Network Storage Boom

SAN MATEO (04/18/2000) - Times are good for Network Appliance Inc. and for CEO Dan Warmenhoven. A booming storage market and recent deals with FogDog.com and Yahoo have nearly doubled the revenue of the network-storage technology provider over the past year. And as e-business continues to mushroom, few indicators point to a slowdown in storage growth anytime soon. Warmenhoven sat down with InfoWorld reporter Dan Neel to discuss the rapidly growing storage market.

InfoWorld: How big is the storage market right now, and how do you see it changing?

Warmenhoven: First of all, the total storage market that's external from computer systems is somewhere in the range of about $30 billion this year. And it's growing roughly 15 percent per year, so it's already a huge market growing at a pretty sizeable clip. More importantly, a couple of recent studies looked at IT spending broken down between servers and storage, and a few years ago servers dominated. It was [a ratio of] about 75-to-25 servers and storage.

Right now we're at the crossover point where the spending on servers and storage is roughly equal. And the estimate is that by 2003, storage will be 75 percent of IT dollars and servers will be 25. And the study even made the quote that by 2003, computers or servers will be secondary to storage. There the entire server-storage relationship flip-flops.

InfoWorld: Why do you think that relationship will reverse?

Warmenhoven: I think there are several reasons for it. Storage systems, or online storage in particular, is the key to online information. The volume of information that people want to have immediately accessible online -- whether it be for traditional business purposes like data warehousing, or whether it be for the new economy purposes like Internet sites and so forth -- is enormous.

So all that takes more and more storage, which means storage becomes essentially what it should have always been, the center point for IT strategy, shifting the thinking away from computers and applications and more toward the information itself. And coupled with that, IT can now start thinking about a storage architecture or an information management architecture that's different from computers and applications.

InfoWorld: Have managed storage services such as Internet storage taken the lead in that thinking?

Warmenhoven: I think managed services are just one more point along the spectrum. For years now, companies have outsourced Web sites and things like that to hosting companies, such as Exodus or Frontier. But those kinds of services provide a value-add of, actually, not just hosting where the systems go, but in terms of managing the information content for backup, disaster recovery, things of that nature. And so they take over the system-administrator function as well, which is [a key component], especially when you're talking about large volumes of storage and large volumes of information.So they have taken the outsourcing model to the next level, which is really a managed storage service. And I think that's going to be a very popular kind of alternative for a lot of customers -- for the online component in particular.

It is so difficult these days to hire enough IT staff, especially qualified professionals, that if you can find somebody who will perform the services for you, it's probably a reasonable thing to consider.

InfoWorld: How much memory capacity should an e-business, or any business requiring volumes of data storage, plan for?

Warmenhoven: It really is a case-to-case basis. A lot of it depends on the type of information, the frequency of access, [and] also the business requirements.

If they're looking to do the disaster-recovery scenario where they have the information mirrored on a second site, and it has to be kept synchronized, that's obviously going to require more bandwidth. So it really varies based on their needs [and] the pattern of access. It really is a very complicated answer. I'm not sure I can give you a single answer. It really is a customized kind of condition.

InfoWorld: How important is offloading storage from the main server?

Warmenhoven: You know, I've been a believer for some time that computers make very inefficient data managers and data-access devices. In fact, the whole model for Network Appliance was built around the notion that computers make terrible file servers. They're just generally awkward to manage because they were designed for some other purpose, mainly computation. And so the whole strategy here is to go build a system [that] is faster, simpler, more reliable, because it's customized to this set of application requirements, being mainly information access and data access.

And the thing that most people have difficulty believing is that we can provide information access over a network that's faster than a local disk in most cases. Now that is really hard to fathom, right? Because typically you think, 'If the disk is screwed into the backplane of my computer, it's got to be faster.' But the answer is no, not anymore, because the technologies have shifted such that the bottleneck now is the disk drive itself and no longer the network interface.

InfoWorld: You mentioned bandwidth. Where do you see bandwidth changing storage?

Warmenhoven: Well you know, I see bandwidth kind of coming in what's called three different chunks. The first chunk is that which is in the server room and interconnects the servers and the storage. And that's gone from megabit to the primarily gigabit speeds we have today, and going very soon -- probably in the next couple of years -- to 10GB speeds. So at that point it actually looks like a virtual backplane. Now you move outside the server room, right, and you're into, let's say, the wide-area backbone chunk, and I'm a big believer that the evolutions in fiber-optic technologies are going to increase the bandwidth through this backbone quite dramatically. And as that occurs, I think you're going to see that the backbone bottlenecks decline. You used to hear stories a few years ago about the meltdown of the Internet because the backbone couldn't scale. I am not a believer that that's going to happen; I'm a believer that the bandwidth is going to be plentiful on the backbone. The third chunk is the end points, the tail circuits, the last mile. I am a big believer there in broadband technologies in general -- I personally think DSL [Digital Subscriber Line] is going to be the most widespread one -- but I think they're going to address many kinds of issues at the last-mile transmission gap. And with that, I think you're going to see that, given a fatter pipe, both from the origin point all the way through the backbone, you're going to see an increase in richer content.

InfoWorld: What was the biggest challenge for Network Appliance following the Yahoo deal?

Warmenhoven: I'd say it was probably globalization. Yahoo, which I think has somewhere in the range of about 50 million free e-mail accounts, has about 10 million of those in India. We don't have a lot of presence in India at the moment. Yahoo truly is a global [phenomenon]. And we were not necessarily in every geography where they had a major presence.

InfoWorld: The changing price of DRAM has gone through some fluctuations recently. Has that affected your company?

Warmenhoven: No, not particularly. Actually we don't consume a whole lot of DRAM. By today's standards, we're a very small user of DRAM. In fact, I think that the current system, our high-end system, I think has a maximum configuration of 1 gigabyte of DRAM -- a thousand [megabytes], which by today's standards is not very much.

InfoWorld: Is that just for throughput?

Warmenhoven: That's correct; we use it primarily for the data buffers. What we do, they provide the high-performance disk access I was referring to. When a client system goes to read a piece of information, we not only read that, we read ahead 100KB in the same file. And the reason for that is that odds are when you go do a read, you're probably going to do a subsequent read. And so the idea is to have the data in memory already.

InfoWorld: Share with us your insight on the question of disk memory vs. static memory.

Warmenhoven: This discussion has gone on for years, and I've looked at the trend lines between magnetic media or solid-state memories and things like that. And I don't see them crossing over or getting close enough for one to displace the other for quite some time. And if you follow the last few years, I think actually the cost of disks, in terms of cost per gigabyte, is coming down at this point faster than memory. And it's not just the rpm; it's the density.

I mean [during] the last two years we've seen basically an eight-fold increase in density in disk drives. Two years ago this month, we were shipping 9GB drives. That was the high end. Then it went to 18. We're now shipping 36's, and we have in hand samples of 72's. That's an eight-fold increase in two years.

InfoWorld: What do you think is the next big thing in storage?

Warmenhoven: Actually I think the next big thing is going to be simpler ways to manage it and access it. You know, the issue has gotten to the point where the density has gone up enormously, and now the question is, how are you going to manage all that stuff?

So providing easier management tools, I think, is the key piece, and information-access tools is the key piece in managing storage. This is going to keep getting denser, and incidentally, I didn't point it out in the last answer, but the 9, the 18, the 36, and the 72 all had the same price when they came to market. No price differential, appreciably, at the time they were introduced. And the question now is, 'OK, I've got lots of it; now what do I do with it?' And it turns out that the disk capacities and the volume [of] information people want is trending up faster than tape-drive speeds, so you can't back it up anymore. And so [with] the information management, ... instead of backing it up, now people are looking at remote replication and a variety of other things like that as alternatives to backup. So information management in general gets to be what the new, new thing is.

Network Appliance Inc., in Mountain View, California, can be reached at www.netapp.com.

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