High-End Storage: Store Wars
A gradual return to centralised computing has seen a big rise in demand for high-end storage. Sean Hallahan reports on the companies out for a slice of the pie
The IT industry has seen a series of wars break out over the past 20 years. We have seen chip wars, database wars and operating system wars. Now we are witnessing the start of another one, this time for the high end storage market.
The latest entrant in the field is Sun Microsystems, which in January announced a new range of products aimed at taking on data centre storage giants IBM, EMC and Hitachi Data Systems, among others. Sun estimates that the worldwide market for high-end storage systems is worth $50 billion.
Sun has acknowledged that many companies are now returning to the concept of centralised computing even for their distributed systems. The company quotes the Gartner Group?s suggestion that, by 2000, 70 per cent of shared storage in a network environment will be re-centralised.
Sun is banking on the fact that the return to centralisation will take a radically different form from that seen in the past.
In a briefing paper on its storage solutions, Sun said: ?This new model of centralisation will be vastly different from the glasshouse approach of earlier data centres. Effective storage solutions will exploit the underlying network architecture to transfer greater data loads, streamline data access and distribution, and handle more complex information types, such as digital video. By choosing network-intelligent storage solutions, companies with large investments in mainframe-based data centres can achieve the best of both worlds: the performance and efficiency of a distributed computing environment and the manageability and reliability of centralised storage.?
Sun will have a fight on its hands if it is to beat EMC, the current leader in the mainframe storage market and a growing force in the open systems arena.
According to analyst IDC, IBM had 76 per cent of the 480 terabytes of storage shipped in 1990. Today it is second behind EMC, whose rise since the beginning of the decade has been nothing short of meteoric.
By the end of 1995, EMC had captured some 41 per cent of the mainframe storage market, compared with IBM?s less impressive 35 per cent.
Even on its home turf in the Unix market, Sun?s share of the open systems external storage market lags behind EMC?s with 16.8 per cent. IBM has 14.8 per cent and Digital has 13.6 per cent. According to EMC senior vice president Ray Fortune, the company?s share of the external Unix storage market is worth $4.6 million and is growing by 50 per cent annually.
In the mainframe market there are only a few competitors but they are all long established: EMC, IBM, HDS, Storagetek and Amdahl. The open systems market has significantly more players which include EMC, IBM, Digital, Sun, Hewlett Packard, NCR and Data General. But well over a quarter of the systems sold are from other vendors. Sun?s market share currently stands at 11.4 per cent, according to IDC. HP has 9.7 per cent of the market, NCR 3.3 per cent and Data General 3.2 per cent. Along with the 26 per cent represented by unnamed suppliers, these last three account for 42 per cent of the market.
Sun is taking a cautious approach to the storage market and will aim its new range of products at its installed base rather than at its competitors? customers.
?We are not going to come knocking on your door if you have never heard of us,? says Jonathan Mills, Sun?s manager for storage products. The first targets will be the growing number of NT machines and machines running HP UX. Sun will sell its new range of products initially through its existing channels but is examining the possibility of signing up specialist resellers, Mills said. Mills does not believe that Sun?s entry into the storage market will precipitate a price war. ?Storage subsystems are not yet a commodity item,? he says.
Sun will not be challenging the major mainframe players, at least in the foreseeable future. To take on the likes of EMC and IBM in the glasshouse type of environment would probably be beyond the company?s capabilities. But some analysts believe that Sun?s move into the storage market is a shrewd one. Much of Sun?s future depends on the future of the internet and the Java language. ?Sun has lined up the ducks. It has Java and a number of other products but it is not going to sell Java unless it has a presence at the top end.
Moving into the storage market could give it one,? says Robin Bloor, chairman and chief executive of Bloor Research. He believes that Sun will target HP in the short term, aiming to displace it as number two in the IT hierarchy.
But other analysts are not convinced that Sun represents a major threat to HP and argue that its move into the storage sector is a result of the pressure it is feeling from the alliance between HP and EMC. ?As soon as HP got into bed with EMC it started to do Sun some damage,? says Phil Payne, an analyst with Sievers Consulting. EMC has had an agreement for the past 12 months to supply its Symmetrix storage devices to HP and in February it added Sequent to its list of partners.
The growth area in the high- end storage market is in open systems where Sun is a major provider of servers and workstations. Traditionally, these systems have been located outside the data centre but the increasing return to centralised computing means that open systems hardware is being returned to the data centre.
According to Mike Maunder, EMC marketing director, the return to centralised computing is not being pushed by the IT staff but comes from the business sector. ?The data centre is starting to take control of Unix, NT and Novell and the data centre managers are having to train their staff in these disciplines. In the open systems market people have bought storage attached to the server which has got bigger and bigger. As applications become more critical they tend to look for the weak link and that has often been storage,? he says.
Where in the past distributed processing in a corporate environment may have required four or five different storage technologies, companies are now looking to slim this down to two suppliers. Traditionally, the mainframe data centres operated a dual supplier policy buying the processor and some storage from one company and some storage products from another supplier. This policy provided customers with an alternative source of supply in the event of production shortages or faults in the devices and it gave them a stick with which to beat both suppliers to obtain the best price and service. Maunder believes that much the same thing will happen in the open systems world now that Unix and NT boxes are being absorbed into the data centre. Maunder admits that, until 1995, EMC did not have a class Unix product.
There is no doubt that EMC?s partnerships with HP, Sequent, NCR and Bull are important to both parties. EMC comes from a mainframe tradition and has only really been in the open systems world for 18 months. ?We have had a reseller agreement with HP for 12 months and HP has made a tremendous move to promote us. A lot of our success in the open systems market has been fuelled by HP,? says Maunder.
Similarly, companies like Se- quent can benefit from EMC?s success in the high-end storage sector.?I know of three deals in the past year that Sequent has lost out on because of storage,? Maunder says.
Maunder joined EMC from Data General (DG), one of the original minicomputer manufacturers which now concentrates much of its effort on selling storage products. He contrasts the different approaches by Sun and DG to the market. ?DG has a storage strategy. DG selects the bids it goes for very carefully but it builds in a high service element, being prepared to act as the prime contractor and offer systems integration services. Sun still has a reseller mentality.?
Open systems solutions have traditionally been delivered through the channel in part because they were perceived as departmental systems out of the control of the IT department. Data centre purchases have traditionally been centralised and are purchased direct from the supplier. Around 75 per cent of EMC?s mainframe sales are sold by its direct sales force. But its move into the open systems market means that it has had to change its business model and, by the end of this year, Maunder expects there to be a 50/50 split between direct and indirect sales.
There has been much speculation about the role of the network computer (NC), originally proselytised by Oracle?s CEO Larry Ellison and adopted gradually by the majority of manufacturers from IBM to Microsoft. Although there is considerable debate about just how widely the concept of the thin client will be taken up there is no doubt that it will radically alter, even increase, the demand for centralised storage.
Maunder adopts a cautious approach to the future of the NC. But if the thin client concept does take off, and with every manufacturer now hedging its bets by having a prototype in the laboratory, there is little doubt that it will have some impact, one thing is certain ? the demand for storage products will increase.
With IBM?s OS/390 mainframe operating system now certified as an open system by the Open Group, the distinction between proprietary operating environments and the world of Unix and NT is becoming blurred. The return to centralisation, growth of the internet and intranet and the birth of the NC will fuel demand for storage.
None of the smaller players in the field is unassailable. Companies like HP and NCR have a cushion because of their agreement with EMC. The likes of IBM, Sun and Digital can expect to rely on their installed base to remain loyal and to buy their storage sub-systems from their processor supplier. But the companies that are really vulnerable are the unnamed 26 per cent of storage suppliers to the open systems market.
Some of Sun?s competitors in the storage market acknowledge that, tactically, the move into the storage sector makes good sense but speculate just how successful the company will be in winning customers outside its own installed base. ?It is a good strategy for Sun but to get some of the key features of storage you need to buy in storage management products and in Sun?s case that means Sun Solstice which is proprietary,? says Phil Townsend, HDS manager of mid-range operations. He also questions whether the return to centralisation is necessarily a good thing ? even whether it will happen at all. Townsend raises the spectre of the old style data centre, where users were in the IT department?s thrall.
Initially, Sun?s entry into the storage sector will not damage the likes of EMC and the other major players but it will make them more competitive. With the open systems storage market already worth $600 million a year and forecast to grow to $800 million by the year end, no manufacturer can afford to be outside the sector. The cost of storage has fallen dramatically recently but with the advent of ever more powerful applications, the demand for storage subsystems continues to rise. The storage market is the place to be in 1997.