Outsourcing to Impact the Storage Market

SAN won't be the only trend happening this year in storage.

Enterprise Storage Group Inc. analyst Steve Duplessie predicts more companies will be outsourcing their storage this year. The firm forecasts companies will spend 60 percent of their capital on information technology costs for storage experts, products and services.

Availability is critical, and companies lack the infrastructures and experts to manage storage, Duplessie said. It will be easier for firms to "find a company that lives and knows storage management, and let them worry about it, he said."

As for firms leading the outsourcing charge, Storage Networks Inc. in Waltham, Mass., tops the list, followed by Exodus Communications Inc. in Santa Clara, Calif., and Level 3 Communications Inc. in Broomfield, Colo.

But not everybody is convinced about outsourcing.

BankBoston's Hermant Kurande said outsourcing will catch on for enterprise storage management, but it still has drawbacks.

"I need to look at the cost model and see a real justification and tangible needs for outsourcing," said Kurande, senior manager of treasury infrastructure at the Boston-based bank. "It's a difficult pill to swallow - the information is intellectual property of every corporation and to keep it elsewhere is difficult to comprehend."

What won't be difficult to comprehend is the intensified competition this year.

John McArthur, an analyst at International Data Corp., said companies will battle to roll out "credible" products and shift from high-end to midrange products.

Hopkinton, Mass.-based EMC Corp. will continue to lead the storage market but will be challenged to integrate Clariion products, he said. IBM and Compaq Computer Corp. will be heavy players, while smaller firms such as Carlsbad, Calif.-based Dot Hill Systems Corp. and Tinton Falls, N.J.-based ECCS Inc. will need to specialize in certain storage facets to survive, McArthur added.

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