There's a delicate balance of power among storage vendors, but
small tech upstarts might tip the scales.
In the storage systems space, there have been only a handful of
players -- EMC, Hitachi Data Systems (HDS) and IBM -- that have
truly controlled the high-end enterprise array market.
These vendors fight over billions of your dollars every year; much
more than that if you count all of the ancillary stuff surrounding
the hardware. If a vendor can get the "core," it can usually find
other spots within the enterprise to sell the rest of its wares.
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For years, EMC, HDS and IBM have been battling each other inside
the core. They steal shares from each other when possible and, over
time, we've seen big, slow shifts. In 1988, I think IBM had
approximately 98% of the market until EMC took advantage of Big
Blue's lack of focus and became the market leader by changing the
battle. EMC made storage a separate decision from the server, which
tripped up IBM because once a customer evaluated storage
independently, IBM's technology was inferior. IBM took a long time
to react with technology and, more importantly, a business focus on
a market it took for granted. HDS has always been seen as the
company with the greatest technology, but it gets knocked for being
too nice. All three vendors are looking strong, but the stakes have
never been higher.
These three have figured out that leveraging the "win" in the core
is the competitive advantage. That means they've been developing
noncore offerings, buying up companies, and frantically ensuring
they have the offerings and business focus to take advantage of
their opportunities.
There have been other companies that have fought for the less
prestigious, less influential, but much greater dollar market in
the midrange space. Along the way, the more successful of these
companies have tried in vain to crack the core. And none has tried
harder than Network Appliance (NetApp).
NetApp has been the most consistently successful company in the
last 15 years. EMC has been the bigger cheese, with bigger numbers
and sometimes bigger problems. NetApp wants a piece of the core,
and EMC wants the revenue and profits NetApp consistently generates
outside the core. Neither has been successful, but they both make
money.
Now it's going to get really interesting. NetApp, in an OEM deal
with Topio, has a well-timed way to steal core storage. NetApp has
changed its strategy from replacing EMC to enabling customers to
move or replicate nontransactional data on more expensive core
storage to its own systems. Whittling away at EMC's business is a
smart strategy. In addition, NetApp's OEM deal with IBM gives IBM
the same potential benefits and NetApp a much greater reach.
Through its own relationship with Ibrix, EMC has been making
headway into some of NetApp's biggest accounts, such as Pixar
Animation Studios and Yahoo. Suddenly, a little tech company has
enabled the much bigger EMC to do what it hasn't been able to do.
Another little player, Signiant, did a deal with a big oil company
to ensure its remote rigs moved their data immediately and didn't
suffer another Katrina-type catastrophe -- and dragged an order for
25 TB of EMC disks along with it. Talk about a freebie!
These opportunities exist because the market has moved on. The
requirements aren't the same, so the solutions have to change. The
difference now is that the little guys have the opportunity to
participate among the giants, and the door to opportunity has never
been open wider.
This column by
Mr. Duplessie first appeared in
Storage's September 2006 issue.
About the author:
Steve Duplessie is the founder and senior analyst for the
Enterprise Strategy Group in Milford,
Mass.