Where Are The Pockets Of Growth For SAN?

A few years ago storage companies were focused on developing solutions that appealed to dot-com companies. IT infrastructures seemed to be evolving into something that was more Net-centric. "Everyone wanted dot-com friendly solutions," says Omar Barraza, director of marketing for Dot Hill Systems Corp. (Carlsbad, CA). "Conversations we had with end users and solutions providers all seemed to revolve around the dot-com business. But, as soon as the economy turned down, customer wants and needs began to change."

According to Barraza, during the dot-com boom, the capacity of storage products kept growing. However, vendors soon found out the end users were no longer looking for huge TB systems. The suddenly tight economy had customers wanting to use the infrastructure in which they were already invested. "Customers wanted to upgrade rather than replace," he says. "Unfortunately, the storage market in general was ill prepared to meet those needs."

Fortunately, the software and switch manufacturers came to the rescue. While hardware sales were floundering, the market began to see the advent of new software suites that helped customers get more out of their existing hardware. Intelligent switches also began to hit the market. Users were suddenly able to take these new products and integrate them into their existing infrastructures. Needed functionality such as data mirroring, disaster recovery, or snapshots could suddenly be added without having to replace one hardware device with another.

"The storage networking market has matured quite a bit and realized that the empowering concept is networking, not storage," adds Barraza. "Devices that plug into existing infrastructure and enhance, rather than replace, it are empowering to integrators. If long-term customers need more functionality, a VAR can give them those functions without replacing equipment he already sold to the customers."

Look For Opportunity In the Middle Market
Selling products that add functionality might be a great way to service existing SAN (storage area network) customers. But Rob Peglar, corporate architect for XIOtech Corp. (Eden Prairie, MN), believes the target market for VARs in 2003 is mid-tier companies. "This is where we believe VARs should be spending most of their time," he says. "The adoption rate of SANs in that space, over the last two years, has gone from almost nothing to near 50%. As prices continue to fall, we could be at 70% adoption in a couple of years."

Peglar believes that, unlike dot-coms, companies in the mid-tier have established business practices and an established customer base, but are not huge companies. They are not early adopters and most do not already have a SAN in place. "Mid-tier companies have the biggest need and the biggest market potential for network storage technology, and SAN in particular," he says. "Many larger companies have a SAN, and the smaller companies are still using the direct attached storage model and probably will be for some time."

Peglar states the need of companies in the mid-tier market to expand their storage assets, coupled with the availability of interoperable solutions and the lack of complexity of those solutions, has really energized the market. Companies in the mid-tier also stand to experience the most gains from that technology in terms of productivity gains for their employees. For VARs offering SAN solutions in this market, he believes packaged SAN solutions are the way to go. "The most interesting vertical is healthcare, because those businesses have a great need for the technology," he says. "That industry has been a laggard in storage, and only now is the SAN world opening up to them. Federal government is another interesting market, especially with the emphasis on homeland security. Ditto for education, grades K through 12 in particular. Many of the larger school districts are now introducing SAN as they attempt to bring sophisticated computer education to students."

Services Required In The Mid-Tier
Marc Jourlait, director of marketing for network storage solutions at HP (Palo Alto, CA), agrees that SAN will continue to be a growth market for VARs. "Most companies have figured out that direct attached storage is probably the most costly and inefficient way to deploy storage," he states. "SAN shipments are now outnumbering shipments of direct attached storage. The crossover has already happened. For most end users, networked storage makes sense and is more cost-effective than direct attached. Many companies are now consolidating their servers and consolidating their storage at the same time. While some are starting off with NAS [network attached storage] as a way to stick their toe in the water, others are jumping right into the deep end and going with a SAN."

However, those users are also finding out that networked storage is more complex than direct attached. The complexity, however, equates to opportunity for VARs. "SANs are not plug and play," he says. "They are complex solutions and channel partners have a huge value-add opportunity in terms of the up-front consulting and analysis. Customers need to know how to move from islands of direct attached storage to a consolidated, network attached architecture. There are also opportunities in the deployment and the day-to-day management of a SAN. Integrators can shine on the services and support side of the business, and it allows for account control and building the long-term relationship with clients."

For The Core Or For The Edge?
While the news seems good for VARs in the SAN market, Hu Yoshida, VP and CTO for Hitachi Data Systems (Santa Clara, CA), stresses the importance of evaluating customer needs first, and then recommending an appropriate solution. "On the enterprise side of the market, we are seeing consolidation," he says. "SANs that used to be a mesh of switches are turning to higher-tech, director-class products and high-port count switches. But on the lower end of the market, many companies are still moving into low-port count switches. Greater penetration of SAN technology is occurring all the time, but different customers will need different storage devices to meet their varied needs."

Yoshida notes that large and powerful storage devices are needed for the core network requirements, or those segments of the network where all of the heavy lifting is performed. But companies will also require edge products for branch offices and applications that need special treatment. Here the need is for modular devices designed to serve a few users economically.

"VARs need to make sure they are selling the right storage for the right usage requirement," Yoshida stresses. "We have seen many resellers trying to sell edge products into the core network simply because they are cheaper. While these products may be cheaper, they should not be part of a network that needs to be highly available. To meet customer needs, it is essential that VARs position the right storage architecture for what is required of the network."