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The 10 biggest storage companies in 2003?

StorageSearch names them.

click here for an updated version of this popular January 2001 article

by Zsolt Kerekes editor - published January 2001

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.
Zsolt Kerekes - Publisher
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.


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
  • Execute in a timely way
  • 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.

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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.

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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 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.

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