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Consolidation predictions for intelligent switching, SRM and NAS

Arun Taneja, Sr. Analyst, Enterprise Storage Group

Consolidation predictions for intelligent switching, SRM and NAS

Let's look at some examples of how the storage industry may consolidate its offerings in 2003.

Consolidation and the intelligent switch market

Let's first take a look at the smaller players in the intelligent switch category. As a minimum, we have Maranti, Maxxan, Sanera, Rhapsody (in the process of being acquired by Brocade), Pirus (acquired by Sun in Q42002), Cisco and Storage Appliance (acquired by HP in ealry 2002). As you can see, the process of consolidation has already begun.

Consolidation prediction: One could assume McData will need to buy someone to cover this space. Maybe IBM will decide they need to own this technology to complete its "On Demand" architecture, much like Sun decided to buy Pirus as a lynchpin for its own N1 effort. Bingo, the new players will be gone. Absorbed.

Good for the industry? Maybe. Good for the startups? Sure. If the amounts paid to purchase Pirus and Rhapsody are any indication, the others should do well. (If we had more time, I would tell you what the impact of these purchases might be on Brocade, but we will leave that for a different article.) But, you see how consolidation will occur in this segment. Other areas will meet the same fate, if they are lucky.

Consolidation and the SRM players

As we have seen in the last two quarters, many SRM players realized it would be hard to exist as an SRM-only

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player so they have been extending their feature sets to include SNM, provisioning, etc.:
  • Tivoli purchased Trellisoft
  • Veritas purchased the SRM product from NTP Software
  • EMC bought Prisa Networks (more of an SNM player) to handle Dell's needs

    Once again the process of consolidation has already begun.

    Consolidation prediction: In this case I think we will see some bigger fallout where companies run out of money. There are simply too many players without enough vendor-buyers. The market is still too small for this many independent players. So there you have it. More consolidation, some fallout.

    Consolidation in NAS virtualization

    I expect we will see a similar fate in the NAS virtualization space. Look at the number of new players funded (to name just a few):
  • Spinnaker
  • Panasas
  • BroadBand (now part of Snap Appliances)
  • Maximum Throughput
  • LeftHand Networks
  • Agile
  • Isilon
  • Z-Force
  • Nuview
  • 1Vision

    Of course, you also have NetApp, EMC and several smaller players in the market today who also have their own plans to "virtualize" multiple boxes. BlueArc comes to mind. While I am very bullish on the NAS space in general, I can't see all these players finding enough business to make it to an IPO or whatever other financial plans they might have.

    Consolidation prediction: Once again, I think we will see a few players get bought out. IBM, HP, Sun and Dell all need a high-end (i.e., not Microsoft SAK-based) NAS solution. I think a couple of these startups will make it to stardom on their own. Don't get me wrong. These startups have created some incredible technologies. If times were better and the world was fair, most would make it. Unfortunately, most won't, given our current economy and the decreased likelihood that VCs will continue to feed their players for the long haul.

    How the storage consumer and storage industry benefit from consolidation

    I could go on with other industry examples beyond smart switching, SRM and NAS virtualization, but you get the point: Consolidation. Big time. That's 2003.

    A word to storage vendors: Either get revenue traction (hard to do in this economy) or get sold or go out of business. Period.

    Unfortunately, we will see a lot of fallout. While this might not be good for individual companies, if you stand back and look at the amount of innovation injected into the storage arena, it is totally astounding.

    Storage management, for example, has come a long way from even two years ago. SAN and NAS are no longer acronyms that bring fear to IT administrators. Customers are not anywhere near out of the tunnel yet, but perhaps they can see the light at the end of it. The storage industry has thrown a lot at them in 2002. We will throw even more at them in 2003 that they will need to sit down and absorb. As they absorb, the industry will consolidate. That's how I see it.


    Arun Taneja is a Senior Analyst with Enterprise Storage Group. Arun has over 25 years of industry experience, ranging from small startups to Sun Microsystems. Most recently, Arun was VP of Marketing for Vixel Corporation, a Fibre channel switch vendor.


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