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The storage industry's report card for the year 2001 is nothing to
brag about. There is some hope for recovery in 2002, at least. But when?
- The past year was not particularly glorious for the computer
industry in general, and not much better for the storage sector. Storage
capacity needs in large enterprises is growing, but IT budgets are tightly
monitored, while storage subsystem prices have dropped considerably. The events
of September 11 no doubt provoked an abrupt halt in economic activity, but the
preceding nine months were far from stellar. Rare are the storage companies that
will finish the year with sales greater than in 2000 - in fact, a large majority
will likely close out in the red.
- For the very first time ever, fewer PCs and servers were sold in
2001 than the year before. Consequently, it became even tougher to sell hard
disk drives. While analysts' figures are not yet known, it seems probable that
2001 was the first year, in the quarter-century history of the HDD industry,
when fewer units were sold than in the preceding year, i.e. fewer than the 2000
record of over two hundred million shipped. Revenues for the last quarter of
2001 have yet to be published, but they shouldn't be too bad for desktop drive
makers, due to
1) Fujitsu's retreat from the sector, to the benefit of
some rivals, and
2) the arrival, at last, of new applications for disk
drives outside the IT realm, and more specifically the launching of game
consoles with HDDs, such as Microsoft's Xbox. -
At the end of 2000,
manufacturers had hit 20GB per 3.5-inch platter - we're now at 40GB at the end
of 2001, and as always, at a price that is nearly identical for a drive with the
same number of platters. Consumers no longer know what to do with HDDs of such
high capacity, but the areal density race rages ahead. The SAN and NAS market
would not be what it is without the massive help of disk drive makers, but
because of the competition that exists between the two sides, the latter are the
last to profit from their efforts.
- No technology is yet in any position to challenge Winchester drives
in the medium term, particularly since, as Fujitsu and Seagate have proven, the
devices are capable of attaining areal density of 100GB per square inch, or
125GB per platter.
- The industry lost a veteran HDD maker, Calluna Technology, as well
as a newcomer, Halo Data Devices. ExcelStor is the most recent arrival, built on
the ashes of Conner Technology. - LTO seems to have made stronger inroads than
SuperDLT, in a tape market that was nevertheless flat overall. For the first
time, Imation dared to take on Quantum's monopoly in DLT. The story is still
developing, in U.S. courtrooms, of course. Certain tape makers also caught on to
the fact that they need to prompt their R&D services to greater intellectual
heights, if they want to keep up with the steady growth in HDD capacities. OmaSS
has promised us 600GB in 2003, while Sony has pledged a whopping 500GB for this
year. It wouldn't hurt to get the ball rolling a little faster with current tape
technologies.
- There are scattered reports that the floppy diskette still exists.
We only ever see CD-R/RWs these days. As for writable DVDs that are slated to
replace the latter media, the battle between DVD-R/RW/RAM from the DVD Forum
against the DVD+RW from the DVD+RW Alliance as the privileged standard reached a
fever pitch, although no clear winner is yet discernable. It is evident,
however, that there's no room in this town for both of them. If you thought we'd
know in 2001, guess again. DVD Forum will most likely triumph this year, if our
hunches are right.
- It's clear to everyone that serial interfaces will gradually edge
out their parallel counterparts. Unfortunately, there's likely to be little
complementarity between all the new serial interfaces: serial ATA, FC and now
serial SCSI. The arrival of USB 2.0 technology is certain to shake up proponents
of 1394, more sophisticated, but also more expensive.
- RAIDs are relying more and more often on low-cost IDE drives, which
are consequently eating into the SCSI unit market, and perhaps even that of tape
technology, for back-up, if not for archiving.
- Market research companies were obliged to revise their 2001
forecasts downward in almost every segment of the storage industry. IDC thus
foresees a drop of 18% in storage subsystems, due in particular to the poor
economic environment and dot.com failures, but nonetheless is banking on 12%
growth in open SANs.
- Even if some progress was made, interoperability, or the absence of
it, remains an impediment on growth in the SAN market. As in all industries,
it's the leaders (we're thinking of Brocade and EMC here) that are the last to
move things forward.
- 2001 will also be remembered as the first difficult year in the
history of SAN giant EMC, now under assault from both IBM and Compaq (despite
the demise of the latter two firm's partnership), as well as Hitachi Data
Systems, with allies Sun Microsystems and Hewlett-Packard. And the difficulties
are not minor: losses for the first time in 12 years, and nothing to sneeze at,
$1.2 billion with restructuring charges, not to mention sales down by 47% from
one year to the next for 3Q01 alone. It remains to be seen whether the agreement
signed with Dell to resell EMC Clariion will shuffle the deck.
- Since Joe Tucci succeeded Mike Ruettgers as CEO at the beginning of
the year, EMC has not been the same. Its new strategy, like that of its rivals,
is to seek the holy grail of storage software, with much more comfortable
margins than with hardware. In other words, imitate Veritas. In consideration of
this, we award Tucci with 2001's lemon of the year, while Veritas CEO Gary Bloom
walks away with the title of Storage Industry Man of the Year, no
contest.
- EMC's misfortunes will furthermore probably cause it to
lose its number one slot among storage companies for revenues, a torch that will
most likely be relayed by Seagate, rather than the new Maxtor, even with the
latter's addition of Quantum HDD, proving once again that in the case of
acquisitions and mergers, one plus one sometimes works out to quite a bit less
than two.
- One effect of September 11 was to highlight
vulnerabilities in the area of remote backup and disaster recovery, prompting a
number of companies to scramble for new contingency solutions.
- Storage over IP sounds like a dream, but we're hearing significantly
more about it than we're going to see, at least until total standardization has
been achieved, expected some time this year. For Infiniband, this process will
come even later. 2001 was also the year in which virtualization software made
its big splash, even if sales remain sluggish.
- 2001 also gave witness to an even more disastrous Comdex than the
previous year. CeBIT seems to have definitively won the war of giant
international IT trade shows. The past year also saw a major blitz among expo
organizers to specialize in storage events, an effort that more or less paid
off.
- We end on a brighter note: despite the gloomy year the industry
just suffered, despite the number of mergers and acquisitions, despite even the
dramatic reversal of fortune for SSPs, we've never seen a year with so many
start-ups, for the most part looking for an angle in storage networking. Do they
all still dream of IPOs? Perhaps not, because the stock exchange is far from
welcoming at the moment. Instead, they seem content just to stay the course,
perhaps hoping one day to snag a particularly big fish?
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