Isilon revenues have increased 17% in the second quarter of 2008 quarter over quarter and 23% year over year. Margins have also stabilized at 52%-53%. However, the company continues to suffer a net loss as sales and marketing expenses take up 48% of total revenue. With a negligible market share and a worsening economic downturn, the immediate future of cluster storage is unclear.
As various tech companies either announced drops in 2Q earnings as a result of the downturn, or lowered their 2008 earnings guidance (including Kodak and Comcast), doubts arose whether Isilon can continue to sell its hardware products to these companies. While Isilon's storage hardware helps make IT systems more efficient, it is not an essential part of most businesses's operations. Compounded with the company's unprofitable history, the company's stock is reactive to any signs that its customers are cutting their IT budgets.
