Kaminario Gets Out of Hardware Business to Focus on Software

All-flash storage provider Kaminario is getting out of the hardware business to become a software company. The company announced this week a deal with Florida-based Tech Data, which will build, sell, and service computer hardware equipped with Kaminario's VisionOS, Clarity analytics software, and Flex automation and orchestration software. Under the agreement, Kaminario will receive a percentage of Tech Data's sales of the systems.

According to Kaminario, the move will result in a win-win situation for all involved, including its more than 200 channel partners. In a prepared statement, Kaminario's founder and CEO, Dani Golan, said the move "positions us to deliver the economics and flexible consumption models that cloud providers need with absolutely no compromises on our well-proven technology capability."

He expanded on this point in an interview with The Register published on Wednesday: "We simplify our operations and remove the inventory holding costs from our operational model. We can now more easily collaborate with our supply-chain partners and continue to lower our cost of customer acquisition."

In addition, he indicated the partnership will result in products such as the Kaminario K2 all-flash array being delivered with "disruptive" pricing by leveraging Tech Data's manufacturing prowess and buying power, as well as its product and supply chain expertise.

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All indications are that this deal is something of a lifeline for Kaminario. Although it has raised $218 million in funding since it was founded in 2008, the privately held Massachusetts-based company is not thought to have yet turned a profit, even though the company has received many industry accolades, both for the quality of it products and for it's marketing acumen.

"There’s a lot of reasons software companies are more valuable than traditional hardware companies," Kaminario's chief marketing officer, Josh Epstein, told the Boston Business Journal. "It’s just expensive to manage inventory, to buy stuff to hold it, to manage logistics."

Kaminario certainly has expertise and credibility in the software arena -- especially when it comes to software defined storage. In October the company announced it was moving towards a software defined "self-driving data center" when it announced it had added machine learning to the cloud-based predictive analytics platform, Clarity, that integrates with its K2 storage systems.

Tech Data is well suited for the task of doing the heavy lifting on the hardware manufacturing and distribution end. In business since 1974, it specializes in IT products and services, providing a broad range of products, logistics capabilities and value-added services that tech manufacturers and resellers, including Apple, Cisco, Hewlett Packard Enterprise, IBM, Microsoft, Symantec and VMware, leverage to deploy IT solutions.

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It's also on sound financial footing. Last year the publicly traded company reported revenues of $26.2 billion and a gross profit of $1.3 billion. Pertinent to this deal is its global reach: the company is especially visible in Canada, Mexico and the EU.

"Tech Data provides product lifecycle management services for technology companies that want to focus on their core competencies," John O’Shea, Tech Data's SVP, global lifecycle management services, Americas, said in a statement. "Our alliance with Kaminario helps them to deliver a complete solution to their customers by leveraging Tech Data’s global logistics network and comprehensive integration and product support services."

Now that it's getting out of the manufacturing game, the obvious next move at Kaminario will be some serious cost cutting, which will definitely result in a loss of jobs for some of the company's estimated 250 employees. For the time being, the company is being mute about how many might be facing the ax. However, Golan acknowledges that "we will be aligning resources and investments to support our core competencies, drive profitable growth and increase operational efficiency."