The parent company of Santa Ana’s SimpleTech Inc. is looking to break the consumer memory gear brand out of its box.
San Mateo-based Fabrik Inc., which got its start in 2005, bought industrial memory products maker STEC Inc.’s ailing consumer data storage and flash memory unit for $43 million a year ago.
This year it’s gearing up to pit SimpleTech against the disk drive giants of the industry, Scotts Valley-based Seagate Technology LLC and Lake Forest’s Western Digital Corp.
“2008 is the year we are going to do much more interesting things and begin to get outside of what was the historic SimpleTech channel,” Fabrik Chief Executive Mike Cordano said.
When Fabrik bought the brand from Santa Ana’s STEC, it was running on razor-thin profits selling flash memory cards for digital cameras, cell phones and other gear.
Fabrik has scaled down the flash memory gear,although some SimpleTech cards still are sold in stores,and started investing in external disk drives for consumers.
It’s where Fabrik can compete and pitch SimpleTech as a solid No. 3 in the market, Cordano said.
The company is doing something the competition hasn’t been as big on,paying close attention to industrial design, colors and packaging.
“Traditionally, external storage has been a very horizontally positioned, generic product,” Cordano said. “It’s been sort of one size fits all for every kind of user.”
The company is set to release a line of portable drives next month that was a collaboration with Italy’s Pininfarina SPA, a firm best known for creating the look and feel of luxury cars made by Ferrari, Maserati, Cadillac and Jaguar.
Pininfarina helped design the drives around a food theme. The drives come in colors that correspond to fruits and other flavors, such as blueberry, black cherry, cool mint, kiwi, marshmallow, bubblegum and espresso.
It’s an unusual take for computer products typically relegated to bland, silver boxes, said Matthew McRae, vice president of marketing for Fabrik.
“We are kind of perceived as the innovator in the market and we are breaking some of the rules,” he said.
Roughly $200 million in revenue last year came from the SimpleTech alone, Cordano said. Privately held Fabrik expects to do about $400 million in sales this year, he said.
Cordano hails from Maxtor Corp., where he was the vice president of sales and marketing and helped launch its successful OneTouch line of external drives.
Seagate paid $2 billion for Maxtor in 2005.
“The roots of Fabrik and what we are doing now really come from my time at Maxtor,” he said. “The OneTouch was the beginning of taking hard disk drives and trying to create a venue to take it directly to the consumer.”
He characterized the established players as being a bit stodgy and too far up the supply chain to connect with individual users.
“There were limitations inside a company like Maxtor or any of the large companies who sell hard disk drives to people that integrate them into system,” he said. “There are cultural implications to that.”
Cordano has some beef with the big guys’ approach.
For one, Western Digital’s and Seagate’s focus is selling huge numbers of drives to makers of computers and servers, not individual consumers.
“Those companies are really driven by technology, engineering and finding value in operational efficiencies,” Cordano said. “It’s a different mentality. It’s about, ‘How do I minimize my marketing and engineering expense and maximize the revenues?'”
Second, such companies are more focused on the hardware than the kinds of software and services that could be bundled and sold,for a premium,to consumers looking to store, back up and organize their files, he said.
The companies “lack a channel marketing and brand-centric view of the world,” he said. “These are things that are not easily done in an industrial company.”
The SimpleTech buy was a good fit for Fabrik, Cordano said.
“What we were after was a channel,” he said. “We knew what we got was an entry level storage and memory channel. It was a nice combination of scale and volume,at low margin, granted,that together becomes more interesting in terms of a viable business.”
SimpleTech’s roughly 150 workers moved down the street from STEC in Santa Ana last year. It leased a 30,000-square-foot building in July.
Most workers here are in sales, marketing, tech support and operations. Manufacturing is done in Asia but some final assembly is done locally.
Development is done at Fabrik’s offices in Northern California.
The company is continuing to hire as the storage line gets ready to launch in stores and online, according to Mike Williams, general manager.
“We continue to see very strong growth in the business through 2008,” Williams said.
