Isilon serves up digital storage for NBC Universal

NEW YORK Mon Apr 16, 2007 4:25pm EDT

A trader smiles while pointing to a monitor on the floor of the New York Stock Exchange in New York April 3, 2007. REUTERS/Shannon Stapleton

A trader smiles while pointing to a monitor on the floor of the New York Stock Exchange in New York April 3, 2007.

Credit: Reuters/Shannon Stapleton

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NEW YORK (Reuters) - Digital storage specialist Isilon Systems Inc. ISLN.O, which listed four months ago, said on Monday it reached new deals to provide the storage backbone for NBC Universal and other media firms amid a shift to a new era of video technology.

Shares in Isilon, which provides "clustered storage," or computer software and hardware that house massive amounts of digital information, rose nearly 4 percent on the news.

The digital storage market is one of the fastest growing in technology spending, fueled by an explosion in photo-sharing, music downloading and online video viewing in the latest phase of Internet use, according to industry analysts.

"Simply put, the world's information is moving from words to pictures," Isilon Chief Executive Steve Goldman told Reuters.

"We give these folks a gigantic 'C' drive," he said, with more than 50 times the capacity of traditional storage.

NBC Universal is reconfiguring its film and television operations to better capitalize on Internet media, including a new online video venture with rival News Corp. NWSa.N.

NBC, majority-owned by General Electric Co. (GE.N) and minority-owned by Vivendi (VIV.PA), has chosen Isilon to be its primary provider of digital storage and will use the system to help organize its broadcast coverage of the 2008 Olympic Games in Beijing, Isilon said.

Isilon said it will also be the primary storage provider for XM Satellite Radio Holdings Inc. XMSR.O, with more than 170 channels, and has entered a supply deal with broadcaster Discovery Communications, a unit of Discovery Holding Co.

(DISCB.O).

The deals were announced at the National Association of Broadcasters convention in Las Vegas. No financial terms were disclosed.

"We are definitely the up-and-coming challenger," Goldman said. "The next frontier is how do you really get to the meaningful stuff" among thousands of hours of stored sports and entertainment.

Isilon said it has also entered partnerships with 20 companies that provide technology to identify and manage digital media once stored, including Anystream, Pharos Communications and Telestream.

Isilon cites industry studies estimating that more than half of all new data in 2007 will be digital content, and the market for storing such data will more than treble to as much as $9 billion in 2009 from $2.5 billion in 2007.

But such digital content requires more sophisticated ways to save it. While a 10-second file of high-resolution digital video uses up to 12 gigabytes of storage, Isilon offers units called petabytes, or 1 million gigabytes, in a single cluster.

Isilon's media and Internet clients account for more than one-third of its business and the company has said it expects to nearly double its revenue to $115 million to $125 million this year from about $62 million in 2006. Its rivals include Network Appliance Inc. (NTAP.O) and EMC Corp. (EMC.N).

Media-related clients include Eastman Kodak Co. <EK.N , News Corp.'s social network site MySpace, radio operator Clear Channel Communications Inc. (CCU.N) and film studio Paramount, a unit of Viacom Inc. VIA.N.

Isilon shares are down about 30 percent from a high of $28.50 shortly after its IPO in December, partly fueled by a quarterly earnings report in February that disappointed investors by not beating Wall Street expectations.

The stock was up 54 cents at $18.52 on Monday after trading as high as $18.94 earlier in the session.

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