Isilon Systems, Inc. (NDAQ:ISLN) soared 72% higher to $22.75 in its first day of trading after being priced at $13 per share. That number was already above the company's expected range of $11 to $12, which was raised not long ago from $8.50 to $9.50. Is this stock worth the price? Well, let's take a look at the company and its industry. According to their S-1/A filing with the SEC:

"We are a leading provider of clustered storage systems for digital content. As more information is recorded and communicated in images and pictures rather than text and words, the volume of digital content — which includes video, audio, digital images, computer models, PDF files, scanned images, reference information, test and simulation data and other unstructured data — is growing rapidly. Enterprises are utilizing this digital content to create new products and services, generate new revenue streams, accelerate research and development cycles and improve their overall competitiveness. Recognizing the growth and importance of this type of data, we designed and developed our clustered storage systems specifically to address the needs of storing and managing digital content. Our systems are comprised of three or more nodes. Each node is a self-contained, rack-mountable device that contains industry standard hardware, including disk drives, a central processing unit, or CPU, memory chips and network interfaces, and is integrated with our proprietary OneFS®  operating system software, which unifies a cluster of nodes into a single shared resource. To date, we have sold our clustered storage systems to more than 275 customers across a wide range of industries.

The worldwide market for external disk storage systems will grow from approximately $17.4 billion in 2005 to approximately $22.7 billion in 2010, according to estimates from a May 2006 market analysis report by International Data Corporation, or IDC. The market for storage systems dedicated to digital content is estimated to grow at a much faster rate. According to a January 2006 research report by the Enterprise Strategy Group, or ESG, certain industries including multimedia, oil and gas, scientific research, healthcare, personal Internet services and software development will experience rapid growth in file-based storage capacity. For example, in disk-based digital archiving, which is one portion of the market our systems address, ESG forecasts that the demand for storage capacity will grow from 377 petabytes in 2005 to nearly 11,000 petabytes in 2010, representing a 96% compound annual growth rate, with the substantial majority of this stored information comprised of unstructured content, such as office documents, web pages, digital images and audio and video files." (Read More)

The company's primary product is OneFS, which it describes as:

"OneFS® is Isilon's patent-pending distributed file system that provides the intelligence behind Isilon® clustered storage. It combines the three layers of traditional storage architectures - file system, volume manager and RAID - into one unified software layer, creating a single intelligent file system that spans all nodes within a cluster. OneFS combines mission-critical reliability and high availability with state-of-the-art data protection to help storage administrators worry less and do more."

Certainly a 96% compounded growth rate through 2010 represents a growth industry. Moreover, Isilon Systems already has more than 275 customers and is a solid player in this market with an innovative product. However, the company noted that it experienced a $19.2 million loss in 2005 and a $10 million loss in the first six months of 2006. Given their short operating history, it is difficult for them to project future earnings; however, their industry outlook and products appears promising. This is definitely a stock to watch during the coming year!