It is that time of the year again when everyone expects analysts to
put it on the line and predict the future. But, before I jump into
that, let me say that for 2006 I had predicted that we would have
20 mergers/acquisitions. I have not done the count, but I think
that number is pretty close. The surprise to me was not that we had
these mergers; the surprise was the beautiful prices associated
with most. Kashya, Topio, Avamar, AppIQ all enjoyed stunning
prices. The other surprise to me was the occurrence of IPOs. Not
that I didn't expect Riverbed, CommVault and Isilon to do
successful IPOs. But, I didn't expect them to happen in 2006. I
thought they would happen in 2007. I am glad they did, however, as
it is a sign of good times returning for all parties involved: IT
buyers, vendors, VCs [venture capitalists] and investors. Frankly,
I didn't see the DoubleTake IPO happening. That hit me from the
side. All said and done, 2006 was a great year for storage.
But now for 2007.
In 2000 and 2001, a massive number of storage companies were
funded. For those that developed a product you cared about (and
whose VCs that were thoughtful and patient), the products finally
came to market sometime in 2003, just as your budgets were starting
to inch upward. These companies, including Isilon, Avamar, Kashya,
3PAR, EqualLogic, LeftHand Networks and many others, started to get
real traction in 2004 or 2005 and most are doing great right now. I
expect those that have not already been acquired, will be this
year.
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Of course, now that IPOs have begun, that could be the other avenue
for them. But to me "fruition" means more than that. Many of the
companies in question fall in the category of next-generation data
protection,
iSCSI or
storage virtualisation. The year 2007 will
be, in my view, when all these technologies go mainstream. That
means I expect most of you would actually go beyond pilot
programs, trials and the like to actually implement large
production systems in these categories. I also include active
archiving in this very broad definition of data protection. Data
protection management would get a super lift as well. Many
products in these categories are fully baked and ready for prime
time. Combine that with increased budgets and compliance
pressures and you can see large implementations happening in
2007. I think this is great for the industry and for IT. We have
been waiting for five years for this, and now we have it. Of
course, in this euphoria, one can jump in head first and find
out that all products are not born equal. You will need to be
selective, but the products are there to choose from. Yes, sir,
I do consider 2007 as the year a lot of technologies will bear
fruit.
There is another category of products which will get a big
boost, but they are not far enough in their cycle for me to put
them in the "fruition" bucket. In particular, I am thinking of
"information management" products. Not device managers, but real
information managers. Products from companies like Kazeon,
Scentric, Index Engines, Njini, Abrevity and the like. We typically
put them all in the information classification and management (ICM)
category. I think these products provide purpose to why you retain
data in the first place. I believe 2007 will be the year that many
of you actually conduct pilots using these technologies, but it
will be 2008 before you will deploy them wholesale.
I have two more predictions for storage. One, that most of the
smaller companies with strong products will either be scooped up by
the bigger players or go the IPO route. I don't think it would
unreasonable for us to see eight to 10 IPOs, barring some crazy
international event, of course. All the big players know that if
they do not make a move on an attractive startup right now, it will
become prohibitively expensive by mid-2007. I am very aware of
which companies are in play, but I will have to kill you if I told
you. It would be fair to assume, however, that the VTL players fall
in this category. I know that most of you couldn't care less if a
startup does an IPO or is acquired. The reason I think you do,
without even realising it, is that it makes "best of breed"
products available to you from a big, strategic vendor and thus
reduces your risk.
My last and final prediction is that many companies that have
already burned $50 million to $100 million of VC money, but still
do not have enough customers lined up, will be sold for mere
assets. Unfortunately, a number of chip companies fall in this
category. Aristos Logic, Astute, iStor, iVivity immediately come to
mind. There are a few others. These companies have been at it for
five to six years now, working their tails off. They even have
decent products. But, some do not necessarily have enough customers
committed to buying their products in adequate quantities. Their
VCs are likely tired of pumping fresh money every year. In 2007,
some of them will cut off the supply.
I could probably go on for another two pages. But for now, I
will sign off. I wish you all a very "fruitful" 2007.
About the author: Arun Taneja is the founder and consulting
analyst for the Taneja Group. Taneja writes columns and answers
questions about data management and related topics.