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Spellerbyte's
ScryWareTM
utility often
provided spookily accurate market predictions. | |
...Later:- in the first
version of this article, in January 2001, I invited readers to nominate anyone
they thought we had left out from this list, and I made a big mistake... I left
out HP...
Hundreds of HP employees let me know the
reasons why they
should have been (correctly) in this list. Nominations are still open for any
company which you think we may have left out. Thanks to everyone who sent emails
and helped to make this article even more useful.
This article has now
stood the test of time, having been viewed by tens of thousands of readers. In
January 2002, I'll revisit this theme and see how accurate the prediction looks
a year later. |
 |
| Above, Zsolt Kerekes
editor of
STORAGEsearch & the
SPARC Product Directory,
published by ACSL,
established in 1991 |
| For an independent storage
analyst's view, STORAGEsearch asked Farid J. Neema, President of Peripheral
Concepts, Inc. to tell our readers his view about the future of storage to run
alongside this Squeak article. |
|
The Future of Storage
by:- Farid J. Neema - President of
Peripheral Concepts, Inc
The future of storage networking is contingent upon the evolution of SAN and
NAS architectures, the distribution model for storage, and the advances in
telecommunications techniques. These in turn will create new applications
demanding higher levels of performance, very scalable interoperable systems, and
universal data access. Storage beyond 2003 will inter-operate with the rest of
the IT and IP environment
SAN and NAS Architectures
The frontiers of SAN and NAS are rapidly growing and evolving making it
increasingly difficult to identify separate markets. Ultimately, much of the
differing functionality of the two architectures will merge. NAS will find a way
to overcome the slow nature of TCP, and take advantage of the higher Ethernet
speeds, as NAS appliances scale and layer in additional software functionality
SAN will overcome its interoperability problems, will incorporate both caching
and heterogeneous data sharing, while moving to easy-to-install, low-cost
products. The road to NAS and SAN convergence will go through some "SAN
over IP" solution
The exact outcome of SAN and NAS merger is not clear at this point. The most
likely outcome is that FC prevails in the mid-term for the metropolitan area, a
SAN file system emerges as a standard, and bridges are built to either
encapsulate FC (or SCSI) over IP or to translate FC into IP for WAN connections.
IP protocol will prevail in the long term with the advent of 10-gigabit
Ethernet, its advantages override FC merits, and many SAN products will be
implemented based on IP.
Just like in any major new development, there won't be one technology that
fits everyone's needs. There will be complementary technologies that address
different market segments. The proper solution will likely differ by
application, connectivity requirements, scalability, performance, and price
sensitivity. Fibre Channel SAN has acquired enough momentum to ensure its
continued high acceptance rate for the next three to five years. For any
architecture to be successful, it will have to guarantee continuity/ integration
with Fibre channel.
Storage Distribution
The profile of distribution channels is changing, driven by service
providers. Service providers represent a very significant discontinuity in the
way storage is distributed and the way vendors interact with their users and
channels. They will constitute a great market opportunity and create a new
business model for storage. A data tone model will prevail. Storage will be
provided as a utility by service providers, except for larger corporations that
will be very reluctant to give away all of their data to someone else to manage.
To succeed, a VAR will need to offer a complete solution and service.
Applications
The Internet revolution is causing businesses to rethink every interaction
with customers, suppliers and partners. While the Internet is merely the
trigger, the real effect lies in the better use of corporate information,
leading to broader market reach and additional business. Corporations will
aggressively invest in the development of more efficient and optimized IT
infrastructures to leverage new and existing data. Mobile business, consumer
retail purchase, entertainment, combined with multi-media support, will drive
the creation of an infrastructure where content is independent of the data
format and the storage location. In such an environment, data security will grow
to a become a vital necessity.
Industry and Industry Leaders
The storage leader in year 2003-2005 will:
- Provide reliable, scalable solution to open storage that is easily managed
- Stay closest to his customers
- Offer a high Quality of Service
- Have very high software, system and network skills
Industry consolidation will continue, many storage vendors will disappear,
and a new breed of companies will emerge as storage leaders. |
| . |
Other
articles on STORAGEsearch
A Storage Architecture
Guide - white paper by Auspex Systems
LVD, SE,
HVD, SCSI compatibility - or lack of it - by Paralan
The Cost of Owning and
Storing Data - by Overland Data
SAN Applications -
by Peripheral Concepts
The Return of
Removable Hard Disk Drive Architecture - white paper by DataZone |
| . |
Other
Squeaks
Squeak!
- The top 10 fastest growing storage companies in the US?
Squeak! - Breaking the
SAN Babble
Squeak!
- Will Sun Succeed in the STORAGE market? - part 1
Squeak! - Will Sun
Succeed in the STORAGE market? - part 2 |
| . |
Notes
re the top #10 picks by Zsolt Kerekes editor
First, a declaration of
interest. At the time of first publishing this article none of the companies
listed were advertisers or customers of
ACSL, the
publisher of this directory. (Although that may change.) Also, I don't own
shares in any of them.
In order to make this list, the company will
have to achieve a projected annualised storage revenue in 2003 of at least
$5 Billion.
There were some near misses here for companies which
came within a cat's whisker of being included. In choosing which of these
companies to actually include I also looked at other factors: such as the
popularity of their news stories on this site, the number of new storage
partnerships announced during the last year and other metrics which can be used
as predictors of relative growth.
Some product segments were
problematic. For example
"storage software"
and "storage
switches."
My belief is that the buying spree witnessed in
2000 where storage software companies were being snapped up by hardware
companies will continue, and so naming one of these companies as an independent
company in 2003 would be a pointless exercise.
Although analysts have
predicted that the storage switch market will grow fast, most of the companies
in this sector would need to get a growth increase of x 25 (or 300% annual
growth sustained for 3 years) to get there. Whereas it's possible that a company
may actually do this, the assumptions needed to get the 10 companies into this
list were more modest. |
|
| Our STORAGE Portals
directory links to all other significant storage related publications on the
web, even all our competitors. |
|
| Our Industry trade associations
directory links to storage related dot-orgs which are vendor independent. Many
of them include white papers about aspects of storage technology. |
|
| Our Market research & STORAGE
analysts directory includes all significant market research
organizations which specialise in tracking the storage market. Many of these
have whitepapers, market reports or other articles, some which can be read free,
most available for purchase. |
|
 |
| Our sister publication, the SPARC Product Directory
includes articles about the Sun Microsystems compatible market, and a directory
of products, vars, oems and related web sites. |
| | |
 |
Which
companies are going to be the winners in the enterprise storage market of the
future?
Predicting the market 2 years into the future may seem
somewhat rash. For example, if we look 2 years back in the past terms like "SAN" and "NAS" were just starting
to appear in the computing vocabulary and were always expanded. (See our
Glossary for more of
these.)
One thing's for sure, the top 10 storage companies are going
to be a lot bigger than they are today. In 2000, EMC would easily top this list
with revenues around $8B (this article was written before their Q4 figures were
announced). However, my guess is that the leading storage company in 2003 will
more likely have revenues in the region $25B to $30B.
Hey, let's do a
reality check, some market research companies have predicted that the whole
market segment may only be worth $60B, but 3 factors lead me to think that's an
underestimate.
- "storage" will begin to encompass a lot of
things which we currently regard as separate product categories. For example:
is a web site hosted by a server, or an intelligent storage system?
- nearly every technology change which affects this
market tends to increase the demand for additional storage. For example - the
data content in a typical email circa 1990 would be just plain ASCII text. By
2000, most of us overcame the compatibility problems which affected early
attachments of Word documents and static graphics. A year ago, one of my
colleagues was using couriers to send her 200M byte audio-visual powerpoint
presentation which would have clogged up the email system at the recipient's
end. In 2003, the size of these files will be more like a Gigabyte, and if you
figure the number of iterations along the way, we're all going to become as
familar with video editing tools as we are today with word processors.
- the entertainment industry, which today is still
distributing most of its video content in analog form, will be entirely digital.
Digital camcorders are easier to use than their analog predecessors and will
make movie directors of us all... The internet which will subsume cable,
telecoms and satellite, will provide additional outlets for this data. Although
I have no reason to believe that the quality of the content will be any higher
than the current low level on most web sites.
Another important consideration in judging the size of
the top 10 storage companies in 2003 is that this will be affected by the same
economic factors which also affect any other mature market in the internet age.
The internet encourages the "gorilla" affect. So, after all the
shake-outs which will take place in the next 2 years, the biggest company in
each product category will most likely be bigger than all its competitors added
together. That's why it will be possible for many of the leading companies in
this market to achieve annual revenue growth of over 50%, at the same time as
spending on the segment as a whole may be growing at a much slower rate. There
will be few winners, and hundreds of losers.
In my notes below, I've
picked 10 possible winners which I think will be the biggest storage companies
by the end of 2003. I've also included my reasons. There will be a follow up
article to this one, in which I invite any reader or vendor to suggest other
companies which I may have left out due to my ignorance, or a different
perception on their outlook.
Let's go back to basics...
What users really want is a system in which it is as easy to retrieve
all their data as if it all existed just for their own personal use, on their
own PC. The fact that many users may want access to the same piece of
information, or the same user may want this information when he/she is in a
different location contributes to the technological complexity which underlies
today's networks. When they decide to send data to someone else, they should not
have to worry about how big it is, or whether it can be used at the other end.
That data could be a letter, an order, a business plan, or an entire movie...
Users
also want the data to be recoverrable, when they make mistakes, or when their
hardware or operating system fails, and they still want the data to be online
without disruption when their original hardware becomes too old and slow and has
to be replaced.
Any storage networking product or service which
supports these aims, will have a chance of being successful... |
The Biggest
(revenue) STORAGE companies in 2003
STORAGEsearch.com
editor's prediction - January 2001
note - these are not listed in size
order! |
| company |
product |
notes |
| HP |
services,
optical storage, RAID, tape, etc |
Due to an
error in adding up all the many segments of the storage market in which HP is
involved, we accidentally omitted HP from the original published version of this
list. Our readers and HP employees soon put this right. I've published
some of the responses
from HP which give you an insight into their new corporate thinking on storage.
Editor. |
| Intel |
flash memory
and entry level RAID |
Intel has come
in for a lot of criticism recently. The January 2, 2000 edition of
Red Herring magazine discussed in
great depth the factors which have resulted in Intel's decline of market share
within the Intel compatible processor market from over 90% several years ago
down to about 80% today. In my view it took stunning corporate arrogance to
conceive and execute new product introductions which seem, by their timing to
have totally disregarded their competitors as irrelevant. But let's get back to
storage...
RAID systems will start to appear in entry level systems,
and even some consumer PC's during the next few years. The reason? Most people
running PC's in small businesses aren't systems administrators and don't do
regular backups. Having fault tolerance and data recovery in their disk systems
is the only way that they can survive. Also, for consumers, who want to record
maybe 50 or more movies in digital format, the size of the average disk drive is
not going to be sufficient to do this. (By the time most kids I know start
school they've already been using PC's for a couple of years, and know how to
operate the satellite tv and VCR as well, or better, than their parents.).
When RAID controllers start appearing in 100 million or so PC's each
year, it's easy to calculate that this will be a big market. Intel has set up a
division to provide RAID systems, and while they're not very visible in the
market today, they design the motherboards which the first generation of each
new PC uses and they've got the marketing clout to make sure that consumers know
why they will need Intel Storage Inside (or whatever brand they decide to come
up with.)
Some readers have questioned my analysis on the above, and
said that Intel shouldn't be in this list. Well, I've been watching Intel and
predicting their moves for about 25 years, and have seldom been wrong. For these
doubters I add the following note on flash memory, which Intel invented in
1988. See also -
news
- Feb. 8, 2001 - Siemens Signs an Agreement with Intel to Purchase more than $2
Billion of Flash Memories
. If you add a billion here, and a billion there, pretty soon you're talking
about real revenue in storage;-) |
| Cisco Systems |
network
interconnections |
Cisco started
to respond to the storage network paradigm in 2000 in the classic Cisco
fashion... it bought a company which had the technology it wanted. In July 2000,
it acquired NuSpeed Internet Systems which had developed technology to
interconnect SANs with IP networks. However, as the Cisco share price started
2000 at a level lower than a year before, it will find it harder to buy any
additional technology it needs using stock options.
As the biggest
encumbant in the IP internetworking market, most SAN companies have to develop
or acquire products which can interoperate in a Cisco connected world. That may
cushion the blow of this paradigm shift at first, because everyone will be
talking to them, just as everyone in computing (long long ago) used to talk to
IBM. I suspect that Cisco may be slower than others to develop native SAN
products, but this option will become necessary to its survival, and it's got
enough internal resources to start late and still come out of the race as a
winner. |
| Microsoft |
web storage |
This is the
part when most of you will think you've seen a typo on the left, and think "Web
storage", surely they meant "Storage software." No, we think that
Microsoft's reputation for software which crashes a lot, will prevent them
becoming successful as a network storage software company until user memories of
their earlier desktop OS products fades. But I really do mean they could become
the #1 ASP in the web storage area.
My reasons? Well, put aside the
fact that
web storage is going to
be a very big business which everyone wants to get into... you can see plenty of
these in our directory. The fact is that web storage is strategic to the
success of Microsoft's new vision of the connected document world, and the
company which shot to the #1 slot in the browser wars is well placed to make
this succeed.
In November 5, 1998 Microsoft acquired LinkExchange, a
web based ASP which linked over 800,000 member sites in an advertising lead
exchange network. Some of the services which came from that acquisition have
been subsumed in the renamed bCentral.
No other ASP provider connects so many web sites in a fee based relationship. So
when Microsoft decides that web storage comes within view of its gunsights,
they'll have the head start of already being web connected to a significant
slice of this potential market. |
| IBM |
storage
services |
This one's
easy for me, because someone else has already done the research. In May 2000
an
IDC press release
said that the worldwide storage services market would top $40 Billion in 2003.
Their report also named IBM as the top U.S. vendor with an estimated $3.6
billion of the market's revenues in 1999, which was more than their main
competitors added together.
My view is that unless IBM suddenly loses
its work ethic, or decides that the computer services business is unfashionable,
that commanding lead will endure and grow. |
| EMC |
storage
systems |
This is
another easy one. With an annualised revenue rate over $8 Billion (at press
time) EMC is the leader in the enterprise storage market. Information on their
web site said "EMC's addressable storage market in 2000 will be
approximately $44 billion and is expected to reach $78 billion in 2003,
encompassing enterprise storage, mid-range storage, networking, enterprise
software and services."
Whereas I think that EMC's profitability
will come under attack from rivals, like Dell, which charge less for the air
space in their systems cabinets, history shows that buyers of big iron are slow
to change their allegances, and growth at the top end will ensure that EMC
remains in the top 10 even if they do not acquire a single new customer during
the next 2 years... |
| Dell Computer |
storage
systems |
Dell was just
one of hundreds of computer companies which became born again storage
evangelists in 2000. However, unlike some of its server competitors, Dell
started its groundwork a year earlier than most with its acquisition, in October
1999, of ConvergeNet a SAN technology company.
In a
September
18, 2000 press release Dell revealed a bit more about its storage
business... according to Dell, the business unit was formed to capitalize on the
significant global growth opportunities for storage products and systems. Dell's
PowerVault storage division was originally formed in 1998 as part of the
company's Enterprise Systems Group. Now the sixth largest provider of storage
products worldwide1, Dell achieved 70 percent growth in year over year sales of
external storage products in the second quarter, and reported overall storage
sales were approaching $1 billion annually.
As I've mentioned in other
Squeak articles, there will be storage winners and losers among the biggest
computer server makers. My perception, is that with its aggressive attitude and
clear channels of communication with its customers, via the web, Dell will be
one of the storage winners and can gain market share not only in its captive
server base but also in the installed base of rivals such as Compaq and Sun. |
| Seagate Technology |
disk drives |
Last year
Seagate went back to private ownership, but for the period ending September 2000
its annualised revenue was reported to be about $6.8 Billion. The magnetic disk
drive business has been a tough one with over 90% of the oem's in this market
exiting this product segment during the last 10 years. As one of the few
survivors, Seagate is almost guaranteed a revenue stream in more than a third of
all RAID systems, NAS and SANs during the next few years, and easily makes our
top 10.
This is a market in which the current product generation has
usually been displaced by smaller newer units, as 8 inch drives gave way to 5
1/4, then 3.5 inch and now 0.5 inch and smaller are appearing in non computer
type products. Investment costs in each new generation have been high, the
product market life has been unpredictable and profitability has been commodity
like... all over the place.
In January 2001, Seagate acquired SAN
company XIOtech in a possible move to move up the supply chain and provide
integrated SAN systems which would be more profitable than selling bare drives
and incur a higher switching cost. Although XIOtech has been active in the PR
area, I haven't seen any evidence of a strong branding campaign from this part
of Seagate, and as one of more than
100 companies with similar
products, it's unlikely to have much impact on Seagate's fortunes as a
whole. |
| Maxtor |
disk drives |
In December
2000, the proposed merger of Maxtor and Quantum cleared some legal antitrust
notification milestones. "The transaction will create an enterprise with
annual sales of approximately $6 billion and with one of the strongest balance
sheets of any publicly held disk drive company."
Quantum's DLT
(tape drive) & Storage Systems Group (with annual revenue of $1.4 Billion
), which is not involved in the Quantum HDD/Maxtor transaction, will
operate as a legally separate, standalone company that will be known as Quantum
Corporation. |
| Sony |
miscellanous
storage |
Sony makes
storage products ranging from the memory sticks and tape drives you'll find in
consumer digital cameras upto tape libraries and high capacity magneto optical
drives found in network attached jukeboxes.
Sony will benefit from
the same growth factors which affect the enterprise storage business as a whole,
but it's also a pioneer in creating portable appliances such as mini disk
players and digital cameras which will increase the raw digital content which is
stored in the home, and sent via the web.
Sony has a strong brand in
the consumer area and this will help it maintain and grow market share as the
digital portable appliance market grows. |
| Compaq |
storage
systems |
Compaq is
currently struggling in a lot of market segments in the computer industry where
it is no longer the #1 supplier, or is losing market share. From the outside,
the company gives the impression of a company which is still suffering
indigestion after its acquisition of DEC a few years ago.
However,
Compaq is starting from the position of having one of the largest installed
bases of computer users in the world, so even if I'm correct in guessing that
they will lose substantial share of the storage growth within that customer
base, they will still make my list of top 10 storage companies.
On
January 11, 2001 - Compaq officially announced the expansion of its Enterprise
Storage Group with the opening of a new storage software development facility in
Louisville, located in the Cole Creek Business Park. As part of that news
release, the company commented on the storage market... As reliance on the
Internet soars, the SAN market is expected to expand tenfold over five years,
from $2.7 billion in 1998 to $27 billion in 2003. So they know what they
need to do, but it's going to be a very competitive market, and execution is
what matters. | |
In the
next edition of Squeak! - I look at
The top 10 fastest
growing, profitable, storage companies in the US. - You wouldn't think
there was a recession in the US IT market, if you looked at these results. While
most segments are hurting, some product areas have been growing like topsy. |
|
