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Software is brightest hope for storage growth

Veritas Software's internal sales numbers show a huge rise in both NAS and SAN management software for the first half of 2001 compared to the same period last year.

San Francisco - Veritas Software has released internal sales figures that show a 335% increase in network-attached storage management software for the first half of this year, compared to the same period last year. And sales of storage-area-network-related backup and recovery software grew 246%, the company says. According to Veritas, it's an indication that storage customers are looking to software as a way of getting higher levels of utilization out of their existing storage hardware, rather than buying new.

Customers have overbought hardware, believes John Maxwell, vice president of product marketing at Veritas, and with their budgets under pressure, are now looking to software to optimize what they have. Forrester Research figures show that less than 50% of the disk arrays currently installed are actually utilized. And Veritas itself, which sells hierarchical storage management tools, says that 40% of the data on disks that are utilized hasn't been accessed for up to a year.

The new trend toward so-called storage virtualization, which creates a pool of common storage across different physical devices, aims to pull that utilization rate higher. "I believe with the right tools in place, that can be increased to between 75 and 80%, as is typical in the mainframe world," says Maxwell.

Veritas' figures are based on licensing rates for two products: NetBackup with NDMP (network data management protocol) for NAS sales; and the NetBackup SAN Shared Storage Option for storage area networks connecting tape devices. Network Appliance, EMC and others license the NAS product. Veritas claims to be the only company offering dynamic tape drive sharing software. Its primary competition for backup software comes from IBM's Tivoli. Maxwell says that backup software vendor Legato has only recently joined the market for NDMP software, despite having acquired Intelliguard in 1999. Intelliguard was the co-developer of NDMP along with Network Appliance.

Gartner Dataquest figures on the storage management market show Veritas with a 45.1% share for Windows-based network backup and recovery worldwide, and a 36.8% share for Unix. High tech buyers make up the biggest segment of customers, followed by financial services, telecommunications and retail.

Hardware-oriented storage firms such as EMC, Network Appliance and IBM have been seeing customers defer purchases recently, while profit margins are being squeezed. All the storage players are now putting a greater emphasis on software, which, aside from its faster growth rates, doesn't suffer from the likelihood of expensive inventory buildup during unexpected periods of downturn. "You can't sell software on e-Bay," Maxwell points out.

Even so, hardware vendors such as EMC are still showing impressive growth figures in the NAS and SAN sectors. EMC says it increased its NAS revenue to $562m in the first six months of 2001, nearly triple its amount from the previous year (before the launch of its Chameleon NAS line). And its SAN revenues rose by 49% in the same time period, to $1.3bn.

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