State of the market

Storage is one of the few areas of information technology that has continued to grow in spite of slowdowns in other areas. Over the past five years, storage revenues in Canada have increased at a compound annual growth rate of 16 per cent. Future revenue growth, however, is expected to be much slower,

at only one per cent per year. This slower revenue growth is good news for users, as it indicates that prices are falling.

Demand for storage capacity is continuing to increase. The digitizing of all kinds of information, from e-mail to videoconferences to print materials, will continue to drive this growth. In addition, increasingly stringent legal requirements for archiving will ensure that demand for storage capacity will continue to grow for the foreseeable future. So with demand for storage continuing to rise, why are prices falling?

Prices for storage products are falling in part because of falling component prices. Disk drives are the key component of all storage technologies, and increasing areal densities have meant that users are able to get more capacity for less cost. Cost per MB will continue to decline for at least the next several years as this trend advances. Furthermore, storage vendors have been experimenting with alternatives to costly SCSI disks. Disk arrays using ATA or serial-ATA disks are widely available. For many users, ATA provides adequate performance at a much lower cost. Improvements to the S-ATA interface expected for later this year will offer performance equalling or surpassing SCSI, again with a substantial cost advantage.

In addition to falling disk drive prices, costs for other components are also falling as the technology matures. While Fibre Channel (FC) has been the gold standard for storage transport for several years, ongoing research has yielded other alternatives. Ethernet speeds have increased to be comparable to FC, so that more networks are now based on this lower-cost technology. The competition from Ethernet storage has pulled down the prices of FC storage.

IP protocols have also been expanded to storage, which has yielded several IP storage technologies, including iSCSI, iFCP and mFCP. IP storage has the advantage of overcoming distance limitations of traditional FC storage. The use of well-known, standardized Internet protocols has lowered the cost of installation of storage networks and has simplified management, as these skills are well-established and widely available. Fibre Channel does offer some performance advantages, but more users are employing a combination of FC and Ethernet technologies to maximize the benefits of each.

In addition to the technology changes in the storage market, there are marketing issues that are also driving prices down. The adoption rate of storage networking is very high among large private sector organizations. In fact, this segment of the market is virtually saturated. As a result, vendors have been looking for growth from small and medium-sized businesses (SMBs). Adoption of storage networking has been lower among SMBs because of relatively high cost and complexity. Now that vendors are targeting these users, they are addressing both of these concerns. Every major storage vendor has announced new products or versions of products specifically designed for SMBs. The focus for these new products is ease of use and lower cost. Vendors are making it economical for smaller organizations to take advantage of the benefits that storage networking can offer.

Data storage and protection is becoming a front-burner issue for organizations of all kinds due to more onerous legal requirements. In the U.S., legislation has driven the adoption of more stringent and comprehensive backup procedures. Although there is no similar Canadian legislation, wise users are adopting compliance policies in advance of legal requirements.

Because the volume of data is growing, many users are having difficulty completing tape backups outside of operating hours. This is consistently identified as one of the key pain points of storage users. Storage vendors have responded with disk-to-disk (D2D) backup products to speed up the process. While disk-to-disk backup is faster, tape backups are still being used. Tape offers infinite capacity

and the ability to store data off-site — key advantages over D2D technologies. A blended approach, using all three technologies, is often referred to as disk-to-disk-to-tape or D2D2T. This approach sees users backing up primary data to disk, and then backing up the secondary copy to tape.

Finally, storage vendors are relying more on storage products to drive revenues. Traditional backup and recovery software products are mature, but newer storage management software is continuing to improve. Virtualization is a hot topic for storage vendors. Most users have excess storage capacity unused on their network. Virtualization software can find and use this excess capacity, increasing storage space without the need for additional hardware.

Jennifer Ewen is the Senior Market Analyst for Storage Products at Evans Research Corporation. She can be reached at jewen@evansresearch.com

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