The Enterprise Storage Market: What It Will Take to Win This Year?

By Bill Stevenson, executive chairman at Sanbolic

If you are an equity investor in the enterprise storage market, you are probably asking yourself this question: do you bet on the new kids on the block such as Nutanix, Pure, Nimble, SimpliVity and Sanbolic?

The value curve is indeed bending in favor of the new players – especially for the enterprise storage component and flash vendors (see chart below). Who wins in 2014 will largely depend on the new players’ ability to attack the Tier 1 enterprise storage market – traditionally the purview of legacy array vendors.

How the New Storage Players Are Addressing the Enterprise Storage Opportunity

Most of the new vendors are acutely aware of the need to move beyond narrow segments. Fusion-io saw tremendous growth on the strength of their sales into the data centers of Facebook and Apple (more than 50 percent of total sales) but then struggled to continue that growth across the broader enterprise market. Violin and IBM FlashSystem flash arrays are great for accelerating Oracle databases, but their challenge remains identifying and growing into new segments. Nimble has seen great reception for its hybrid arrays in SMB customers; they are now focused on cracking the enterprise code.

Legacy storage array vendors are acutely aware that the large public cloud data centers have long since moved away from their products. Facebook found that NetApp storage arrays were much too expensive when the number of photos being uploaded to their site exploded. As a result, Facebook built its own storage from commodity servers using Fusion-io flash cards and proprietary software. Google and Microsoft have taken similar approaches.

Most enterprise storage customers tend to be conservative, and only a few of them are likely to rip out their existing infrastructure and replace it with a brand new product. The data housed within those storage arrays is a core business asset that has to be highly accessible, protected and managed effectively. However, as the cost of housing that data has been growing exponentially, an increasing number of these traditionally shy enterprise customers are opening up to the possibility of weaving in new technologies around the edges, especially if such technologies offer the real promise of improved enterprise data management.

Enterprise Value in Billions of Dollars

Source: Data from 2/7/13 and 2/7/14. EMC EV net of 79.7% VMware stake. Source: Ycharts

5 Must-Have Capabilities for Winning in the Enterprise Storage Market

So what will be required for flash appliances and software-defined storage to move into core Tier 1 and Tier 2 applications? They will need the following five must-have enterprise storage capabilities that result in real, disruptive economics and performance:

1. Scale-out, HA block and file architecture. Winning storage solutions cannot be limited to two-node clusters; instead, they must offer support for multi-petabyte environments and performance scale-out across multiple controllers. They also must support geo-distributed workloads, not just disaster recovery/hot failover.
2. Compelling economics. To win in the enterprise market, storage solutions need hybrid flash and HDD persistent storage volumes—and the flexibility to match performance/cost to specific workloads. They should be built on commodity hardware and require dramatically less space and power. As far as specs, they must offer, as a bare minimum, less than $0.5/IOP, less than $0.5/GB (hybrid), more than 10 million IOPS/rack and more than 1 million IOPS/KW. Most of these specs have already been greatly surpassed, but it will be hard to get a lot of traction without at least hitting them.
3. Extensive data protection and efficiency features, such as RAID, replication, snaps, clones, dedupe, intelligent data placement, etc.
4. Granular Quality of Service Management. Solutions should offer guaranteed SLAs for critical workloads without overprovisioning, not just throttling of bandwidth hogs.
5. Simplified Management. Ultimately, the customer wants to manage data in a unified process. New solutions need to move toward this goal.

Few, if any, vendors meet all these requirements yet. It is hard to develop efficient scale-out technology quickly if the product was not initially designed to do so. It will be even harder to create disruptive economics by stuffing flash into an old storage array.

Dedicated storage controllers on commodity servers is the architecture used by most of the new flash storage system vendors, but the flexibility to run on converged compute/storage architecture will become increasingly important. Nutanix and SimpliVity are examples of this approach. We wouldn’t be surprised to see converged compute/storage become a core element of Cisco’s Unified Computing System.

The interesting question is how customers will choose to buy new storage technologies. Most are accustomed to buying a hardware box they plug in and then spend days or weeks configuring. At a recent Goldman Sachs conference, the CEOs of Nutanix and SimpliVity agreed that customers currently prefer buying an appliance, but that “software only” sales deployed on commodity hardware are likely to grow in the future. Given that storage is really about data architecture, not hardware deployments, will storage become a larger practice area for system integrators over the next few years? It could accelerate adoption in the Tier 1 accounts that legacy vendor are working to protect. In any case, a lot of change is coming.