Egenera CEO: Change Your Approach, Not Your Vision

From the Road

Egenera CEO Pete Manca says the company was ten years ahead of its time when it targeted the converged data center infrastructure. Its recent transition from a hardware-focused company to a software-oriented one has enabled it to stay in the thick of a now-booming market pursued aggressively by Cisco, HP and others. I talked with Manca about Egenera’s strategic shift.

Focus on your Business Model

Engera’s mission—to simplify the data center—hasn’t changed in the dozen years since it was founded. But “12 years ago, when we were pushing converged infrastructure, everybody kind of scratched their head and said, ‘What do you mean? What is it?’ Now with products like Cisco’s UCS, IBM’s PureFlex and HP’s Matrix, there are a lot of examples in the market,” Manca said. Meanwhile, the company struggled to turn a profit.

When Manca joined Engera in 2010, his main goal was to change its business model from one focused on selling hardware to selling software that runs on many hardware platforms. “As other vendors got into the market and blades became more of a commodity, it became even more difficult for Egenera as a hardware company to get the business model to work correctly,” Manca said.

The company’s PAN Manager software began as proprietary software that ran on the Egenera’s own hardware. “We’ve been able to take that, really the crown jewels of the company, and provide that capability on open platforms. Since then I’m very happy to be able to say that we’ve been profitable for the last two years. We’ve got the business model corrected.”

Have a Clear Execution Plan

When Manca took over, he had a three-step plan. “Step one was: Get on as many major platforms as we can. That step is now complete. We may add one or two more here or there,” he said. Now, Egenera is focused on steps two and three: to give customers the ability to manage their physical and virtual infrastructure, at scale, from the same interface, and to support the private cloud.

“Everybody’s rushing toward similar types of capabilities,” Manca said. “If anything, it makes it more intense with some other vendors out there that we may find ourselves competing with some of the more traditional software houses.”

Pricing is designed to be simple and flexible. “We sell the base product—the discovery and I/O virtualization and the provisioning engine as the base—and then we upsell high availability, we upsell disaster recovery on top of that,” Manca said. “With service providers, even that pricing model can be custom and it could be a pay-as-you-go kind of model as well.”

Work the Market Dynamics

Egenera’s partners, including IBM, HP, Dell, NEC and Fujitsu, have their own converged infrastructure offerings. However, Manca said, it’s harder to assemble a converged infrastructure product from pre-existing components. “In some cases, some of these vendors are creating a more complex environment by piecing together components that were really never meant to work together,” he said.

That’s made it harder for other vendors to compete with the other heavy hitter in the market, Cisco, and its Unified Computing System. “They did something that the other vendors didn’t do—only Egenera did—which is they started from scratch. Some would say they copied our model. We were certainly a very good solution for them to do that. We have probably the most advanced high availability and disaster recovery capabilities on the market and some of the other vendors don’t offer those capabilities.”

Cisco is a formidable competitor, partly because of its enterprise sales force. But Cisco offers a proprietary hardware and software stack, Manca said. Egenera differentiates itself through its patented high availability disaster recovery capabilities, and its openness: “It benefits the channel, [and] it benefits the end user customer because they now have a choice,” he said.

Egenera’s target customers include service providers, mid-market companies and lower-tier enterprise-class companies—up to around $5 billion in annual revenue. “These folks maybe have a handful of people in their IT department, they don’t have time to be cobbling things together,” Manca said. “They want a solution that you can wheel in, turn it on and be up and running within hours, and that’s what PAN Manager provides them.”

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