SANTA BARBARA, Calif. - It was billed as a storage conference, but attendees could be excused for thinking they had stumbled into a software industry meeting.
If one thing was clear at last week's Merrill Lynch Storage Technology Conference held here, it's that disk drives are uncool and the future of storage is in software. With hardware prices plummeting more than 30% per year and storage area networks catching fire, vendors were scrambling to reposition themselves as the solution for tying everything together.
''The question is who's going to provide the software that dominates the SAN,'' said Thomas Kraemer, a Merrill Lynch hardware analyst.
Added Merrill-Lynch CTO John McKinley, ''The company that provides good [storage management] software to me will own the relationship with me.''
That message was reinforced in numerous strategy statements from the leading vendors:
EMC Corp. said it will spend $1 billion in research and development this year, 70% of that on software.
Compaq's top storage executive, Mark Lewis, said the company will invest more than $100 million in storage companies this year, most of them software vendors, and refocus its storage strategy around software. ''We've built what we call a next generation software company,'' he said.
Hewlett-Packard storage chief Nora Denzel said her company is shifting from a focus on servers to an emphasis on storage with the hardware serving mainly as a way to deliver software.
Underlying the trend is what analysts believe will be a massive shift from server-attached to network storage over the next several years. It's a change that some people think will revolutionize IT organizations and the storage industry by turning hardware into a no-name commodity and establishing code as the only significant source of differentiation.
''Everyone is trying to `commoditize' everyone else,'' said Merrill Lynch's Kraemer.
Added Russell Holt, GM of Dell Computer's storage group, ''The cost of storage hardware is more and more approaching zero.''
Not surprisingly, vendors are competing to deliver the operating system that ties everything together, a market that analysts agree is relatively open right now. Although EMC is the default front-runner at this stage, competitors hope that SANs will make it possible for new leaders to emerge who specialize in managing and troubleshooting very large storage farms.
And the vendors are being quick to respond. Brocade CEO Gregory Reyes touted his company's ''intelligent fabric operating system'' as a switch-resident software bridge to unite heterogeneous storage devices. HP is building its storage strategy around its popular OpenView network management system, saying storage is just another in a long list of IT assets that OpenView can monitor.
Peter Bell, founder of service provider StorageNetworks, Inc., hinted in his opening keynote that the software his company developed to rope together multi-vendor storage devices may be released as a commercial product. Compaq outlined a strategy it calls ''virtualization,'' in which all of a company's storage assets can be bound up into a single storage utility through the use of Compaq's software.
The SAN market right now has all the characteristics of an early-stage game, similar to the salad days of the PC or networking industries, noted Merrill Lynch's McKinley. Vendors are competing ''to own me and I don't want to be owned,'' he said. He sees two more years of relative chaos followed by consolidation and agreement.
Or as HP's Denzel put it, ''If this were a baseball game, we'd be in the second inning.''