VCs pour, and storage start-ups drink

Posted on April 01, 2003

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Despite the economic slowdown and IT spending clampdown, venture capitalists keep funneling money into storage start-ups at a surprising rate. Just a sampling of funding rounds over the last two months includes the following:

  • LeftHand Networks (IP storage arrays): $20 million
  • EqualLogic (iSCSI disk arrays): $15 million
  • Arsenal Digital (one of the few surviving storage services providers): $10.5 million
  • LiveVault (online backup and recovery): $10 million
  • EVault (online backup and recovery): $6 million

Few start-ups have the resources to field sufficient service and support organizations (even with the help of VARs and integrators) to survive on their own. But it's equally true that any start-up that has survived this long, and has attracted the VC bucks indicated above, has some technology that's worth considering.

Whether it's disk arrays or storage management software, end users should not limit their short lists to the obvious few big vendors. Whereas the big vendors are hampered with slow-moving bureaucracies and the need to maintain backward compatibility, etc., start-ups are free to rethink storage from a clean slate. That makes for cool technology.

But IT organizations typically don't buy the latest and greatest technology. Although the DMX arrays may prove an exception, IT managers don't buy Symmetrix arrays because they're the latest and greatest. Rather, they buy them because of EMC's service and support organization (and maybe for the software).

Few end users buy technology for technology's sake. They buy solutions to problems, and if they can solve the problem with the second-best technology from a well-known vendor they'll forsake the best technology from an unknown start-up.

That's unfortunate, because the solutions from start-ups are often the best—and almost always cost less. You just have to roll the dice on the service-and-support issue.

Of course, the exit strategy for many start-ups today is to be acquired. And when that happens you get the best of both worlds—superior technology with the requisite service and support. Until then, end users should give start-ups a place at the bidding table.

In this issue

Making sure that your IT infrastructure is secure is nothing new, but an intense focus on storage security is relatively new—and to some, confusing. Industry analyst Nancy Marrone, with the Enterprise Storage Group, provides an excellent introduction to storage security in this issue (see "Why you need (more) storage security," p. 40).

Marrone notes that "the recent focus on storage security stems from a greater awareness of the value of data to an organization and the reality that security breaches can and do compromise valuable company information."

She goes on to argue that just protecting data at the front-end (e.g., the network) is not enough, and that security threats are amplified by storage networking configurations where there are multiple "entry points" into data.

If you're wary about the security of your storage resources and data, Marrone's article is a good place to start in developing an ironclad protection strategy.

Dave Simpson,
Editor-in-Chief


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