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Happy Story for Storage
Sanjeev Jain
Monday, May 1, 2006
Data can be a painful chapter in any company’s textbook especially when it comes to storing it. Tons of data are generated everyday and companies find it hard to store it, sometimes as hardware developed to store it can just give away. Stored data, which has been growing at 30 to 50 percent per year earlier, is now reaching levels of 60 to 80 percent each year.

Some industries are experiencing 100 percent data growth. Data is the lifeblood of any organization and critical to the smooth functioning.

VCs had given up on investing in the storage segment as the industry was fragmented and any device that made its debut in the market was just not enough to handle the amount of data being generated. In the two-year period between mid 2001 and mid 2003, VCs invested in more than 200 storage companies and burned their fingers - badly. Most of these companies just downed their shutters.

Cut to the present. Venture capitalists have renewed their interest in this industry as the survivors of the bust period and a crop of new companies have shown promise of containing uncertainties of the storage space. Gary Gretsch, managing director Sigma Venture Partners says, “In terms of new storage investment in 2005 investing had slowed down a bit in 2005.” However Sandeep Aneja, Principal, Outlook Ventures differs. He says, “2005 was a year that the storage space started to see some level of renewed interest on the VC side as companies have made some good progress in the storage space.”

The reason for the relook of the VCs in this space is hardly surprising. Stored information was more vulnerable to havocs than ever before. Added to this is the compliance cost, litigation discovery, and business value pressures that are increasing the real storage cost beyond one’s means. These pressures are threatening the existence and recovery of fast-growing voluminous data. Storage hardware costs have fallen but storage management costs are moving north.

The storage mart, valued at between $50-100 billion is not something that can be ignored by storage vendors. The advancement in the technology ran the entire gamut between prevalent and newer technologies just coming into their own. Some of the most important and interesting of these developing technologies include backup and recovery, archiving, tiered storage, storage networking, interconnects, CDP, NAS, iSCSI SANs, virtualization, security and encryption.

Gretsch says, “The storage industry is in a flux. New and mega trends are happening and that’s having an impact on the storage industry.” The midsize industry is the biggest backer of the iSCSI SAN (Internet Small Computer System Interface Storage Area Network), as they have a desire to reduce storage overheads and have lesser interconnects and dealing with fiber channel and Internet. The iSCSI protocol is among the key new technologies expected to help bring about rapid development of the storage area network (SAN) market, by increasing the capabilities and performance of storage data transmission. Because of the omnipresence of IP networks, iSCSI SAN can be used to transmit data over local area networks, wide area networks, or the Internet. It also enables location-independent data storage and retrieval. iSCSI SANs undeniably have their place in the data centers of today. This technology is growing rapidly with a deployment rate of 150 percent expected this year and hereafter, IDC says.

iSCSI SANs are selling like hotcakes in the marketplace that includes the upper and the mid-market. The basic philosophy for the acceptance and adoption of iSCSI SAN is to do with its network topology and simplicity that everyone is familiar with. Mid-market businesses cannot afford IT staff dedicated to manage storage. They look for simplicity and want the systems to be easy to deploy and run. The enterprise side is also adopting iSCSI SANs for its advanced features and capabilities. Take this for example-if a company deploys a series of iSCSI SANs as links in a campus SAN, they can use their network nodes over the existing infrastructure. In their case simplicity may be a small benefit but high availability and scalability, along with leveraging value, are their top vexations. In both markets, cost-effectiveness is an added advantage since iSCSI uses simple and inexpensive common agents like Ethernet. “That’s why iSCSI is attractive because you can have your entire storage running on Internet. iSCSI like in 2004 and 2005 will be a growing market in 2006,” says Gretsch. “The entire storage market will grow about 20 percent and the ISCSI will grow 100 percent.”

Another retrieval-based technology the VCs are betting at are makers of disk-based hardware that can pull down the prices of storing equipments by half or more. Tapes are untrustworthy, bulky and cannot hold more data. Disks, in contrast, make it easier for companies to store more data and are reliable. “One that could utilize hardware and provide special storage hardware at cheaper cost. So basically the industry moved from expensive tapes to cheap throwaway disks and that saw reduction in the cost of the hardware,” says Aneja.

Network Attached Storage (NAS) offers immense potential to people looking at getting into this sector. NAS is the actual standard across industries for data mobility. Data mobility is challenging due to provisioning and storage management needs. Enabling technologies like virtualization are crucial in this environment, where data management should be automatic and transparent. Virtualization layers allow businesses to automatically balance filer provisioning, and to boost utilization by balancing and leveraging capacity.

NAS vendor could expand NAS management globally, which improves efficiencies with NAS-based backup, and optimally locating data. “Storage software area is big in its ability to make a difference,” Aneja says. The need to backup, recovery and archival has thrown up an exciting market for potential entrepreneurs. Gretsch says, “These three trends will drive the huge sales of storage systems and many more terabytes of storage use.” iSCSI will be used primarily in mission critical application like transportation and medical application.

Other places one can look at storage in 2006 are the security and encryption, virtualization and lifecycle management, ILM and continuous data protection. “The real market trend is in CDP. One can also look at plug and play storage appliance and ILM,” Aneja adds.

Well so much for this year and beyond. It’s time for you the entrepreneur to decide in which pie do you want your fingers to be in.
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