Software, services are the sweet spots

Posted on December 21, 2004

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By Dave Simpson

End-user spending in the overall storage market is expected to creep at an anemic 3.6% CAGR over the next few years, but spending on storage software and services will increase more rapidly and garner a larger share of the market, according to research from International Data Corp.

Within the software market, it's interesting to note that end-user spending on traditional backup and archive software will decrease over the next few years, while the fastest-growing segment will be storage resource management (SRM) software. In fact, SRM is expected to become the largest storage software category by next year.

Although definitions for SRM vary widely, IDC defines SRM as "software that provides for the management of storage and storage networks as resources and includes such functions as device discovery, topology mapping, event monitoring and reporting, and configuration management."

IDC breaks down the overall SRM software category into four sub-categories:
--Capacity, quota, and resource management software;
--Device and SAN management software;
--Storage policy and automation software; and
--Virtualization and volume management software.

The increased interest in SRM is also shown in an end-user survey conducted last year by TheInfoPro research firm. For example, in TheInfoPro's Technology Heat Index, which ranked 20 technologies in terms of users' near-term spending plans, SRM scored a perfect 100, leading all other technologies. (Disk-to-disk backup/restore and storage capacity forecasting tied for second place with rankings of 90 in the Technology Heat Index.)

ILM, CDP, compliance
According to IDC, key drivers in the storage software market include information life-cycle management (ILM), regulatory compliance, and continuous data protection (CDP). Bill North, IDC's research director, storage software, defines CDP as a "technology that allows RPO [recovery point objective] and RTO [recovery time objective] to be reduced to near zero, and that permits recovery of the system data state as it existed at an arbitrarily selected prior point in time (recovery point)."

IDC considers the following vendors to fit into the CDP category: Alacritus, Atempo, EMC/Dantz, FilesX, Kashya, Mendocino Software, Microsoft (in the second half of 2005), Revivio, Storactive, TimeSpring, and XOsoft.

Another hot area in the storage software market this year, according to IDC, is automated provisioning, although survey results from other research firms has revealed serious reluctance on the part of storage administrators to automate tasks such as provisioning, or allocation. For example, in TheInfoPro survey cited above, automated storage provisioning scored a 65 on the Technology Heat Index.

Users need services
The market for storage services is not expected to grow quite as fast as the storage software market, but it is still the largest segment of the overall storage market and is projected to grow at a healthy 6% CAGR through 2008. Storage integration services are the fastest growing (8.7% CAGR) sub-category of the services market, followed by storage management services, consulting, and support.

Dave Reinsel, IDC's director of storage research, says that revenue growth in the storage services market is being driven largely by end users' increasing need to consolidate, as well as increased emphasis on data protection and business continuity--all of which are facilitated by third-party services organizations.

A 1999 IDC survey of IT sites showed that 52% were in the process of consolidating servers and storage. In 2004, 79% of the surveyed sites were in the process of consolidation. Among the benefits of server/storage consolidation cited by users: more-effective provisioning of servers and storage, reduced cost of assets and administration, and enterprise-wide control of all information resources.

One more interesting statistic from IDC's research: Although spending in the overall storage market is expected to creep at a 3.6% CAGR through 2008, terabyte shipments are expected to leap at a 51% CAGR, providing further evidence of rapidly declining prices--at least on the hardware front.


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