Microsoft's storage partners—well-known companies such as EMC and Iomega that serve small and midsized businesses—should pay attention to Microsoft's new storage-related products and services, which are intended to affect the competitive landscape of the storage market. For Microsoft's business customers, the software giant's storage-related moves, coupled with the commoditization of cheap, off-the-shelf storage devices, will lead to a new era of affordable storage for all. This change in product offerings is beneficial for companies that haven't invested heavily in storage solutions. Here's what you need to know about Microsoft's storage product plans.

What's New in Windows Server 2003 R2
Although Windows Server 2003 and earlier versions include core storage technologies such as Volume Shadow Copy (VSC), Virtual Disk Service (VDS), Encrypting File System (EFS) and NTFS, and Automated System Recovery (ASR), the latest Windows Server 2003 Release 2 (R2) includes a number of key improvements.

DFS replication. The Distributed File System (DFS) has been upgraded and renamed to DFS Namespaces. The replication piece, previously handled through the File Replication Service (FRS), has been significantly overhauled and renamed DFS Replication. DFS Replication uses a multimaster replication model that lets it replicate DFS-based data more efficiently over the network than FRS did. DFS Replication efficiency results from a new technology called Remote Differential Compression (RDC), which replicates only those parts of a file that have changed, dramatically decreasing load on network bandwidth. This change makes remote storage access more efficient and less expensive.

File Server Resource Manager (FSRM). FSRM is a set of tools designed to help administrators set and manage storage quotas on a per-volume or per-folder basis. When you launch FSRM, it automatically loads two snap-ins: Storage Resource Management, which creates quotas and screens files to block users from saving certain file types, and Scheduled Storage Tasks, which schedules storage reports automatically and on demand.

Disk quota limits. Windows 2003 R2 lets you configure a hard or soft storage disk quota for each user. If you configure a hard disk quota, when a user reaches the configured disk storage quota the system generates a system log file entry and doesn't allow the user to save additional files. With a soft quota limit, the system sends a warning message to the administrator, but the user can continue saving files to disk. An administrator can configure settings that cause the system to automatically notify him or her when disk quotas for users reach a certain percentage of full. Administrators can also set a quota template for a master folder, and every folder that sits underneath this master folder inherits the quota set in the template. The quota template is a useful feature for administrators who want to create similarly configured disk storage quotas for a number of users.

Storage Manager for SANs (SMfS, or "simple SAN"). SMfS is a Microsoft Management Console (MMC) snap-in tool that makes storage management easy. SMfS lets you discover Fibre Channel or Internet SCSI (iSCSI)based SANs, including low-level SAN information called storage array properties. You can create, delete, and expand storage array logical unit numbers (LUNs), which identify storage allotments. You can also allocate LUNs to specific servers on the SAN and monitor the status, health, and allocation of a LUN. You can use simple wizards to configure most of the core SMfS functionality.

Windows Storage Server 2003 R2
Microsoft recently released Windows Storage Server 2003 R2 (WSS03 R2), which is available only with new server appliance hardware or rack-mounted systems from server hardware manufacturers. You can't purchase the Windows Server R2 software as a standalone item.

WSS03 R2 is interesting. Microsoft basically took Windows 2003 R2 and removed some of the non-storage-related capabilities, then optimized the system for file serving. The great thing: You can use tools you already have to manage your WSS03 device.

WSS03 R2 is a dramatic improvement over the previous version, thanks to three new features: Single Instance Storage (SIS) engine, a full-text search engine, and optimized low-level file server performance.

Single Instance Storage engine. SIS, which was available previously only for and with Remote Installation Services (RIS), copies transparent duplicate files to a SIS Common Store and replaces the originals with reparse points to reduce disk consumption. The concept is similar to UNIX symbolic links.

Here's how it works. Say you have five duplicate files on a file server. SIS replaces each of the five physical files with a separate shortcut that, to an end user, resembles a normal file. If no one edits these files, only a single physical version of the file is stored in the SIS Common Store. When a user wants to edit one of the files, SIS leaves the original in the SIS Common Store but places a copy of the original file in the directory that the user specified. SIS lets users work in their usual manner while minimizing the amount of disk space they use. Also, common backup solutions, such as Veritas's Backup Exec and Computer Associates' (CA's) ArcServe Backup support SIS. Microsoft reports that SIS can provide as much as a 60 percent savings in disk space.

Full text search engine. This search feature, which leverages Windows 2000 Server's and Windows XP's indexing engine and client search features, provides almost instantaneous results from network-based searches and searches on network share directories. The indexing engine supports common file types (such as Microsoft Office files) and various filters for other file types (such as Adobe PDF, WinZip, Adobe Macro-media Flash, Corel WordPerfect, and MP3).

Optimized low-level file server performance. This preconfigured performance feature makes the WSS03 R2 the fastest file server available. For even faster performance, WSS03 R2 lets you disable 8.3-file-name generation on XP clients. The optimized performance occurs at the configuration level, not at a low level, which means that it's possible for Windows 2003 R2 users to achieve similar performance levels if they know how to manually configure the appropriate settings.

WSS03 R2 includes all the features in Windows 2003 R2, which means you get the benefits of that product's storage advances, including the new DFS Replication and FSRM functions.

System Center Data Protection Manager 2006
Microsoft's System Center Data Protection Manager 2006 (DPM) product is a 32-bit disk-based data backup and recovery solution that augments slower and less reliable tape-based systems. The goal here is to provide users with snapshots of recently saved data that they can access via the normal VSC service. That means administrators won't need to get involved every time someone overwrites or mistakenly edits a key document.

As a server-based solution, DPM protects data on your file servers. So you typically install DPM on a separate server, with its own storage, and configure it to monitor (and back up) data from other file servers. Installing and configuring DPM is straightforward, if a bit time-consuming. The product installs a copy of SQL Server 2000a with Service Pack 1 (SP1) and Reporting Services, and Microsoft IIS. The DPM management console is clean and straightforward, with modules for monitoring, protection, recovery, reporting, and management. When you first install DPM, you need to configure which disks will be in the storage pool, remotely install a DPM agent on any servers you'll be protecting, then create the protection groups, which specify a set of data to protect and how often it will be protected. You can also configure how much network bandwidth DPM can consume by using bandwidth usage throttling.

DPM needs to be installed on an Active Directory (AD) member server, not a domain controller (DC), which might limit its use in smaller businesses. And, logically enough in my mind, you can't store protected data on the system partition of the server on which DPM is installed. That is, you must offer DPM other physical disks for storage. And you must install a DPM agent on each server you are protecting.

DPM isn't perfect. The product protects only file servers and has no understanding of Microsoft Exchange Server, SQL Server, or other common data stores. Also, DPM can't replace tape-based backup completely. Instead, the product is designed to provide a limited restore window for users. For more permanent long-term backup, you still need to use a traditional tape-based backup solution. In this initial version of the product, DPM is ideal for 5 to 99 servers only, making it a small or medium-sized business product. Larger enterprises might find DPM useful in branch-office situations.

DPM follows the Microsoft Operations Manager (MOM) licensing model. That is, you can roll out DPM on your own servers or purchase prebuilt DPM servers from OEMs such as HP in appliance and rack-mounted form factors. Future revisions to DPM will natively support Exchange Server, SQL Server, and Windows SharePoint Services, and a 64-bit version will ship in the Longhorn Server timeframe, I'm told.

Windows Server "Longhorn"
When Longhorn Server is released in 2007, it will formalize Microsoft's goals to provide users with market-renowned file servers that have exceptional storage capabilities. It's likely that Longhorn Server will utilize WSS03 R2's SIS technology across all product editions, but at this early stage there's a lot that's not known about Longhorn Server. One of the big questions is whether Longhorn Server will include the SQL Server-based storage engine called WinFS, which should be finished before Longhorn Server is released.

Itanium users should also be aware that the Itanium version of Longhorn Server won't operate as a file server. Instead, this high-end Windows Server version will focus exclusively on three markets: databases, custom applications, and line-of-business (LOB) applications.

Microsoft is gunning for your storage dollars at every conceivable point in the market, although high-end SAN users are unlikely to be swayed by Windows 2003 R2's Storage Manager for SANs, and DPM is currently geared only for small and medium-sized businesses. But it's only a matter of time before Microsoft has the whole market covered.

In the meantime, you should weigh the benefits of Microsoft's integrated and simplified approach against the costs and complexities of third-party solutions. Microsoft's storage moves seem to be targeted to low-end and midmarket companies with moderate storage needs. But when Longhorn Server is released in 2007, you should expect Micro-soft to have revamped its storage products to encompass the demands from any enterprise. Microsoft is after the storage solutions market, so storage solutions providers beware. The competition, as one might expect, should truly benefit all customers.