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IBM: We're No. 1 in storage hardware

A new combined disk and tape tracker from IDC has IBM trumpeting from the rooftops that it's the market leader. But what's IBM's story when it comes to software?

IBM called a press conference under cloak-and-dagger terms on Monday to tout the fact that it has been named the market leader in combined tape and disk storage hardware in a new report by IDC, its first leadership position in the storage market since the halcyon days of the early 1990s.

"We've been working for 10 years on this after decades of dominance -- we lost our dominant position [in storage] in the 1990s and now we're back," said Andy Monshaw, general manager for IBM's storage unit.

The new IDC numbers showed the overall combined storage hardware market -- branded disk and tape offered as a package -- growing from 27.2 billion in 2005 to 28.2 billion in 2006, which is as long as IDC has been using this metric, according to IDC storage research program director David Reinsel.

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The other vendors evaluated in the report were Hewlett-Packard Co. (HP), EMC Corp., Dell Inc., Sun Microsystems Inc. and Hitachi Data Systems (HDS). According to Reinsel, products were measured according to what brand was on them rather than who manufactured them, making it at least theoretically possible that IBM's market share could have been lower or higher based on factory revenue, though Reinsel said that was unlikely.

IBM hopped to the No. 1 position by increasing its market share in the combined disk and tape hardware markets 0.2% over 2005, while previous leader HP lost a full percentage point.

What about the big picture?

HP did lose ground slightly in this survey to IBM, but like most of IBM's large competitors is basing many of its storage messaging around software features as the storage hardware market continues to commoditize.

According to Reinsel, tape hardware in particular -- already the minority of the revenue being reported at $3.8 billion -- showed a decline, from $4.2 billion in 2005. "Tape is pretty much a flat market year over year, and by quarter last year there was a slight decline," Reinsel said, though he declined to release quarterly numbers.

"The uptick for this market is based on disk, not tape."

Meanwhile, IDC also forecasts that worldwide disk prices will fall approximately 34% over the next year, matching the rate of decline IDC's been seeing for the last five years.

As for the bigger picture of IBM's position in the storage market, Reinsel said, "Software clearly brings personality, features and functionality to hardware, neither is good without the other, but our assumption with this report is that software is at play there too, these particular numbers just don't capture it."

Still, IBM is behind many of its competitors when it comes to some of the hottest current storage product categories. It has yet to market a data deduplication product in any of its secondary storage devices, for example, and lacks an iSCSI storage area network (SAN) partner for the low end since dumping partner Adaptec Inc. late last year. It's got a reseller relationship with Tacit Networks Inc. for WAFS, but at this point is behind fellow Tacit reseller Brocade Communications Systems Inc., which announced additional file virtualization capabilities for its version of the Tacit product last week.

"There's still a huge amount of money to be made in hardware," according to Arun Taneja, founder and consulting analyst with the Taneja Group. He added that companies the size of IBM play by different rules than smaller companies in the marketplace, which is where the innovation usually comes from. "When you're that large a company, you have access to gigantic customers as a strategic partner, and those customers will wait as long as IBM tells them they're working on getting them a certain feature."

However, in this, IBM isn't that different from EMC Corp., which has been stating its intentions to make software the core of its business for at least a year. "There are certain holes in the product line that IBM needs to go and do something about," Taneja acknowledged. IBM recently announced it will offer Network Appliance Inc.'s (NetApp) A-SIS data deduplication feature for primary storage file systems, but according to Taneja, "Not to have it on the VTL side in six months is not an option, the way I see it."

When asked where IBM's growth is going to come from if it holds back on new storage markets, Monshaw responded that IBM's differentiation would be in offering an integrated product line that would extend to heterogeneous management and storage virtualization products. One example of such integration Monshaw gave was the IBM T1120 self-encrypting tape drive, which combines IBM's proprietary hardware with encryption and key management software. "Look at the DS8000," he added, "as another example of how software is being sold to the customer as hardware, in a disk array that also contains three million lines of microcode with availability and business continuity features."

As for integrating new storage technologies into those systems, "There are 50 different kinds of new, leading-edge technologies that we look at on a regular basis -- cool ideas we could sit around a campfire and talk about -- but they're not ready for prime time," Monshaw said.

John Webster, principal IT consultant with the Illuminata Group, pointed to information lifecycle management (ILM) and continuous data protection (CDP) as examples of previously hot storage markets in which IBM has ultimately looked smart to hold back on. "With any technology, wait and see can be a very sane approach," he said.

As for this announcement in particular, Webster pointed out, "I'm not sure if this is as big an issue for customers as it might be a channel issue, a way for channel partners working with the IBM logo to justifiably say, 'we're No. 1.' It tends to be a motivator, a way for IBM to reassure the channel and its partners that the relationship is working out."

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