab at offering online data protection services.

FalconStor recently acquired privately held Hong Kong-based online backup and storage services developer World Venture Ltd. for an undisclosed amount. World Venture provides the front-end Web interface for FalconStor's Software as a Service (SaaS).

In Taiwan, FalconStor is collaborating with HiNet, the ISP arm of Chunghwa Telecom. HiNet will use FalconStor's IPStor continuous data protection (CDP), replication and Network Storage Server (NSS) software to offer home users online backup.

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FalconStor CEO ReiJane Huai said he's talking to U.S. and European ISPs about similar partnership deals. "We have identified and are working actively with partners," he said.

Huai declined to say who the potential partners are, but he said he hopes to have U.S. and European-based offerings "within the next couple of months." This is FalconStor's second attempt at offering online storage. In October 2005, the company launched PrimeVault, which combined its IPStor replication and virtual tape library (VTL) software with a FalconStor-managed data center meant to provide off-site disaster recovery for small clients.

That service, which FalconStor now calls a "proof of concept," has since been shut down. Huai said he decided FalconStor shouldn't be in the data center infrastructure business. The company has since made all of its software hardware-agnostic with the launch of IPStor 6.

"This will be a software-only offering," Huai said of the new SaaS package. "We don't maintain the infrastructure, and [service providers] don't have to change the infrastructure to use our software."

"This will also be a complement to our existing healthy OEM relationships as a distribution channel for our products," Huai said. FalconStor plans to sell ISPs the licenses to its software and take a cut of SaaS revenues.

FalconStor is wise to go after U.S. and European partners, but will find a North American market already stocked with competitors, said Enterprise Strategy Group analyst Lauren Whitehouse. Those competitors include established players, such as Symantec and Asigra, that don't ask to share their ISP partners' SaaS revenues.

"FalconStor is smart to have a SaaS strategy, and it's good to hear that they are pursuing the U.S. and European markets," Whitehouse said. "I wonder what the asking price is for the service and what percentage gets shared. If I am a [service provider], I guess there will be a lot of options to investigate before [placing] a bet."

A FalconStor spokesperson declined to disclose the terms of the deal FalconStor is offering ISPs.

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