In 2001, XOsoft abandoned its original business, which offered a content-distribution service over the Internet, a la Akamai Technologies. Instead, it switched to selling data replication software—and now, the company claims it’s so good at what it does that it can charge a premium.
Just the bluster of a startup desperate for attention? Maybe, but customers do profess satisfaction with XOsoft.
“I give them my highest accolade: I can forget about it, and it does its work,” says Kevin Lohan, vice president of technology and systems for reinsurance firm Max Re. The company uses WANsync to replicate data from its Bermuda headquarters to an office in Dublin, Ireland. Lohan notes, however, that when he bought the software in mid-2003, he paid $22,000 for a six-server license, which was only a bit higher than NSI Software’s.
Still, XOsoft proudly claims it’s the priciest software of its kind. “Customers are willing to pay more, because our software works and it’s easy to use,” says Gil Rapaport, head of strategy and marketing. The company charges between $5,000 and $8,000 per server, depending on application, up to three times the pricing of replication packages from NSI or Veritas Software.
Customers say a key advantage of XOsoft’s WANsync software is that unlike some traditional replication products, it’s built for long-distance, low-speed networks. PowerDsine, which develops technology for sending data over power lines, initially found the traffic generated by WANsync swamped the 1.5-megabit-per-second link connecting its U.S. and Israel offices, says Yaron Rachmany, manager of global information technology. Then, Rachmany enabled the software’s compression, which cut the amount of data transferred by 70%. “That saved us from having to upgrade our bandwidth,” he says.
When Greg Bierbaum, technology manager at St. Louis investment firm Buckingham Asset Management, evaluated data replication software two years ago, he was “a little concerned” that XOsoft was a young company with a relatively immature product. But WANsync was among the most efficient products available at the time, he says, and since then, the XOsoft software has worked as advertised. “I’ve really had very few problems with the product,” Bierbaum says. “They run a pretty tight ship.”
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Financials
Revenue, 2004 (est.): Less than $10M
Funding to date: $30M
First profitable quarter: Q4 2004
Investors
JK&B Capital, Draper Fisher Jurvetson Gotham, Platinum Neurone Ventures (PNV), Seed Capital Partners, Goldman Sachs
offices
Burlington, Mass.; New York; Cupertino, Calif.; Beit Dagan, Israel
Other Major Customers
Financial: Bank Leumi (Israel), Bank of Montreal, Merrill Lynch
Media: Bloomberg, British Broadcasting Corp., Universal Music
Manufacturing: General Motors, Intel, Lexmark International, Mitsubishi Motors, Raytheon
Government: Federal Reserve Board, U.S. Army, U.S. Coast Guard, U.S. Dept. of Agriculture, U.S. Navy
Legal: Kennedys (U.K.), Pillsbury Winthrop
1991
Founded as an Internet content-distribution service provider
2001 Raises $9M in fifth round of funding
2003Releases Data Rewinder software
2004
Switches focus to data replication software
Sources: Company Reports, Baseline research
