Interview with Tom Fedro, FarStone Technology

Irvine-based FarStone Technology develops software for digital content security, replication and management. I talked to their VP of Sales and Marketing, Tom Fedro to better understand what the company is doing and how it fits into the software market.

BK: What is FarStone and what business is Farstone in?

TF: FarStone is a software publisher focused on designing, developing and deploying unique security solutions for PCs and networks, as well as a comprehensive portfolio of utilities for digital content replication and management.

BK: What are your major products, and what are your target markets?

TF: We have over 20 products that fall into 2 broad categories:

1) PC and network security solutions
2) Digital content replication and management utilities

In the security category we are pioneering a new market segment for personal disaster recovery with our RestoreIT product portfolio. Embraced by OEM partners like Intel and Phoenix Technologies, RestoreIT enables users to instantly restore lost files or roll back entire systems to their previous state. As a pre-OS (operating system) solution, the technology is unique and works even when Microsoft Windows won't boot up. RestoreIT's patented technology provides total system backup by creating a compressed archive of all the files, programs and partition information stored on the PC. A network version of RestoreIT is also available. The target markets for our RestoreIT suite are OEMs, VARs, system builders and consumers via our website and retail channels.

In the digital content replication and management category our core solution is VirtualDrive. The VirtualDrive technology allows users to store images of CD and DVD programs such as games, graphics and audio/video on the hard drive. These programs typically require that the actual CD/DVD be in the drive to run and many have multiple CDs, requiring the user to swap CDs in and out of the drive while running the program. With VirtualDrive, users create virtual CD/DVDs on the hard drive, eliminating access time and significantly increasing program speeds. With VirtualDrive installed in over 10 million systems worldwide, we have dominated this area of the utility market for sometime. When combined with our CD/DVD burning utilities our latest product offering, VirtualDrive Utility & Burning Suite, provides the strongest media creation and management tool available. The target markets for these products include laptop users, gamers, multimedia buffs and parents. The VirtualDrive network versions are popular in the government and academic markets.

BK: What's the history of FarStone, and how long has FarStone been around?

TF: FarStone was founded in 1993 by our CEO Thomas Lin. Thomas was a top engineer at Microsoft for several years but his entrepreneurial spirit led him to found FarStone in order to exploit an opportunity he saw developing as CD drives were initially being developed for PCs. He and a core group of FarStone's first employees' pioneered CD emulation technology which became the company's foundation for its suite of digital content replication and management utilities.

Today FarStone is a profitable, ISO 9001 certified software publisher with 125 employees and offices around the world with its corporate headquarters here in Irvine, California.

BK: It seems like being a retail software maker might be a tough business, when companies like Microsoft dominate shelf space. How has your company adapted in this environment?

TF: To compete effectively we focus on a set number of retailers and use a combination of value based selling vs. competitive offerings, targeted rebates and strong packaging.

As you mentioned it is a tough business and we are a comparatively small company when you look at Microsoft or any of the larger software publishers. With that as the context, we have developed our overall channel strategy to the point where retail stores provide a very small portion of our revenue. We focus the majority of our time, energy and resources on the OEM space where some of the very largest retail software publishers are actually our customers. In addition, we are developing a very strong Value Added Reseller channel and our website continues to set records for us in terms of consumer visits and online purchases.

BK: How has your company managed to successfully cater to OEMs?

TF: We recognized early on that our core strength in the development of complex software solutions for PCs and networks that are easily integrated to other technology platforms and software products. We have spent the time and resources to leverage that strength along with our unmatched patent position into a strong, scalable program for our OEM partners who view us as a true technology partner, not just a vendor. Many of our competitors have made the decision to spend enormous amounts of money promoting, marketing and branding themselves at the expense of a clear focus on what it takes to be a solid partner to the OEM community. While branding is important, we believe our approach has been a tremendous success and has led to multiple relationships with some of high tech's marquee names like Fujitsu, NEC, Intel and Phoenix Technologies.

BK: What's your view of where the software market is going? Enterprise software providers have complained recently of a slowdown--what does it look like in your segment of the market?

TF: Regarding the enterprise market, its clear those technology companies catering to this space have, by and large, done very well over the past decade. This may be a period where their customers are taking a breather as they absorb these massive expenditures and are in the process of validating the return on investment that had originally been anticipated.

Specifically for our segment, which includes small to mid size business as well as the education and consumer market, we believe this area to be exploding with opportunity. With our security products leading the way, both through our OEM partners and our other channels, we are experiencing a dramatic ramp in our product inquiries and sales volumes. We believe the demand for technology solutions that help secure the digital environment at home, on the road and in the office will continue to mushroom as the cyber threats continue to morph and increase in frequency as well as severity. The other side of our business, digital content replication and management, has been the mainstay of FarStone for years and continues to enjoy steady growth. With our latest release that combines professional level CD/DVD burning capabilities to an already strong offering we believe this side of our business will continue to find new customers in new applications worldwide.

BK: Finally, what's FarStone's big goal for this year?

TF: We have been profitable for some time now so our big goal this year is to maintain that state while building out a world class sales and marketing infrastructure that can take advantage and maximize the opportunities we've been discussing here.

It's a very exciting time in the company's growth!

BK: Thanks!


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