ARM hyper-converged vendor KALEAO enlists Vancouver’s Tuangru as key channel partner

KALEAO, which first brought product to market last October, provides an update of both its overall and channel strategies, and where Tuangru fits in.

Greg Nicoloso, ‎KALEAO’s General Manager and CMO

Hyper-converged infrastructure startup KALEAO announced their entry into the market last October. While they are still in the early access phase, response from customers has been strong. A very select channel is critical to the company’s present go-to-market efforts, and they have expanded it with a key VAR. Tuangru is based on Vancouver, but they will take KALEAO to market well beyond the Lower Mainland, as they will handle the U.S. west coast business as well.

KALEAO has attracted attention because its ARM processor-based technology is fundamentally different from everyone else who preceded them into the hyper-converged space.

“We are going at it from a different approach than the genesis of it all,” said Greg Nicoloso, ‎KALEAO’s General Manager, CMO, and one of the co-founders. “Our KMAX generation-zero line uses an ARM-based processor, and is available in two versions, one that is bare metal server hardware only, and an appliance which is a hardware and software stack.”

Nicoloso said that unlike the ARM-based HP Moonshot, they are bringing the ARM option to market at the right time.

“We have seen interest, and a change in the market from a few years ago when HP brought out Moonshot,” he said. “They were probably a little too early. The market wasn’t ready. Power consumption in the data centre was less of an issue then. They were also 32-bit ARM. We started on the design path three years ago, looking to bring about true convergence – native convergence of compute storage and network. The beauty is that it is now being validated by the Fortune 50 and 100. Microsoft just announced they want to go after the server market with ARM-based platforms.”

Nicoloso said that KALEAO also benefits from being able to leverage an existing ARM technology.

“We use the same Samsung processors that the Galaxy 8s have, and which are architecturally very close to server-type applications,” he said. “Leveraging mobile technology makes sense because we get economies of scale. Intel makes millions of Xeons – but billions of these processors are made. It also gives us lower power consumption, with 70 to 80 per cent less power per processor, and delivers 3x more servers per 42U rack.”

Nicoloso said KALEAO is still in its early access program phase, before mass production, but are already getting a great response.

“We are a startup, and so you have to take some risks, but the market is responding very well,” he indicated. “At first, there was interest driven by curiosity – but also by what we were promising we could deliver, and now we are delivering that. The market sees a need for ARM, and we know there will be a very crowded space very soon, but we have a leg up in this market.”

Mass production is scheduled for the summer of 2017.

“When we hit mass production will be when we will really know if we were right about this or not,” Nicoloso stated.

While KALEAO’s longer-term strategy is for a more mixed direct-indirect go-to-market model, they are starting depending mainly on the channel.

“We went to the indirect channel first because while we were well-funded, we needed to crawl – walk – run,” he said. “We knew we couldn’t build large internal infrastructure at the outset to do the handholding with customers, because it would cost us more than we had.”

The focus of their channel partners has decided their early markets.

“We are going to very vertical markets in security and videosurveillance, along with Internet of Things, data centres and Web hosting,” Nicoloso said. “Videosurveillance we sort of stumbled upon, but it has good potential for us.”

KALEAO has begun to talk directly with some customers, Fortune 500 types in services and the financial sector. The hyperscale vendors are a longer term goal.

“Google, AWS, and the big eCommerce players are also on our radar, but we want our platform to be fully validated before we go to them,” Nicoloso said. “In this stage we will still have some immaturity in the platform that they just won’t stand for, and we have to get beyond that before we talk with them.”

Nicoloso envisions about 12-18 months of mass production before KALEAO balances its indirect and direct channels.

The heavy indirect channel focus today has led to an imbalance in server deployments over appliance.

“In the indirect channel, those guys want bare metal so they can put their own sauce on top and then add service and support,” Nicoloso said. “So far, 70 to 80 per cent has been server configurations.”

KALEAO’s channel is small, and primarily focused on regional SIs. Tuangru is their fifth partner and the first to be based outside the U.S.

“Tuangru fits this profile of companies who are extremely interested in us because they want to be ahead of the curve,” Nicoloso said. “They see the wave that is coming and want to be a part of it. These companies know the market isn’t moving to ARM now. That will take years. But ARM will have a play in this market.

“In Canada, we wanted to have at least one partner to start with,” Nicoloso continued. “Tuangru’s level of understanding of what we are doing is outstanding. I would perhaps have rather had someone in the east in Canada rather than Vancouver, but they made a lot of sense from an operations point of view because their data centre management platform is great.” Tuangru’s DCM data center infrastructure management and service optimization platform enables procurement, deployment, monitoring and measurement of data center technologies all in one place.

Nicoloso said that because 90 per cent of upcoming sales is forecast in the US, and that because Tuangru also has offices in the U.S., they will handle west coast regional sales in the U.S.

“They will be our partner for the west coast of the US and Canada, and we hope their sales bleed over to eastern Canada as well,” he said. “We will not put anyone else in the west coast of the U.S. because they have access to that as well.”

In these early days, the five channel partners should give KALEAO enough coverage.

“At this stage, that’s what we need,” he said. “We don’t, however, cover much of the American south-east, which, ironically is where we are located.” While the company is based in Cambridge in the U.K., their American offices are located in Charlotte N.C.

Longer term channel expansion is likely once business expands sufficiently to interest larger solution providers beyond the bleeding edge, as well as distribution.

“The big boys are clearly interested in what we are doing,” Nicoloso said. “Ingram Micro and CDW both want to wait and see. They want us to get to a certain level of maturity. Ingram has told us that when we sign CDW, they will sign right away.”