Company's Profile: Synology

Company’s name:
Synology, Inc.

Location:

HQs: Taipei, Taiwan
Subsidiaries: Bellevue, WA; Brinklow, Milton Keynes, UK; Düsseldorf, Germany; Suresnes, France

Date founded:
April 2000 by two former Microsoft’s employees, Cheean Lioa, development manager of the storage engine for Exchange Server and Actice Directory in USA, and Philip Wong, senior sales director in Taiwan. First goal was to design a NAS filer OS-based on FreeBSD and x86 platform for SMBs for less expensive alternative to Microsoft SAK developed with Intel’s support. The company moved to Linux in 2003.

Financial funding:
Current capital between €7 million and €8 million. The private firm has no plan for VC funding or IPO as it is self-financed and wants to remain independent.

Revenues and profitability:
Approximately $60 million (Correction June 15, 2012: $40 million to $60 million) in calendar year 2010 and $100 million (Correction June 15, 2012: $70 million to $100 million) in 2011 with income surpassing $30 million; 2,300% growth in revenue from 2006 to 2011; profitable since 2006.

Main executives:

Philip Wong, chairman
Vic Hsu, CEO since January 2012, formerly responsible for the company’s software R&D, joined the company in 2000 as software engineer.
Cheen Liao, president
Allen Kao, in charge of technology

≠ of employees:
250 – including 70 in engineering -, 30 to 40 being not Taiwanese

Products:
Diskless NAS only for backup and sharing, from one to twelve bays – with expansion units integrating up to twelve disks – and dedicated configurations for surveillance, all of them shipped with its own free software, DiskStation Manager or DSM, last version 4.0 being launched last March.

≠ of patents:
7

Units shipped:
Roughly 300,000 in 2011 (Correction June 15, 2012: Roughly 200,000 to 300,000)

≠ of customers:
"Each customer has an average of two NAS"

Main customers:
EVA AIR (Taiwanese airline company) with around 20 NAS, Bayern in Germany

Average price:
$400

Roadmap:

Will reveal an enterprise scalable unified (10GbE iSCSI and NAS) RAID next month with ten bays, up to 300TB with expansion units
DSM 4.1 supposed to be released next July
In discussion with Intel to integrate Thunderbolt interface.
Lower power hungry systems under development based on new management software
Plans to add tiering

Distribution:
"Almost" no OEMs, hundreds of distributors around the world, the biggest one being Ingram Micro

Main competitors:
Dell, HP, Netgear in the world, Qnap and Thecus in Taiwan

Comments

About all these facts and figures came from Derren Lu who knows quite well the company. He was CEO of Synology until January 2012 and the company asked him at this date to join France, becoming GM of the French subsidiary.

About all Taiwanese storage companies are very secret and don't reveal figures on their activity. Here, for the first time, we got a lot of information about one of them.

The business model of the NAS vendor is highly profitable for two main reasons. The company only designs the hardware and software, subcontracting all the NAS assembly at two Taiwanese firms. Customers, all of them being distributors, are paying cash in advance.

All NAS are sold diskless and the firm is not really affected by the recent increasing prices of HDDs. It only gives on its web site a regularly updated list of HDDs and SSDs supported on its platforms.

Big reason of the success is based on the fact that its sophisticated software DSM, full of functionalities, is free, with the possibility to regularly download updates. This strategy was first applied by NAS companies in Taiwan and is now more and more adopted by their competitors in other parts of the world.

Furthermore, the firm relies on a large users' community to improve its products. There was 79,000 beta testers for its last DSM 4.0 software, or one every five minutes during the testing period, according to Lu.

But the competition is tough in low-end and mid-range NAS against something like around one hundred of small and big companies (Dell, EMC/Iomega, HP, Seagate/LaCie, WD, etc.) in the world.

We published recently a market report from Gartner on the top 2011 NAS vendors in the world. In number of units, the analyst firm ranked Synology ≠3 with 94,538 (13.4%) units shipped, behind leader Netgear (108,876, 16.4%) and Qnap (97,554, 13.8%). On its side, Lu said it's about 300,000 (Correction June 15, 2012: roughly 200,000 to 300,000) for 2011. In term of revenue, Gartner published $57.3 million for Synology, Lu stating around $100 million (Correction June 15, 2012: $70 million to $100 million). He commented about this questionable report: "We have not been contacted by Gartner for our figures."

Company’s Profile: Synology

Flourishing Taiwanese firm in diskless NAS only

Comments