First, in a more personal and informal way than the Storage UPDATE survey we ran recently, I want to gather more information about you and your storage deployments. I hope to learn more about you, so I can tailor Storage UPDATE to your needs. Below are my questions and a place where you can respond.
- What is your role in your organization?
- What key deployment and operational concerns do you face in managing your organization's storage needs?
- What type of content do you prefer in Storage UPDATE: How to, tutorial, editorial/opinion, industry news analysis, or other? What have been the most and least interesting topics we've covered recently?
- Would you prefer to see Storage UPDATE in HTML or text format?
- Do you prefer to have all the content in the e-newsletter or a summary-and-link approach?
Please take a moment to send us answers to these questions. As we seek to provide a better e-newsletter, your comments are vital. Visit the following URL to post your comments.
Storage Service Providers
The Storage Service Provider (SSP) industry is small but growing slowly. Just 18 months ago, venture capitalists funded any business plan that included the words "storage" and "service." Currently, Dataquest lists 45 companies in the SSP space, including Arsenal Digital, MSI, SANrise, Storage Alliance, Storage Provider, Storability, StorageNetworks, StorageWay, and WorldStor. Several expansion companies capitalized upon industry pioneer StorageNetworks' successful initial public offering (IPO) in June 2000, but other companies' funding has seemed largely a matter of faith in the idea. And yet other companies, such as Freedrive.com, give away storage over the Internet. I've never understood how those companies stay in business.
The Storage Utility Model
StorageNetworks offers managed storage based on the utility model. The company essentially sells storage servers to its customers, places those servers in collocation sites, and gives customers a high-speed metropolitan area network (MAN) connection to their managed storage assets. StorageNetworks creates Storage Points of Presence (SPOPs) in what I call "the NFL cities." StorageNetworks has only recently begun to post significant revenues. Although the company isn't yet profitable, it's still relatively new.
The storage utility model has definite strengths and weaknesses. The provider maintains control over storage assets and can therefore concentrate resources and expertise in one place. And, in theory, a customer's storage can grow or shrink over time as its needs require without the customer having to make major unnecessary capital investments. However, the storage utility model can make it difficult for storage providers to scale their resources.
The Storage Service Model
After StorageNetworking World, I discussed the SSP market with Kirby Wadsworth, vice president of Marketing for Storability. Storability uses the storage service model rather than the storage utility model. Former StorageNetworking employees founded Storability, whose business is to manage customers' storage equipment.
Storability calls its model the AssurENT architecture. Storability deploys a rack-mounted storage appliance (Storability's agent) at the customer site. Using remote intelligent agents, Storability monitors its customers' storage assets 24 x 7. Storability assumes all the tasks of managing a storage array, including design and planning, additional deployment, backup and restore, and reporting. Storability aims to automate as much of its service in a central location as possible.
According to Wadsworth, in the short time that Storability has been up and running (since February 2000), the company has acquired more than 40 customers. Storability partners with EMC, Exodus, and VERITAS, with the first two companies reselling Storability's services when appropriate.
The current economy puts pressure on companies in the fledgling SSP marketplace. According to Wadsworth, companies such as SANrise—which is well funded and has a good business model—will prosper. Companies such as Storage Provider, which has stayed regional, and Storage Alliance, which concentrates on oil and gas in Canada, will continue to be strong niche players. But other companies might not survive.
The service model really resonates with the telecommunications companies, who own a lot of storage equipment they want to put to full use. Wadsworth tells me that "the real play is with the telcos—companies that own the infrastructure, pipes, and storage, are the lowest-cost providers." However, even though telecommunications companies are the lowest-cost providers and can provide the connections to the customers, they often lack high-quality customer service or differentiation.
The downturn in the economy will shake the SSP market segment out more quickly than many customers would like. Stay tuned for periodic reports.