Donning Our Swami Hats: Storage Trends for 2003


Well, it's that time of year again. January is almost over and we have heard more than our fair share of both useful and useless predictions for 2003. And although the folks at Enterprise Storage Forum are not in the "prediction" business (we don't have any crystal balls, tea leaves or swami hats), we thought we would find out from a few well-informed storage folks what they think this coming year holds for the storage industry.

During the third quarter of 2002, storage systems revenue was down 3 percent from the previous quarter, according to International Data Corp.'s (IDC) Worldwide Disk Storage Tracker market sizing data. In addition, overall disk storage revenue decreased from $4.9 billion in the second quarter to $4.74 billion in the third quarter of 2002, claims IDC. IDC also reported that revenue for storage area networks (SANs), network-attached storage (NAS), and direct-attached storage (DAS) decreased 6 percent, 10 percent, and 2 percent, respectively.

The decline in spending by companies is clearly the major cause, of course, and IT personnel are trying to do more with less, according to Mark Bradley, technology strategist at BrightStor Storage Solutions. "IT managers are also less in control of their expenditures and more than once, I've heard that the CFO is determining what is purchased, not the CIO or other IT management," he says. Rick Walsworth, director of product marketing at Maranti Networks, believes that IT spending has been practically shutdown and that customers are trying to maximize storage utilization, which will require more intelligence in SAN fabrics. "Application-Aware Storage Networking platforms will certainly increase storage utilization levels in 2003," says Walsworth.

Although these 2002 numbers may have created a dismal view of the overall storage market, they don't tell us all of the reasons behind the declining numbers. Walsworth believes that some of this decline is based on the changes that the NAS market has undergone in the past year or so. He says that the NAS flier functionality is slowly being removed from the storage arrays and more NAS "heads" are entering the market. "Switched NAS is a trend that started in 2002 and will continue to grow in 2003," says Walsworth. He believes that integrated SANs and NAS will be a strong system requirement going forward in 2003 and beyond.

However, according to Bradley, other than business slowdown, he says not that much has changed in the NAS market. "Capacities are up and backup of NAS-stored data is more available and reliable," says Bradley. "There are more vendor choices and thus more different OSes being deployed in NAS devices. We seem to also have gotten over the CIFS and NFS accessibility mismatches," he continued.

IDC also reported that revenue for storage area networks (SANs), network-attached storage (NAS), and direct-attached storage (DAS) decreased. I asked one of our storage gurus what he thought was behind this. Bradley said that because most SAN deployments are in big systems environments -- glass houses, if you will -- when mainframe spending decreases, so does SAN spending to some extent. "NAS capability fills some server functionality, so when more file server capability is needed, why not buy a NAS box instead of a server with large disk systems when a NAS unit is cheaper?" continued Bradley. He also said that DAS having the smallest decrease did not surprise him because he believes that DAS is and has been the predominant disk for PCs in general.

Page 2: The Outlook for 2003

The Outlook for 2003

For 2003, the big question is whether the numbers will increase, decrease, or stay the same. "Even with the shift to networked storage, there have been a lot of restrictions on IT spending," says Walsworth. He believes that as the economic situation improves, we can expect to see this trend reverse in 2003. Bradley agrees. "Most analysts, both storage and others, say things are turning around," he says. "The slow but visible economic recovery means more business, and more business means more data," he continued.

Both of our storage gurus agree somewhat that the economy has taken a toll on the storage market as a whole. "Storage has not been immune to the downturn impacting the entire sector," says Walsworth. "Customers are in a position where they need to do more with less and are looking for the infrastructure and tools that enable them to do this," he continued. Bradley, somewhat less optimistic than Walsworth, added that he does see some recovery and volume increase in 2003.

With all the talk about the economy and its affect on the storage industry as a whole, we wanted to know if the enterprise storage market was beginning to lose its luster. Bradley says that the enterprise storage market is becoming dulled as technology matures and product margins decrease with that maturity. "Stock price erosion is there and offers fewer marketing dollars to advertise and create luster. Perhaps the improved economy will help," he says.

According to another recent study, the number of U.S.-based small and medium sized businesses (SMBs) using one or more business process automation software solutions more than doubled in the last 12 months, from 490,000 to more than one million -- but what is driving the growth in SMB storage, and will it continue through 2003? Walsworth says that SMBs have been impacted as much, if not more, by the economic downturn and are trying to streamline business processes in order to reduce costs and improve business efficiencies. "Automation is obviously one of the ways that has been able to achieve these economies and you can certainly expect this trend to continue through 2003," he says.

Bradley seems to think the SMBs that stayed lean and/or took measures to stay viable over the past 3 years probably had the least to spend on storage. And, he also says that those who did needed to ensure that the human costs were kept in line as well. "Data always increases while capacity does not grow and the lean years have probably stretched us to use what we had. It's time to reprovision and try to regrow the businesses," continued Bradley.

Over the past year or so, some industry observers have been questioning if NAS really stands for Network Attached Storage or Not Always Secure. We wanted to know if there was any truth behind this observation, and if so, what is the storage industry doing to eliminate it? Although Walsworth was not inclined to address this question, Bradley seemed to find the quippy moniker rather amusing. "I hadn't heard that one. Pretty funny," he said.

However, on a more serious note, Bradley said that it's certainly true that businesses in general have counted on systems' and operating systems' tools for security, including the network components. And, because of this, says Bradley, many did not consider that SANs and NAS devices directly attaching to the fabrics and the fabrics being bridged to one another would require much in terms of device security. Bradley believes that most security concerns can be addressed by simply following available best practices. "Often, it's been reported that the 'default' password on a SAN switch is not changed after installation -- no one would ever do that on a computer system," he concluded.

Storage customers and storage industry professionals have many questions and quite a few answers surrounding the future of the enterprise storage industry. And although the economy is still on everyone's mind, many analysts feel that things are turning around. So, maybe as the economic landscape improves, we will see changes in the present restrictions on IT spending, which in turn will help get the storage industry out of its slump.

» See All Articles by Columnist Leslie Wood


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