Storage UPDATE, December 16, 2002

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(below COMMENTARY)

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December 16, 2002—In this issue:

1. COMMENTARY

2. NEWS AND VIEWS

3. ANNOUNCEMENTS

4. RESOURCES

5. NEW AND IMPROVED

6. CONTACT US

1. COMMENTARY
(contributed by Elliot King, [email protected])

The latest numbers from IDC, a market research company, reflect that the data storage market has begun to parallel the mainframe computer industry in one crucial way: Increased capacity doesn't increase vendor revenue. For most of the 1990s, mainframe vendors generally reported that each year they sold more MIPS, the primary measuring unit of mainframe-computing capacity, while revenues consistently fell. The situation is similar in the storage market, in which the increase in the number of gigabytes per unit sold hasn't offset a corresponding decline in dollars per gigabyte sold.

According to IDC, the third-quarter 2002 revenues that disk storage systems generated worldwide dropped 3 percent, as compared to the second quarter. Revenue that Network Attached Storage (NAS) and Storage Area Networks (SANs) sales generated declined more sharply than the overall market: Open SAN sales diminished 6 percent, and NAS plunged 10 percent. Overall, the external storage market, which includes both network-based and direct-attached storage, fell 5 percent.

The revenue drop in the SAN and NAS markets presents a misleading picture of the contribution SAN and NAS technologies have made to the industry. SAN and NAS continue to emerge as the dominant approach to storage in many enterprises. Gartner reports that in 2001, network storage represented approximately 55 percent of all external storage systems. That number is expected to climb to 80 percent by 2006.

The same factors that are fueling network storage growth are dampening revenue growth. As disk prices fall, companies can deploy drives with more capacity but that cost less on a per capacity basis. Also, with SAN, companies can deploy fewer, larger SANS with the same number of people. Another contributing factor in decreased revenue is the continued improvement in storage management software. Management tools let administrators use storage resources more efficiently; the amount of redundant capacity that enterprises need to maintain is shrinking. Finally, the overall growth in resource consolidation over the past 2 years has eliminated many department-level systems. As companies centralize their IT resources, the need for smaller distributed data storage nodes has eased.

Shrinking revenues have led to fierce competition between the major data storage vendors, a group that includes both third-party vendors such as EMC and Network Appliance (NetApp), and larger server vendors such as Hitachi, Hewlett Packard (HP), IBM, Sun Microsystems, and now Dell. According to IDC, by revenue, NetApp has grabbed the market share lead from EMC in the NAS arena, garnering 38 percent of the market, compared to EMC's 31 percent. In Open SAN, HP claimed the top spot with a 30 percent share of the market, compared to 27 percent for EMC. EMC, however, continues to lead in the combined network storage market. EMC sales represent 28 percent of that market.

In the overall storage market in 2002, HP retained its lead with 27 percent of market share, followed by IBM, which held 20 percent. Hitachi, which purchased IBM's disk drive business, saw the biggest jump in sales, with revenues growing 23 percent quarter over quarter.

As data storage vendors scramble to grab or maintain market share, they're beginning to forge interesting alliances. Perhaps the most promising alliance is EMC's partnership with Dell, which calls for Dell to manufacture and market a model in EMC's entry-level CLARiiON line of storage solutions. The deal lets EMC market beyond its traditional Fortune 200 stronghold and puts Dell on the map as a storage player. IDC reports that Dell's storage revenues jumped 70 percent quarter over quarter in 2002. The EMC deal has helped Dell bring 1500 new customers into the fold, Dell reported.

For the short term, exploding capacity and falling prices are good for end users. Vendors are working hard to attract and retain customers and are heavily investing in new product development and adding features and enhancements to their existing products.

In the long run, however, declining revenues signal a significant danger for both vendors and their customers. If the market continues to shrink--IDC projects a 20 percent drop in revenues in 2002 following the company's 21 percent drop in 2001--a shakeout is inevitable. With fewer market players, innovation could come to a halt, which augurs poorly for storage in general. To return to the mainframe analogy, even though vendors continue to sell more MIPS every year, mainframes have long since ceased to be the primary engine in most IT infrastructures.

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2. NEWS AND VIEWS
(contributed by Keith Furman, [email protected])

EMC announced a new Network Attached Storage (NAS) system: The EMC Celerra NS600 combines EMC Celerra's enterprise NAS features with the high availability and cost advantages of EMC CLARiiON storage systems. The new system is meant to offer competition to Network Appliance (NetApp).

The Celerra NS600 is available immediately and starts at $167,000 for a 1TB configuration. You can configure the Celerra NS600 in either a high-availability mode or for maximum performance--or you can convert from one mode to the other as your business needs evolve.
http://www.emc.com

3. ANNOUNCEMENTS

"The Insider's Guide to IT Certification" eBook is hot off the presses and contains everything you need to know to help you save time and money while preparing for certification exams from Microsoft, Cisco Systems, and CompTIA and have a successful career in IT. Get your copy of the Insider's Guide today!
http://winnet.bookaisle.com/ebookcover.asp?ebookid=13475

Networking UPDATE brings you the how-to tips and news you need to implement and maintain a rock-solid networking infrastructure. We'll explore interoperability solutions, hardware (including servers, routers, and switches), network architecture, network management, network security, installation technology, network training, and WAN disaster recovery. Subscribe (at no cost!) at
http://www.winnetmag.com/email/networking

4. RESOURCES

Forum participant "BertGreen" is using a standard Windows backup for Windows 2000 Server with Microsoft Exchange 2000 Server. When he loads the backup, however, it locks for about half an hour. If you can help, join the discussion at the following URL:
http://www.winnetmag.com/forums/messageview.cfm?catid=46&threadid=50891

5. NEW AND IMPROVED
(contributed by Carolyn Mader, [email protected])

Auspex Systems announced CogniStor, technology that shares file changes with a variety of enterprise applications to speed business operations. Based on Auspex's core network storage engine, the technology can notify targeted applications when a file is created, changed, or accessed. The first two Auspex products to integrate CogniStor technology are IntelliSnap and IntelliScan. For pricing, contact Auspex Systems at 408-566-2000 or 800-428-7739.
http://www.auspex.com

LXI announced that Tape Tracker 3.5 is certified for Hewlett-Packard's HP OpenView Storage Data Protector 5.0. Tape Tracker consolidates tape information from multiple backup servers and network backup products. The solution lets you manage containers and slots for vaulting and centralizes scratch pool management and tape management reporting. For pricing, contact LXI at 972-444-2323 or 800-226-6526.
http://www.lxicorp.com

Have you used a product that changed your IT experience by saving you time or easing your daily burden? Do you know of a terrific product that others should know about? Tell us! We want to write about the product in a future What's Hot column. Send your product suggestions to [email protected].

6. CONTACT US
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