The Politics of Storage Page 2


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The 800-Pound Gorilla Crashes the Storage Scene

So what happens when the number one vendor of mainstream networking steps into a market already occupied by other successful vendors? On the surface we can expect a fair amount of fireworks and shifting vendor alliances, while in the subterranean depths we can expect to hear the rumble from massive collisions of capital. Cisco’s market capitalization is powers of ten greater than most traditional storage companies, and this mass of capital has enabled it to pour significant resources into creating SAN products.

Its economic clout has also enabled Cisco to begin influencing the SAN market, evidenced by its fast track qualification with some major storage vendors and OEM agreements. These alliances are marriages of convenience, though, not of true love. Potential domestic disputes include virtualization, which the storage manufacturers would like to tie more closely to their arrays and which Cisco would like to position in the fabric.

Then there's the uncertainly as to whether Cisco, through acquisition, will itself become a storage vendor or be content to compete for the SAN interconnect. Major storage suppliers cannot ignore Cisco’s presence in mainstream networking, but divorce papers are inevitably being drawn up just in case Cisco oversteps its bounds.

Massive market capitalization is also a useful tool for simply buying market share. Although it may not seem like good business practice to slash prices on new products, give products away, or pull out competitor’s products at remaining book value simply to get your own installed, losing a few hundred thousand dollars up front is sometimes a suitable means to secure additional millions in real sales down the road.

And even if a customer really likes the features and functions of her current SAN vendors, it’s hard to say no to the vendor who is offering its product for free. Still, while this is an available tactic in the 16-port switch arena, it's doubtful that even a Cisco can afford to buy out a significant installed base of director-class switches in the data centers.

The entry of a traditional networking vendor into the SAN market is impacting the political spheres of influence within IT shops as well. For decades, storage managers have made their own decisions about product requirements and vendor selection. Insulated from the broader corporate IT networking hierarchy and volume discount structures for routers and network switches, storage managers have been the recognized and unchallenged experts on SAN sourcing.

Now, however, the networking vendor who has never taken the storage manager to lunch is making recommendations to upper management on which Cisco SAN switch would be best to replace the incumbent Fibre Channel vendor. The purchasing manager, seeing all the money that can be saved through the existing volume discounts for network gear, is elated. Well before the 9th hole, the regime change of vendors is complete, with the storage manager receiving the news well after the fact. This scenario is, of course, an exaggeration — it may actually take more than 9 holes to close the deal.

Page 3: The Dynamics of Change Are in the Air

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