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As the storage market gets bigger and standardisation sets in, many
of the industry's pioneers risk being displaced by new entrants using consumer
marketing techniques to commoditise products which were once seen as being
specialised solutions. As we've seen in other markets, commoditization increases
the size of the market by lowering prices for end users and making solutions
affordable to more people (CDs
being just one example), but along the way strong competition and learning curve
pricing tactics mean that few vendors will make any profit.
One
doomsday scenario for the storage market is that it will segment into
about a dozen (12) companies.
In this vision there will be one major
company which dominates each major segment:- portable systems, desktop, and
rackmount systems. Within each segment the market leader will have a dominant
market share, and their competitors will have to fight it out for small niches
such as higher performance, ruggedisation, or style factors like color...
Another
view is that it will be like the PC market, with thousands of small
manufacturers and a handful of big ones, and almost no one making any money.
You
might ask the question:- How can you differentiate a storage appliance and make
your product unique? (while being compatible with every relevant standard) and
at the same time persuade a customer that it's worth spending more money on your
box rather than Brand X which is 10% cheaper this week?
The answer to
that lies in software and customer service.
Let's fast forward to 2004.
I want to buy a home entertainment system which will replace my
current household mish-mash collection of Dell PC (through which I currently
watch satellite TV, videos and
DVD, and which has
better speakers than my so called "hi-fi"). The new system also has to
replace or work with various generations of Sony gadgets and MP3 players...
I'm
busy and don't have much time, so I go to the web site of the Rodent Consumer
Storage Box Company which lets me select whatever movies and music I want
factory preloaded onto the box when I get it.
Click - maybe
individual selections from the current top 100 DVDs and CDs - or maybe just an
entire group like Arnold Schwarzenneger movies since Conan The Barbarian, or
just a set of Andrew Lloyd Webber musicals. I'm running out of space to store
individual CDs and books and DVDs in my house, and one day I'd like to reclaim
my garage, so if I can buy a preloaded collection at a web discounted price of
50% then I probably won't bother looking for my favourite CD in my car, or my
wife's car, or the office. I'll just click to get another copy on the new
system. After a few clicks on the shopping trolley, I realise that the price of
the 1 terabyte home entertainment storage box is just a small part of my total
order. But then I think of all the money I saved by waiting another year before
buying my plasma TV monitor, and hey, the recession ended last year...
so what the heck!
Now you may think this is a little far fetched. And
if you're the kind of person who buys PCs today without the operating system
pre-installed, then this may not be for you. But think about the advantages for
the rest of us...
- the box company gains because their adverage
selling price is 2 to 3 times higher than just the hardware on its own
- the software companies gain because selling factory
installed software reduces their losses from piracy, and has very little
incremental cost
- the customer gains, because they get most of what
they really need in one go, and don't need to waste any time shopping around or
installing software.
The same goes for NAS, SAN and other storage systems. In fact, if your
company's backup is via iSCSI - you should probably be able to buy your new
storage systems with your company data and applications already
preloaded...The company which lets you do that first - will have all your
attention.
A future in which diverse storage companies thrive while
saving their customers money is indeed possible. The lowest cost hardware box
may not be the winner in this particular race, if the marketing department can
get their act together in time. This may even be a a good time to talk up that
dotcom experience in your resumé. And as for the terabyte storage box
in the home? Well maybe 2004 is a little too early, but it's coming..
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