Handicapping storage vendors is like trying to pick the winner of a horse race — depending on how they evaluate the field, veteran watchers (of both horses and storage) can easily come up with different predictions, and there's no telling who's right until the finish line. So with that caveat in mind, here's our look at who's out in front of the enterprise storage pack.
Fortunately, there are some statistical indicators that offer some clarity to an otherwise confusing picture. Relying on stats too heavily isn't always a good idea, since they tend to favor the mighty — the rising stars are largely off the radar screen until they gobble up at least ten percent of the market share in a particular niche.
That said, we'll start with the easy part — who is putting up the best numbers. According to the latest numbers from IDC, the storage sector as a whole is relatively healthy. Demand for disk storage systems capacity last year surged 57.7% in terms of petabytes and now represents a $14.2 billion market. That's a 4.7% revenue boost in external disk storage systems compared to 2003.
"It is encouraging to see continued acceleration in the annual growth rate for external disk storage systems petabytes," said Brad Nisbet, program manager in IDC's Storage Systems Program.
Looking more closely at the numbers, EMC and Network Appliance not only continue to dominate specific areas of the storage sector, but are also posting the highest gains in revenue and market share among the largest vendors. EMC leads in the external disk storage systems market with 22% of the revenues, and year-over-year revenue growth during the fourth quarter was 15.2%. That saw the company wrest the number one crown from HP.
In total network storage, EMC is also king with a 29% revenue share. Meanwhile, NetApp posted the strongest year-over-year revenue growth for the quarter among the largest vendors, with 29.7% growth. IBM and HP, on the other hand, lost ground in several areas last year. That said, it's not easy dislodging a couple of 8,000-pound gorillas, so expect these companies to show more health as the storage market continues to rebound.
"The rising tide will lift the big boats such as EMC, HP and IBM," predicts Mike Karp, senior analyst at Enterprise Management Associates. "They have plenty of technology that can be applied usefully to the SAN space, both on the FC and iSCSI sides."
That tide will also sweep along some mid-sized storage players who have established a firm technology footing, a loyal customer base and are pushing the cutting edge of storage. FalconStor Software of Melville, N.Y. (www.falconstor.com), for example, has a VTL (virtual tape library) appliance that provides key services to both Fibre Channel and iSCSI SANs. Xiotech Corp. of Eden Prairie, Minn. (www.xiotech.com) continues to make headway in the midrange with its clustered M3D arrays. McData Corp. of Broomfield, Colo. (www.mcdata.com) appears to be acquiring its way into SAN switch supremacy with the recent acquisition of Sanera and CNT, although Brocade and Cisco remain hot on its trail. And CommVault Systems of Oceanport, N.J. (www.commvault.com) remains at the top of the list of private storage companies most likely to go public.
Ruling the NAS Roost
NetApp rules the roost in NAS, with 36.9% revenue share, with EMC second at 32.8%. NetApp also leads in iSCSI with 38.9%, followed by EMC with 25.6%. But it's on the NAS fringes that you find the more exciting developments.
Virtual Iron Software (www.virtualiron.com) (formerly Katana) of Acton, Mass., has launched a software-based virtual computing platform for the Linux platform.
"The wildest company I've seen in a long time is Virtual Iron," says Steve Duplessie, founder and senior analyst at Enterprise Strategy Group. "They will make the term 'virtualization' have real meaning, and have the potential to change the way IT runs in the future."
Other up-and-comers showing promise include Isilon Systems of Seattle (www.isilon.com), BlueArc Corp. of San Jose (www.bluearc.com), Terrascale Technologies (www.terrascale.com) of Montreal, Exanet of New York (www.exanet.com) and PolyServe Inc. (www.polyserve.com) of Beaverton, Ore.
While the storage laggards with the highest profile (in terms of IDC's 2004 market numbers) are HP and IBM, there are a few others who have struggled in recent times, analysts say, primarily in the storage security arena. Veritas is one vendor in need of a more comprehensive approach to SAN security — something the storage software vendor may get help with when it is acquired by Symantec.
"This is not just a Windows problem," says Karp. "Veritas also got involved with Linux/Unix, and the problem exists there too. The bottom line is that the company has no clear stance with regard to security."
Storage security is one area that analysts say should be even hotter than it is. Growing connectivity, greater storage management access, the need for disaster recovery, and data compliance, privacy and preservation requirements have heightened awareness of the vulnerability of storage networks. Analysts predicted big things from the likes of NeoScale Systems of Milpitas, Calif. (www.neoscale.com), but Karp says the promise remains largely unfulfilled.
Vendors like CA and IBM have evolved solid approaches to security, as have a number of smaller, non-storage-focused vendors, stealing some of the thunder from the pure-play storage security vendors.
"Vormetrics, Decru, NeoScale, Kasten Chase and other companies providing encryption software for SANs have not made much headway in the marketplace during the last two years," says Karp.
That said, recent high-profile incidents like Bank of America's loss of data tapes could revive interest in the sector.
Some things have certainly changed in storage — buzzwords like virtualization, storage security and information lifecycle management (ILM) have seen some companies rise and fall as fashions change — yet much remains as it was a few years ago.
Two names have remained constant, regardless of fad or fashion — EMC and NetApp. EMC closed out the roaring '90s as the SAN king, and NetApp came out of nowhere by creating the NAS category to rule that field. Half a decade later, that dual-monarchy structure persists. And the signs are that it will be with us for some time to come.
"Throughout 2004, EMC and NetApp performed consistently well, benefiting from increased focus on software, clear strategy and great execution," said Natalya Yezhkova, a Storage Systems analyst at IDC.
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