The Mid-Range: An Untapped Market, Part II

IDC reports there are over 93,000 North American-based businesses with under 999 employees, compared to just 9,000 large companies with 1,000 or more employees. These "mid-size" businesses account for about half of North American companies’ spending on hardware, software, and other IT services, according to industry analysts.

To the storage industry, this means there is a large, virtually untapped market out there, as the mid-size businesses need storage just as much as their big brother counterparts. This is good news for both storage vendors and the mid-size enterprises, as these companies are finding themselves in a buyer’s market when it comes to purchasing storage products and services.

“Because of their size, the focus of most mid-range firms is on doing business — not on building storage solutions.” — Michael Heumann, AMCC

Let’s pick up where the first part of our discussion on the mid-range market left off.

Choosing Storage Vendors for the Mid-Range Market

There are some storage vendors and industry analysts who believe that a trend is emerging with many mid-size businesses tending to buy storage equipment from the same vendor that sold them their services. “When we’re talking about solutions integrators, mid-size businesses want to deal with a reputable and reliable solution provider,” says Gabriel Lopez, director of product management, FalconStor Software, Inc.

Lopez says that this can help both storage vendors and solutions providers if they work together, as the storage vendor can provide the functionality and flexibility for the integrator to put together a solution that effectively addresses the customer’s technical and financial needs.

Michael Heumann, director of HBA Marketing at Applied Micro Circuits (AMCC) , sees it more as a challenge for the storage vendors, because even though most customers will always look to buy total solutions rather than pieces that they integrate themselves, the challenge for storage vendors today is to identify those buying patterns in mid-size businesses and develop the right partnerships so that they can deliver products needed most by customers without trying to change their buying behaviors.

Heumann, as well as other industry vendors and analysts, also believes that mid-range firms will most often only go with those vendors that can provide them with complete solutions without having to pay too much of a premium to do so. “For many IT needs, large server vendors can service that market very well, and the brand name and perceived reliability that these large vendors bring is often very important to mid-size businesses,” says Heumann.

At the same time, he points out that the ‘white box’ server market is still alive and healthy, with these vendors often filling important niches and/or providing solutions that may not have large enough markets for the big server vendors to be interested in. “Both delivery mechanisms are important, and ultimately customers will go with the vendors who provide real value to them, whether they are server vendors, service vendors, or storage vendors,” concludes Heumann.

Jeff Silva, vice president at MaXXan Systems, Inc. agrees and thinks mid-range companies will go with the storage vendor that will give them the best bang for the buck. Servers have become commodities, he says, and smaller companies look for price, ease of procurement, and quality in terms of vendor reputation.

Page 2: Understanding the Needs of Mid-Range Firms