It’s the end of storage service provision as we know it, maybe

So long, storage service providers (SSPs), we hardly knew you. At least, so say the analysts at IDC.

This week, the Framingham, Mass.-based research firm sent me a link to an electronic newsletter, dubbed The Disappearance of Storage

Service Providers. With a provocative moniker like that, who wouldn’t be interested? (As an enterprise-focused journalist, I don’t often get paid to go googlewhacking, so I take what I can find.)

According to IDC, the outsourced storage market, which entails providing services such as storage-area networks (SANs) or network-attached storage (NAS) on contract, has gone bust in the wake of the dot-com collapse. Many of the original dozen or so SSPs have gone broke, refocused on “”traditional”” storage management services or switched to developing storage management software, IDC says.

For the most part, they were launched at a time when venture capital poured down like rain in Vancouver, and were fed in turn by predictions of surging demand for storage due to rapid e-commerce growth.

While all this is interesting, I had to wonder if this was really news. After all, the online dream died its grisly death some time ago, so why is IDC talking about the plight of SSPs now?

To answer this, we have to go back to July 9, 2001, when Gartner Group Inc. issued its own predictions for the SSP market. In a press release at the time, the Stamford, Conn., company cast a pall over the industry, citing the collapse of online businesses as a major factor in reduced demand.

Gartner predicted the market would grow from US$176 million in 2001 to more than $6 billion in 2004 — somewhat lower than earlier expectations. The number of competitors who jumped in early (and jumped in deep) helped commoditize the market and also hastened the threat of consolidation. “”While a raft of new providers should mean more sales, a good number of them are going to fail which could spook potential customers,”” reads the press release.

Gartner also covered the collapse of StorageProvider in May, calling it the first “”fatality”” of the market.

For its part, IDC seems to have just caught on to this trend. The firm is currently revising its market forecast from last February, when it predicted a US$10 billion global industry by 2005.

As for the “”disappearance”” bit, IDC admits that may be premature. Big firms, including IBM Global Services, EDS, Qwest and other telcos have become the “”new”” SSPs, combining storage provision with other hosting and network services. Stand-alone firms can also find a niche, partnering with the larger players, software vendors or resellers and integrators as part of package deals, IDC says.

That’s not much different from the Gartner brief, which predicted good things for telecommunications firms in the SSP market.

The Gartner brief also plugged a broader report on the SSP market, which was only to be expected, given the firm’s line of business.

The same could be said for IDC, which in mid-January launched a new study on the global storage services market. Looks like the “”newsletter”” could have been a way of drumming up extra interest in the topic. That might also explain the headline hyperbole.

What’s worse, though, is that Gartner beat IDC to the punch — by almost six months.

Free industry analysis may make for interesting advertising, but don’t dress it up as news. Just send me the press release.

johnsaundeers@sympatico.ca

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