What is going on in the storage market? Based on user forecasts of 60 per cent-plus growth rates, storage was set to be the bright spot of the Australian IT market. Vendors forecast prodigious growth rates, but are now finding their market as tough as any other.
IDC's numbers for 2001 show the Australian market for storage is a non-trivial $US393 million - surely enough for the storage vendors to at least smile as they keep their heads above water. But further examination of the IDC numbers shows that revenue is down some 15 per cent while the volume of gigabytes shipped is up by 63 per cent; simply put, the average price per gigabyte has nearly halved. Demand is strong but buyers will not pay nearly as much as they did in 2000.
EMC, the 250kg gorilla of the storage market, has lately lost a lot of weight, but though competing vendors are lining up to poach some of the gorilla's territory, they should be well aware that it has not lost much of its clout. Competitors, still gleeful about the retrenchments and the submarine value of their arch-enemy's once coveted stock options, mustn't forget the enormous influence EMC still has within Australian IT shops.
EMC's loss has been others' gain. Network Appliance (NetApp) has picked up a couple of highly regarded ex-EMC staffers, and the addition of such valuable and hard-to-come-by experience will go a long way to boosting its standing with customers and channel partners. With EMC breathing down its neck for leadership in the network attached storage (NAS) market, NetApp seems to be positioning itself to go further up market and compete head-on with the likes of IBM, Hitachi Data Systems and EMC.
Sun is a real problem child when it comes to storage. Despite its leadership position with servers, Sun has not been able to live up to its oft-stated goal of assuming a leadership role in external RAID controller-based storage. Before the announcement of the Hitachi-sourced SE9960/9910 last August and the SE6900/3900 series in February, Sun's external RAID controller-based storage products have generally been considered inadequate by both analysts and Sun's own server customers. Sun continues to lose sales of the external RAID storage to its own servers, and has negligible success in establishing a presence in other Unix platforms. However, the SE9900 series is winning new friends for Sun, and may be the beginning of a change in management attitude to storage.
At Hewpaq, (sic) storage looks like a business as usual operation now that the roadmaps have been announced without any big surprises. But the competitors have been swarming all over Hewpaq customers since September, certain that in a period of uncertainty they can turn the less loyal away from their supplier. Savvy customers, urged on by the analysts, see this period of flux as an opportunity to wring better deals out of their supplier. Major customer concerns centre on the loss of key sales and support staff and a reduced range of product offerings, a situation that will probably lead buyers to be more critical of acquisitions and more likely to get competitive bids. Like Sun, it has a highly regarded high-end solution sourced from Hitachi and they have been using it to great effect this year.
So for buyers of storage, if they can navigate their way through the confusing hype and SAN, NAS and Fabric attched storage (FAS), in-band and out-of-band virtualisation, fat disk and fast disk and confusing pricing, great deals can be had. But for the vendors, there is no sign of belt-loosening, and with buyers keen to get the best deal for their money there is no letup in sight this year.
Chris Morris is principal of Morris & Patryn.