The Competition Spars with EMC

Reggie Jackson used to brag that he was "the straw that stirs the drink" for the championship New York Yankees teams of the late 1970s. Two recent announcements indicate that EMC continues to be the straw the stirs the drink in the midsized and large storage arenas--and interestingly, EMC didn't make either announcement.

Earlier this month, IBM unveiled an entry-level disk server based on Internet SCSI (iSCSI) technology and aimed at the midsized market. Big Blue has positioned the TotalStorage DS300, which runs Windows and Linux, as suitable for use with its eServer xSeries and BladeCenter rackable systems for workgroup and departmental needs. The DS300's most notable attribute, however, is that it costs about one-third less than similar technology EMC introduced in May.

Shortly thereafter, Hitachi Data Systems (HDS) took the wraps off its new flagship product, which takes aim at the very high end of the market. The TagmaStore Universal Storage Platform is the third generation of Hitachi’s Lightning storage platform and the first refresh of the product line since 2000. Here, too, EMC is clearly in the crosshairs.

The TagmaStore is impressive technology that delivers 68GBps of cached bandwidth and 2 million I/O operations per second—nearly five times the performance of its predecessor. The line has three models, with the largest, the USP1100, offering 332TB of internal storage. The TagmaStore also provides an array of connectivity options: Fibre Channel, Fiber Connectivity (FICON), Enterprise Systems Connection (ESCON), and Network Attached Storage (NAS).

Several analysts argue that the release has given HDS the technology lead at the high end, a boost that came not a moment too soon. Last quarter, HP, which sells high-end HDS storage on an OEM basis, reported significant weakness in its enterprise storage business—a weakness attributed in part to the aging technology HP was marketing.

Despite its impressive hardware specifications, the TagmaStore’s headline feature was new virtualization technology. Unlike the network-based virtualization in EMC and IBM storage, TagmaStore's virtualization technology, which is capable of controlling up to 32 petabytes of internal and external storage, is embedded in the controller. Moreover, the TagmaStore comes with software that lets a single set of tools manage all the storage, enabling data replication and migration across heterogeneous storage systems. In the past, HDS has been criticized for not clearly articulating a virtualization strategy, but at the TagmaStore’s release, HDS chief technology officer (CTO) Hu Yoshida stressed that the new virtualization capability was the centerpiece of the technology.

That emphasis, however, has left some observers less that impressed. In fact, on the day of the announcement, Shebly Seyrafi, an analyst for Merrill Lynch, argued that virtualization was the least important aspect of the TagmaStore. In his view, customers haven't yet broadly embraced virtualization, which Seyrafi termed a “half-baked concept”—a notion that has some support among large-scale–storage end users. He questioned whether end users would opt to put the HDS technology in front of their other storage systems. Based on the product's other attributes, however, Seyrafi felt that the TagmaStore gave HDS at least a six- to eight-month performance lead at the high end.

So, with IBM staking a claim as the price leader in the midrange market and HDS emerging as the performance leader at the high end, where does that leave EMC? As the clear leader in the storage software market, that’s where. And that's not a bad place to be.

According to IDC’s World Wide Quarterly Storage Tracker released last week, EMC had 32.5 percent of the storage software market worldwide in second quarter 2004, a gain of 3.4 percent over the same quarter last year. Moreover, the overall software storage market is growing at a healthy 16.9 percent year over year. In contrast, Seyrafi estimates that the storage hardware market is growing at a more modest 5 percent annual clip. Storage Resource Management (SRM) is the fastest growing segment of the storage software market—and a segment in which EMC has invested heavily through its $1.3 billion purchase of LEGATO Systems in the summer of 2003.

EMC might once again be a step ahead of its competition. In the late 1990s, many analysts wondered whether large enterprises would continue to purchase software from independent vendors such as EMC or opt to purchase storage from systems vendors such as HP and Sun Microsystems. Although systems vendors made gains, EMC has defended and expanded its market share. Now, storage is emerging as an independent technology infrastructure in large and midsized companies, and EMC seems well positioned to lead that development and continue its role as the straw the stirs the storage drink.