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Storage Winners and Losers from the 2000-2003 IT Recession

by Zsolt Kerekes editor of
The US IT recession which started in the 4th quarter of 2000 with Intel Corp warning about projected revenue ended in the 3rd quarter of 2003. But we've all seen those scary wounded creatures which lie twitching in films like Aliens - and then hit you with their tail when you think they are dead... so most of us weren't quite sure it was all over and waited another 6 months or so to see if the recovery was for real. Looking at the high number of storage companies which have already reported year on year revenue growth well in excess of 25% in 2004, we can safely say it's all over. But it won't be business as usual - a lot changes in 3 years.

At the end of a recession - the landscape of leading companies and technologies is never quite the same as it was at the start.

Contrary to what you might think recessions are periods in which innovation thrives. Because users don't have as much money to spend as they did in good times, they are more inclined to look at new technologies which offer cost savings or increase operational efficiency. Now that the recover is in full swing I thought it would be useful to take a look at some of the winners and losers of the 3 year US IT recession in the context of the storage market.

Winners:- disk to disk backup

Losers:- tape

The declining revenue in the tape library market in recent years wasn't just due to the recession. There's been a long term shift away from slow unreliable network tape backup to faster disk to disk backup which is perceived as being more reliable. Comparing the first few months of 2001 with 2003 - the tape libraries page on STORAGEsearch has dropped in popularity by 5 positions. And today disk to disk backup (which wasn't even a separate category in 2001) is now seen by 12% more readers than the tape library page.

Winners:- iSCSI, NAS and IPSANs

Losers:- Fibre Channel SANs

Although SAN gets tens of thousands of readers on STORAGEsearch), it is less popular than NAS (#4 most popular subject) or iSCSI (#6). Back in Q1 2001, the positions were reversed with SAN being more popular than NAS. During the recession there was a lot of consolidation in the Fibre-channel adapter cards market with many companies exiting the market, and increased market share going to the top companies. As users expected their ethernet networks to get faster anyway, the idea of networking their storage via IP (instead of installing completely new Fibre channel networks) was an attractive proposition. And when some tape vendors started saying that backup times on iSCSI were nearly as fast as those on FC, the decision not to migrate to SANs became even more compelling. There was no point in doing this if it cost more, involved learning about a new set of technologies and didn't give any worthwhile speedup. Staying with IP also won the "do nothing now" vote. If users waited long enough they would get all the advantages of SAN soon enough on cheaper and more familiar IP networks.

Winners:- solid state disk accelerators

Losers:- server sales

The solid state disks market (#2 subject on STORAGEsearch througoutht 2003) is too small at the moment to show up as a blip in server sales, but during the recession many users found that they could halve the number of servers (and associated licenses and sys admin effort) by attaching solid state disk accelerators to their networks and effectively doubling the speed of their applications.

In today's high end server systems - the main performance bottleneck is the speed of the storage system. Judicious tweaking in this area can save organisations huge sums of money. The only thing slowing down the wider penetration of this technology is that users and vendors have to have a deep technical knowledge of what the bottlenecks in their applications actually are. SSD acceleration is still some way off being a shrink wrapped plug and play solution, but its popularity indicates that a lot of people are looking at this technology. And when it gets simpler to use, it could have devastating affects on server CPU sales.

Winners:- Serial Attached Drives (SATA, USB, Firewire)

Losers:- Parallel Attached Drives (PATA, SCSI)

As manufacturers worked to increase the speed of hard disk interfaces, while reducing cost, serially attached storage became the dominant focus of their new product development efforts.

Throughout most of 2003 Serial ATA (SATA) was the #1 most popular page viewed on STORAGEsearch. During the recession, older serial disk connection technologies like USB and FireWire got mid life kickers in the shape of faster (but backwards compatible) respecifications. And the writing is on the wall for parallel SCSI, although the better late than never development of Serial Attached SCSI (SAS) shows a migration path for that technology too.

Winners:- data recovery services?

One of the more obvious changes in user behavior during a recession is that systems are not replaced with the same frequency as they were in better times. So the average age of disk drives deployed in PCs and servers becomes a year or so older. Also users are less likely to invest in buying new backup systems. As systems get older and start to approach the wear out part of their bath tub curve users can expect to see a greater incidence of disk and tape system failures which require the special skills of data recovery services. That change hasn't shown up yet in our reader statistics, but I think it might later...
storage history
the Top 10 SSD Companies
this way to the petabyte SSD
SSDs - the big market picture
Is the SSD Market Recession-Proof?
Branding Strategies in the SSD Market
Acquired, dead & merged storage companies
the Top 10 Most Popular Storage Searches Q1 2004
  1. Solid state disks
  2. Serial ATA (SATA)
  3. Backup software
  4. NAS
  5. USB storage
  6. iSCSI
  7. Flash memory
  8. RAID controllers
  9. RAID systems
  10. Disk to disk backup
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