Violin Memory’s losses are deepening faster than its sales are growing and that is surely unsustainable. El Reg’s storage finance desk thinks a shortfall in orders from the federal government exacerbated the stalling of enterprise sales growth – and looming competition and software inadequacies didn't help much either. As a …
Optimism at its best..
Don Basile, CEO of Violin Memory, talked of jam tomorrow: “Our Enterprise Memory Software and Systems are enabling customers to achieve enormous gains in enterprise application performance, and significant cost savings resulting in new levels of productivity. During the quarter, we added 32 new customers and delivered record revenue and gross margins, even in a challenging Federal spending environment.”
It seems as if Mr Basile is playing his fiddle whilst Violin burns down....
Niche, filled, sales plateau?
There's only so many use cases for these 'blazingly' fast storage systems.
Violin has a fantastic proposition for customers - it's highly performant, no one disputes the transition toward Flash Memory, it arrives at the intersection of all sorts of new technologies needing power that can't be delivered by disk. So what on Earth is going wrong ?
At a distance I would note that WW sales reports to the COO. I'd start right here. There should always be a clear seperation of responsibility between the role of COO and Sales - these are different functions by design. The check and balance between what is being spent and what business is being earnt should never sit with the same person. Poacher and Game Keeper. The COO in Violin has the spend tap turned to full
I would consider next if the WW sales GTM and stated goals make sense. In a business this small, why is hiring 100 x direct sales people a goal to aspire toward ? The recruiter fees alone must be immense. Surely a better investment of headcount would be to balance End User sales with sales through Partner. With < 500 people, no install base and a very short window to get to scale the answer must be partner. Everyone else starts this way. It should be no suprise to anyone that the rate of customer aquisition is what it is - winning a net new customer for a new salesman in a new company like Violin takes time and it's an extremely expensive sales model to sustain. Far better to set up and work through a partner salesforce at scale with a proposition that works for them, than struggle to control margin on the handfull of deals you can transact directly
The final thing is the sheer cost being sunk in Direct Sales. Why ? These boxes are shipping at commodity prices and yet being sold by old world storage folks commanding top dollar sales compensation. Across the board, the people Violin are hiring in look to be costing too much in salary, guarantees and expenses relative to results. The COO needs to get a grip. Top Gun was big in the 1980's. Just like the Violin Sales model
- Review Apple iPhone 6: Looking good, slim. How about... oh, your battery died
- Review + Vid iPhone 6 Plus: What a waste of gorgeous fat pixel density
- +Comment EMC, HP blockbuster 'merger' shocker comes a cropper
- Moon landing was real and WE CAN PROVE IT, says Nvidia
- Apple's iPhone 6 first-day sales are MEANINGLESS, mutters analyst