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Pano Logic customers still in the dark

Pano Logic's closure is still shrouded in mystery, but VDI resellers point to a dried-up sales pipeline.

Just a few weeks after Pano Logic's abrupt closure, its customers remain without answers.

They were too good for their own good.

Simon Bramfitt,
founder, Entelechy Associates

Pano Logic, a small VDI vendor based in Redwood City, Calif., has been put into assignment for the benefit of creditors with Sherwood Partners, a business advisory firm for companies undergoing restructuring. Sherwood declined to comment on what specifically it is doing for Pano Logic, but assignment for the benefit of creditors is an alternative to filing for bankruptcy, where an insolvent company's assets transfer to another company for management and/or restructuring.

That doesn't help Pano Logic customers, who say they're still in the dark about basic things such as customer support and whether the vendor might even come back after restructuring. It's made it hard for these IT pros to plan for the future, as well.

"It's basically like driving a clunker car into the ground until it falls apart and won't run anymore," said Darren Schoen, director of technology infrastructure at Broward Center for Performing Arts in Fort Lauderdale, Fla. "I think I've got at least a year until that happens, but now I have to figure out what to do once it does."

Pano Logic closed up shop and laid off its employees Oct. 23, according to the vendor's former public relations firm.

Pano Logic closure: A customer's questions

The Broward Center has used Pano Logic for virtual desktop infrastructure (VDI) for about two years and migrated approximately 40 users onto the platform. There were plans to migrate another 100 users, but those are now on indefinite hold.

Even though Pano Logic was 5 years old and seemed to have a solid customer base, this entire experience has soured Schoen on buying technology from a small startup.

"It's pushing me more toward larger VDI players, but I still have to keep it cost-effective," he said. "I can't invest thousands and thousands into another company and have it go under too."

Schoen's organization is heavily invested in a VMware Inc. server virtualization infrastructure and already uses VMware View, so it shouldn't be too difficult to transition off of Pano Logic's platform. The headache has less to do with the technical aspects of adopting another platform and more with the potential new costs.

"It's made my job harder because I have to find a replacement that is agile, affordable and easy to use," Schoen said. "Pano was such a stellar product for a lot of reasons, but we also didn't have to make upgrades to any other infrastructure. We're a government non-profit, and with my budget, if I had to upgrade the networking, storage, etc., my ROI [return on investment] wouldn't be there."

Struggles in the channel

There has been no official word why Pano Logic closed, but IT solutions providers said the platform's low cost and ease of implementation made it difficult to gain traction in the channel. VDI resellers would have no incentive to push the company's product over a Citrix Systems or VMware product because there was very little profit margin, said Eugene Alfaro, director of engineering services for Cornerstone Technologies, a solutions provider based in San Jose, Calif.

"VDI is all about the drag," he said. "VDI resellers make money from all the services that go into supporting VDI, like updating the network. There was no drag with Pano."

Cornerstone Technologies wasn't a Pano Logic partner, but Alfaro said the difference in margins between Pano Logic and other vendors was significant.

"A thousand-seat [Pano Logic] deal might net a reseller $350,000 to $500,000, and that's it," he said. "We just did a 500-seat VDI deployment, a competing solution, and will pull in several million."

Simon Bramfitt, a VDI analyst and founder of Entelechy Associates, an independent research firm based in Concord, Calif., said what happened to Pano Logic is disheartening.

"It seems like they were too good for their own good," he said.

Pano Logic zero client lost its edge

A U.K.-based distributor who did not want to be identified said via email that his company had moved away from pushing Pano Logic about a year ago.

"I knew last year that their sales pipe was not as it should have been," he said. "No big loss to us, though."

Pano Logic's sales pipeline might have dried up because established players such as Hewlett-Packard and Dell caught up to its initial zero-client hardware advantage, said Steve Kaplan, vice president of virtualization and cloud at Presidio, a solutions provider based in Sacramento, Calif. Presidio isn't a Pano Logic partner, but Kaplan used to sell its product at a former company.

When Wyse Technologies (now part of Dell) and other thin client manufacturers began to make PC over IP-based zero-clients that provided better performance and also carried minimal maintenance requirements, Pano Logic's sales may have been affected, Kaplan said.

Pano Logic was also left without any buyout options from established companies after the market consolidated during the last 18 months, Alfaro said. VMware acquired Wanova, Citrix bought Virtual Computer, and Dell also purchased Quest Software, in addition to Wyse.

About $38 million in funding from investors, including Goldman Sachs, ComVentures, Foundation Capital, Fuse Capital and the Mayfield Fund, backed Pano Logic. In an August 2011 profile of the company by the San Jose Business Journal, CEO John Kish said it had doubled or tripled its revenue every year since 2008, when it had about $1 million in sales.

Kish has not spoken publicly since Pano Logic's closure, but has reportedly hired a media consultant.

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