A CAGR of 26% is projected for the software management market over the next five years, with storage infrastructure products becoming the greatest revenue generators.
BY CAROLYN DiCENZO
Storage software is no longer just for backup. While 80% of storage management software products shipped in 1995 focused on backup and recovery, last year that number dropped to approximately 44%. This year, however, it is the storage infrastructure segment (e.g., data replication and virtualization) that is forecast to generate the greatest revenue, bumping data management products (backup and recovery/HSM) to the second spot for the first time in this market's history.
What users are really looking for are Enterprise Storage Resource Management (ESRM) tools to create the ultimate self-healing environment. But progress in that segment continues to be bounded by API issues, which prohibit optimum data sharing and control.
Nonetheless, the market for new storage management software licenses grew 28.5% last year, despite the year-end economic disruption, to $5.3 billion (see figure). This segment includes various software, from traditional server-based software to that which runs in disk arrays, on appliances, and soon, in storage networking devices. (Note: Products that shipped with storage devices at no incremental cost, including the base microcode, were not included in the software market.)
Overall, storage infrastructure software ac-counted for 37% of the market last year, data management for 44%, and ESRM for 19%. According to Gartner forecasts, the total software management market will record a compound annual growth rate (CAGR) of 26% over the next five years, reaching $16.7 billion in 2005. In terms of overall market leadership, EMC continued to lead the pack last year with a 25.5% share, followed by Veritas Software with 16.3% and IBM (including Tivoli) with 16.1% (see pie chart).
A look at the market by segment (storage infrastructure, data management, and ESRM) provides a better view into where storage device vendors (e.g., EMC, Network Appliance, StorageTek, and Compaq) are concentrating their software engineering efforts, versus where the pure-play software vendors are focused.
Data management still key
With the exception of IBM, which is also a device manufacturer, the pure software vendors lead the data management market. IBM pretty much owns the mainframe data management space with its DFSMS product family. IBM Tivoli Storage Manager is also a strong contributor to the company's leading position. Rounding out the top five are Veritas, Computer Associates, BMC Software, and Legato-all of which are strictly software providers.
Host-based backup and HSM/archive products saw minimal growth in 2000, and with 19% growth, the network backup sub-segment was dramatically down from previous years. This decline can be attributed to management and business practice changes at Computer Associates and Legato, not economic factors. While CA was rebuilding its storage team and planning to launch a new distributed storage product in late 2001, Veritas jumped ahead with strong growth in the backup product space, particularly with NetBackup.
Meanwhile, newer vendors such as BakBone, CommVault, and Syncsort are finding revenue dollars in mid-market segments from users looking to consolidate data management. However, while vendors are seeing new business in enterprise and mid-market segments, sales of value-added modules (such as solutions for Exchange and DBMS) continue to bring in revenue from the installed base.
As for the much-heralded Internet backup products, they have not gotten much traction. Also, although Veritas and Computer Associates have software packages, Natick, MA-based Connected is the only vendor with any significant business in this area.
Infrastructure software tops market
The storage infrastructure segment will become the market-share leader in 2001, surpassing data management products, as disk-array vendors join EMC in marketing both server- and array-based replication and access control products. This segment is forecast to see a 30% CAGR over the next five years.
The top five vendors in this segment, based on license revenue, are EMC, Veritas, Network Appliance, Compaq, and PowerQuest. Veritas captures the number two spot based on sales of its File System and Volume Manager software. Compaq and NetApp saw strong revenue in 2000 from sales of their data replication products. Hitachi Data Systems, Hewlett-Packard, and IBM are eyeing similar growth in 2001 from their array-based replication products.
Server-based replication and imaging products continue to find a growing market and include products from Computer Associates, Fujitsu Softek (formerly Amdahl Software), Legato, NSI, Power-Quest, Symantec, Veritas, and Sun.
Special-purpose file-management sys-tems vendors are also looking for ways to take part in the high-growth storage market by moving from slower-growing niche markets to applications with higher-growth potential. File-sharing products from ADIC, IBM/Tivoli, Hewlett-Packard, and Veritas target Web farms, reducing the need to replicate files to multiple Web servers-saving disk space and easing management. These companies are also looking to expand their presence in the rich media-sharing space, as a need for this technology moves beyond the movie and advertising industries and into more mainstream corporate environments.
Although Veritas has decided not to release its file-system product in a Windows-compatible variety, it has deepened it penetration of the HP-UX platform and has announced plans to deliver an AIX-based version by year-end. Optical and HSM vendors such as KOM Networks and Smart Storage (now part of OTG Software) are also looking to catch the SAN-wave by updating their file systems to target file sharing in networked-storage environments.
Cluster file systems are also getting renewed attention, with several start-ups targeting that space. Tricord, for example, recently began shipping a network-attached storage (NAS) offering with its cluster file system technology.
As for virtualization products, the focus now is on support for SAN, away from direct-attached storage where Veritas has ruled. Last year, DataCore and StorageApps shipped this product, and Compaq, FalconStor, StoreAge, and Vicom have followed suit. While it is too early to tell how this market will fare, one thing is certain: This will be a big market for vendors who are early in providing a strong solution and survive the initial shakeout. With 80% of external storage expected to be SAN-attached by 2005, users will need virtualization products to hide the complexity and simplify the management of their storage networking environments.
ESRM remains fragmented
The ESRM segment leaders reflect the fragmented nature of this market, where point products rather than end-to-end solutions are being delivered. A CAGR of 32% is forecast for the five-year period.
Last year, EMC topped the list primarily due to sales of its Symmetrix management tools, while Computer Associates, StorageTek, and IBM secured second, third, and fourth, respectively, primarily from sales of their tape management products. Only fifth-place BMC Software earned its spot by selling tools that truly address storage management across multiple storage devices.
Meanwhile, storage device vendors continue to introduce products to help centrally manage individual and groups of their own storage devices. For example, Sun released the StorEdge Management Console, which serves as the central console for managing multiple A5x00 and T3 disk arrays; HP rolled out its Command View XP; EMC has Control Center, which includes Symmetrix management; and IBM has StorWatch. These vendors are expected to add functionality to these tools, including API support to allow their products to better link to global management products.
Visualization products such as Veritas SANPoint Control and HP OpenView Storage Area Manager Suite not only provide a central launch point for management tools from multiple vendors, but also improve management of these devices through the API. Similar offerings are also available from BMC, Compaq, IBM/ Tivoli, and SANavigator.
To date, visualization products have been almost non-existent in end-user sites, as vendors struggle to address interoperability issues and user requirements. As customers gain experience with these new tools over this next year, we expect to see increasing demand for tools that provide more than basic monitoring and launch functionality.
Looking beyond device administration products, Storage Resource Management (SRM) remains more point products than total solution sets. Quota management received a lot of customer dollars buying tools from Windows-focused vendors such as HighGround (now part of Sun), NTP Software, and W. Quinn.
Disk vendors are expanding their software array portfolios to include perfor mance management and optimizing tools, such as EMC's DB Tuner and Optimizer and HP's Surestore Performance Advisor. Historically mainframe-centric SRM tools such as Resource Availability from EMC, RESOLVE: SRM from BMC Software, and SAMS: Vantage from CA are slowly being upgraded to better support distributed and networked storage environments.
BMC launched its Application Centric Storage Management (ACSM) Initiative, and HighGround's SRM and SRM for Exchange gained some traction as Microsoft finally released its data-center versions of Windows 2000.
While these point solutions are selling, the ultimate goal is integrated toolsets that not only provide information, but also move closer to overriding goal of self-healing.
Stronger tools, but slow progress
The storage management market continues to provide new and stronger tools, but these tools are still more point products than total solutions. The desired goal is a suite of software with plug-in modules that can be geared to customer needs and storage topologies. This, of course, was the vision for network and system management-a vision that has not yet been realized.
Over the next five years, new tools will begin to appear that will help users manage their storage networking environments. Just how big a help these tools will be will depend on the complexity of the environment and the ability of the storage software vendor to incorporate management of the multi-vendor components. Vendors need to continue their work to embed support for existing management standards into new product releases and to add their own API to allow for even deeper connection to global management software. Vendors that provide the necessary links to allow their devices to participate effectively in the emerging global management applications will win out over their less manageable competitors.
For end users who don't want to "live" through the pain, outsourcing will be an option. In fact, the tools that outsourcing vendors develop to manage their businesses may prove to be the foundation for a whole new way of looking at storage management as a service within the corporate environment.
Carolyn DiCenzo is chief analyst at Gartner Dataquest (www.gartner.com) in Stamford, CT.