Storage startups find best audience in smaller users

Crowded archiving, SaaS and iSCSI markets mean a smorgasbord of new choices for users of all sizes.

As archiving and outsourced storage have become hot markets this year, venture capital is pouring into these market spaces. There's a bumper crop of startups hitting the scene, and companies that have been around for a while before the market got hot are renewing their pushes, too. It makes for a crowded market, but with that comes a wealth of new choices for users.

For example, Jatheon Technologies Inc. is trying to make a push into the U.S. after two years of doing business in Canada. The company, which claims 20 customers so far, is pretty much the definition of "boutique" and so is its archiving product, dubbed Plug n Comply.

Users said they like the product because it comes prepackaged with hardware preconfigured to their environments. Jatheon will even assign IP addresses for a user before shipping the server, unlike email archiving products marketed to larger companies, which are typically software only. "I don't want to have to worry about designing the hardware for the archiving system, and maintaining updates and patches for hardware and software separately," said Shane Mercer, manager of messaging infrastructure for a large law firm based in Ontario.

The size and price are also right, Mercer said. The 100 model starts at under $5,000 and it's small enough to plop into tiny remote offices. The firm has two main data centers in Toronto and Calgary and seven remote offices, with a total of six separate Exchange servers between them. The Jatheon boxes store and forward journaled emails back to the remote office.

For many small companies, outsourcing is a more appealing choice for dealing with increasingly complex archiving demands, but another Jatheon customer, Cormark Securities, didn't want any part of it. "I'm not comfortable sending sensitive data outside our server room, particularly over the wire where someone could intercept it without our knowledge," said Lou D'Souza, vice president of compliance.

Other users who have gone the outsourcing route said there, too, players are a dime a dozen and have to come up with ever-more-targeted features to differentiate themselves. "Hosted storage is a commodity now," according to Kevin Boer, broker/owner of 3Oceans Real Estate Inc., which consists of a two-person office on the West Coast. Boer said he recently cancelled his Carbonite Inc. subscription in favor of a relatively new hosted storage offering from BeInSync Ltd. because the company could also offer file synchronization between his and his assistant's computer, which is important during real estate transactions. "Carbonite is a great service for what it does, but all it does is backup."

Anywhere there's a hot market space you can find new, highly specialized products. Now that iSCSI has been validated by the major enterprise storage players, it's touched off new "biodiversity" among the organisms of the storage jungle, sprouting players focused on specific vertical markets, such as Pivot3 Inc., an iSCSI/grid storage vendor focused on digital video. The iSCSI craze has also breathed life into a whole new class of do-it-yourself IP storage area network (SAN) products for small and medium-sized businesses (SMB), from companies like StorMagic and Open-E GmbH.

Of course, all of these products have their limitations and problems. Jatheon's users said they're not thrilled with the product's performance and its integration with instant messaging applications leaves a lot to be desired. And the newness of the startups can be a risk, according to Brian Babineau, analyst with the Enterprise Strategy Group (ESG), because a small company stands a bigger chance of going out of business, and also because the small companies that make it don't stay small for long.

"The advantage to smaller companies is that they can be more specialized and hand hold customers with more attentive service," Babineau said. "But the problem is that in order to grow your business, which is the goal of any company, you have to diversify." Eventually, Babineau warned, the boutique companies could grow into the big guys and then it could be back to square one.

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