The growing cloud storage market

Posted on February 28, 2011

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By Jeff Boles, Taneja Group

Is the cloud still ramping in buzz, or decreasing in buzz?  From day to day, it can be hard to tell, depending on what indicators you monitor (e.g., number of articles, stock prices, new service provider announcements, etc.).  But one thing is without doubt: The cloud is here to stay. 

From time to time, I have had my moments of ambivalence, especially when I’ve seen various service providers struggle with product limitations, or have seen enterprise customers throw their arms up in frustration about the compromises they have to make with various converged offerings being brought to market as “cloud enablers.”

But my message as we march through 2011 is: Don’t fret, and don’t doubt that the cloud will have a place in your enterprise, in one form or another. 

All of the issues we see today are perfectly normal for the early stages of any market, and given the amount of innovation taking place the limitations customers see as fundamental roadblocks today are evaporating rapidly. As they do, more practical cloud solutions will help enterprises better address fundamental storage and compute challenges.

This is clear in the Taneja Group’s recently released report, “Emerging Market Forecast for Cloud Storage Products.” Notice that this report is focused on products, which includes all storage systems, gateways, and other special-purpose software and hardware solutions for delivering or connecting to cloud storage.  In our view, working out definitions for the market is important because it boils cloud storage down to something easily understandable and well organized.  Part of the problem is that the cloud is an ephemeral space without clear boundaries, and it can mean a hundred different things to a hundred different people.  That complexity is daunting for IT strategists looking at the thousands of potential services in the cloud, with more and more being added by a wide range of consulting companies, VARs, and service providers. 

When you take a different approach of boiling this market down to enabling technologies, there are only a handful of different types of solutions. While cloud services may add up to billions of dollars and come in a variety of business models, they will ultimately be built on the backs of products and the vendors that deliver them.  Understanding how these capabilities enable enterprises will in large part determine how the cloud market fares.  The market will be determined by how these products show up in enterprises and in service providers, and how they enable business groups and customers to interact in new ways.

For example, it goes without saying that storage for primary I/O is going to be a requirement forever. But as we move into cloud infrastructures, customers are opening the door to a wide variety of systems for the delivery of primary I/O.  The focus is now on business capability changers – features such as scalability and automation that fundamentally alter cost effectiveness.  In cloud infrastructures, servicing I/O is no longer a decision made first around preconceived notions about the superiority of file versus block access, or Fibre Channel versus Ethernet. 

The required capabilities have changed, with a focus on new levels of efficiency and scalability that will reinvent costs and make any cloud business possible.  Such solutions will alter buying choices when they really have an impact on business capabilities, but they will take off in adoption when they enable highly converged and/or multi-tenant infrastructures that touch more users and applications than ever before, and also drive users on the far end of the wire into new technology acquisitions because of the improved synergies.

By far, the biggest slice of the $4 billion cloud storage product market is primary I/O, and it will remain that way as cloud storage grows into a $10 billion market by 2014 (according to the Taneja Group), even in the midst of other market segments that are less mature and are growing at much higher CAGRs.

Today, the primary I/O sitting behind cloud-like infrastructures may often be cobbled together from legacy storage, with lots of “work-arounds” to compensate for their deficiencies.  But a number of vendors are innovating in next-generation solutions with scalability and efficiency advantages. Examples include Dell, EMC, HDS, HP, NetApp, Scale Computing and many others. 

Today, they make up about 40% of the primary I/O slice of the cloud storage market, but in four years these vendors will likely dominate.  HP, for example, has assembled a broad arsenal of cloud storage products. There are few contenders with a storage portfolio that crosses all sizes of businesses, and only a handful are coming to market with effective converged solutions for the largest customers.

A leadership position in cloud infrastructures can lead to the delivery of many types of other solutions.  If a service provider is running, say, HP 3PAR storage, there might eventually be synergies with other HP products for customers of that service provider.  The vendors that get this might find that the cloud significantly grows their overall business. And that’s where the cloud translates into business capabilities for customers, as well as greater success for vendors. 

Each of the product segments in this emerging market -- including content storage, gateways, backup and more -- stand to have similar impact for vendors and customers alike.  For more information, see the abstract for the “Emerging Market Forecast for Cloud Storage Products” report.

Jeff Boles is a senior analyst and director of validation services with the Taneja Group research and consulting firm.




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