By Lisa Coleman
While 2002 was the first year that a significant revenue decline occurred in the network-attached storage (NAS) market since its inception in the early 1990s, the market is bouncing back, due in large part to growth in the lower midrange segment, according to International Data Corp.
In addition to obvious trends such as the move to ATA-based NAS appliances, a recent IDC report also notes a potential future trend toward putting NAS "heads" in storage switches and directors. For example, IDC predicts that by 2005, 17% of all NAS heads could be embedded in switches and director-class switches (see figure on p. 22).
"We expect NAS or file-level services to continue to grow," says Brad Nisbet, senior research analyst at IDC, "but the question is, 'How—and where—will these file-level services be delivered?' ''
Traditionally, NAS functionality and disk drives are packaged in the same enclosure. In 2002, vendors began to separate disk drives from NAS functionality by introducing NAS heads connected to a back-end storage area network (SAN) that provides a single storage pool.
Starting later this year, IDC expects NAS heads to move into the SAN fabric by being integrated into switches and directors via blades.
Midrange boosts market
In 2002, the worldwide NAS market dipped 14% to $1.49 billion from 2001's $1.74 billion. The market is expected to rebound through 2007 at a compound annual growth rate of 16.4%.
The bright spot in the NAS market was the lower midrange segment (devices priced between $5,000 and $25,000), which grew by 41% in 2002 in terms of revenues (see figure). This year, many vendors introduced midrange NAS options, including Dell's expansion of its PowerVault 725N series, FIA's POPnetserver 8000, Hewlett-Packard's b2000, Iomega's P800 and P850m, and Snap Appliance's Snap Server 4500.
At the higher end of the midrange segment ($25,000 to $100,000 devices) EMC's Windows-based NetWin 200 NAS server is expected to debut within the next couple of months, and later this year, Network Appliance is expected to formally announce its FAS250, an "entry-level" storage appliance supporting iSCSI and NAS. Also, Spinnaker Networks recently announced the SpinServer 4100.
In addition, the NAS market was pumped up by the use of ATA drives in systems such as EMC's Centera and Network Appliance's NearStore. Revenue for larger ATA NAS systems increased 28% in 2002, and the terabytes consumed with these systems shot up 108%, according to IDC. While the larger ATA NAS systems are targeted mostly at secondary or "reference data" markets—not for use as primary file sharing servers—there is evidence that a few of these systems are being used for primary file sharing. This trend may continue as ATA performance and reliability increase, according to IDC.
One of the biggest trends in the past two years has been the growing use of Windows as the foundation for NAS devices. In 2002, Windows-based NAS appliances captured 32% of units shipped, according to IDC (see figure). (Gartner Dataquest estimates that Windows captured 38% of NAS unit shipments in 2002.) Windows-based NAS is expected to continue to grab market share, especially in the entry-level and midrange market segments. (See "Microsoft debuts next-generation NAS software" )
"Windows-based NAS is marching upstream, as companies like Dell and HP are bringing it more into the midrange," says Nisbet. "Both Dell and HP gained market share in 2002, much of it in the lower midrange." In fact, Dell's NAS market share grew 133% in 2002, and HP's share grew a whopping 693% since the company entered the market in 2001.
Microsoft is making an aggressive bid in NAS and other storage markets. The company formed an Enterprise Storage Division in 2002. This year, with the introduction of Windows Server 2003, the company added storage functionality such as increased SAN support and snapshot capabilities, as well other features (see "Windows Server 2003 means better storage management," InfoStor, April 2003, p. 1).
"Microsoft is clearly setting its sites beyond just NAS," says Nisbet. For example, EMC and Microsoft extended their partnership earlier this year to include swapping APIs. EMC will integrate Windows 2003 APIs into its ControlCenter storage management framework and essentially allow an EMC SAN to be managed through Windows, he says.
According to a survey of 192 end users, conducted by TheInfoPro, price is by far the number-one selection criterion for users considering NAS acquisitions. Price was cited by 43% of the respondents, followed by "technology innovation" by 23% and "functionality" by 18%.
TheInfoPro survey also showed the beginnings of end-user interest in NAS-SAN integration, with 19% of the respondents saying that they plan to integrate the two technologies within the next 12 to 18 months. NAS clustering was cited by 26% of the respondents.
HP targets entry-level NAS
Hewlett-Packard is extending its network-attached storage (NAS) line down into the entry-level segment of the market with the NAS1000s, a Windows-based NAS appliance with a top price of $6,999 for 1TB. The NAS1000s is available in three models: 320GB ($2,999), 640GB, and 1TB.
The NAS1000s is the next step down from HP's SCSI-based NAS b2000, which is priced from $8,000. The NAS1000s uses hot-plug ATA disk drive technology in a 1U form factor. Features include a 2.8GHz Intel Pentium processor, multi-protocol file serving, support for RAID, and backup (including point-in-time snapshots), and anti-virus software. The device also supports automatic fail-over and clustering.