A storage area network (SAN) is storage connected in a fabric (usually through a switch) so that there can be easy access to storage from many different servers. From the server application and operating system standpoint, there is no visible difference in the access of data for storage in a SAN or storage that is directly connected. A SAN supports block access to data just like directly attached storage.
Network-attached storage (NAS) is really remote file serving. Rather than using the software on your own file system, the file access is redirected using a remote protocol such as CIFS or NFS to another device (which is operating as a server of some type with its own file system) to do the file I/O on your behalf. This enables file sharing and centralization of management for data.
So from a system standpoint, the difference between SAN and NAS is that SAN is for block I/O and NAS is for file I/O. One additional thing to remember when comparing SAN vs. NAS is that NAS does eventually turn the file I/O request into a block access for the storage devices attached to it.
Read more in this tip on integrating SAN and NAS.
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