The Return of Dot-Com Storage

First came Google, with an ambitious move into enterprise data management and plans for online storage, followed by Amazon with a Web storage service.

Yahoo, MSN and AOL, meanwhile, have their own online storage ambitions. So what’s going on?

Certainly at the consumer end of the scale, “dot-com storage” is alive and well. My DSL supplier, for example, has effectively supplanted Microsoft Outlook by offering 10GB of free online storage for e-mail messages. I can now retrieve them much faster than I ever could on Outlook, and I can purchase more storage if I ever need it. Meanwhile, I have been using @backup as my online backup provider for years — every day, the changes to my documents are uploaded and I can restore any file I like should anything happen to my hard drive or laptop.

But the latest rumblings go far beyond that. Some say the arrival of Google and Amazon could mean that the “dot-com” moniker may be returning to the world of enterprise storage. Is it possible that we could soon see mid-sized and even large companies using one of these consumer giants to host all their enterprise storage, and paying far less than they would by supporting their own IT infrastructure? Could Google, Amazon and others soon be offering large scale utility-like storage services to the business world?

“Google and Amazon may do well with unlimited online storage for the consumer and perhaps the low end of SMB, but I really don’t see it as an enterprise play,” says Mike Karp, senior analyst with Enterprise Management Associates. “It does appear, though, that dot-com storage is back, though it has morphed significantly.”

Dan Tanner, an analyst at storage consulting firm ProgresSmart, agrees that the storage establishment has little to fear — at least for now.

“Google and Amazon are consumer plays, though in years hence they may move it to professional and small business versions,” says Tanner. “There is no need for EMC, NetApp or HDS to be worried any time soon, as enterprise storage is not the core competency of these consumer-driven companies.”

Storage Bubble

Dot-com storage, or the storage service provider (SSP) model, was initially a product of the late 1990s boom. Every part of business and IT, said the proponents, would be taken up as an online service and delivered better and cheaper than by old-fashioned “brick and mortar” companies. The model was propelled forward by easy access to venture capital and the lack of pressure to produce profits. But then came the crash.

In the world of storage, Tanner reports that the high-water mark for dot-com storage occurred a few years back, with around 18 SSPs in existence. Notable failures included Xdrive, StorageWay and Storage Networks (SNI).

“These were internet bubble creations going after market share and hoping for advertising revenue that never came,” says Tanner. “They lacked the expertise to run their op centers, or couldn’t afford to pay for it, or were too lax on security.”

At that time, enterprises weren’t ready to trust them for security, business continuity or disaster protection. And that was before 9/11. Today, with much greater awareness of security and an array of compliance rules to deal with, Tanner believes there is no way that such a model could ever prevail, no matter how it presents itself.

Some businesses, though, are demonstrating willingness to utilize backup service providers such as AmeriVault, LiveVault and Iron Mountain, while others like FalconStor are offering DR services. But even there, it tends to be the small and medium-sized business (SMB) market that sees the value, with large enterprises leaving the latest wave of SSP services very much alone.

Making Sense of Data

But the reinvention of the SSP is manifesting itself in several interesting directions. Some storage firms are even embracing the arrival of Google and Amazon with open arms. Kazeon Systems, for example, has teamed up with Google to lend information classification expertise to Google’s enterprise search functions.

“I think we are seeing a natural evolution of these companies’ businesses, as the Web is primarily about delivering services and storage is a natural fit for a services model,” says Troy Toman, vice president of product marketing at Kazeon. “If you look at the buzz around enterprise computing evolving to a utility model, you will see that the first part of the infrastructure to run like a utility (a centralized service within the organization, chargeback models, etc.) is the storage layer.”

Toman does not discount the possibility that these internet giants may even evolve their early offerings into enterprise-class services. He points to Salesforce.com as one example of a new wave of hosting success. Google, too, is already providing products such as the Google Search Appliance to thousands of companies.

While Toman doesn’t believe the storage vendor community should be worried, he says many are already paying close attention. Just as companies such as Oracle and SAP had to adapt as the Salesforce.com model gained strength, the large storage vendors are now taking notice in case a Web services model gains momentum. To make his point, he comments that Kazeon’s technology is used by Google in order to take search deep into the storage infrastructure, yet at the same time Kazeon is also partnering with NetApp to bring that same capability to market.

Kazeon’s Google work involves the indexing of enterprise storage. It works in tandem with Google’s Desktop Search and the Google Search Appliance, which are aimed at searching local system data and shared content from Web sites and selected file servers. Kazeon, on the other hand, is focused on indexing and searching the hundreds of millions of files that are scattered across network servers, file archives and backup environments. By bringing both of these solutions together, it may be possible to catalog all of a company’s data.

Stored data, after all, is relatively invisible as it exists in hundreds of file formats and is spread across thousands of servers. By importing technologies from the Web into the storage infrastructure, you open up a whole new world of possibilities about how to leverage, manage and protect information assets.

“I think we are moving towards a day when all storage will be automatically indexed and classified much like we see with the Web today,” says Toman. “There are companies out there today that have almost as much information inside their corporate network as is contained on the entire internet.”

Adding Value

Karp sees efforts by Kazeon and others as the way forward for so called dot-com storage. He doesn’t believe Google or anyone else can really make an economic case for a pure storage play online. But by adding special values to traditional services, SSPs may make headway and gain serious market share. Such companies, though, would probably have to hold specialized expertise in a specific niche in order to add real value. Coupling backup and recovery with compliance in a narrow vertical is one example.

“It might be possible to make a business case by taking care of something like backup and SOX compliance,” says Karp. “Companies that focus on a niche can do very well with online storage services.”

That said, only time will tell if we are witnessing the resurrection of dot.com storage. Even with Google and Amazon entering the arena, it may never develop beyond an elaborate consumer and home office-type market. But with the low-end being largely neglected by the storage mainstream, any advance in this sector could be welcomed by millions of individuals and small businesses. Bolstered by their own storage breakthroughs and economies of scale, Amazon and Google clearly believe they’ve found something to offer.

“The fact that Amazon, Google and who knows who’s next had to go think way outside the box in terms of creating storage and compute grids that worked functionally and economically in the new world should be applauded,” says Steve Duplessie, senior analyst and founder of Enterprise Strategy Group. “If they can turn that into a product or service, good for them.”

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