The Year in Review
A look at the key trends that shaped the storage industry over the last year in the interface, tape, optical, and software markets.
By Dave Simpson
It`s been an exciting year for the storage industry. Data-intensive applications such as Web servers, intranets, and data warehouses led to exploding capacity requirements at most IT shops. As a result, storage was elevated to prime status in the IT purchasing decision hierarchy. Perhaps more than any other development, the advent of Fibre Channel and related architectures such as storage area networks (SANs) breathed new life into the industry, promising a number of benefits for end users, as well as renewed revenues for the vendors that can survive the intense competition. Fibre Channel is a storage and networking interface that provides up to 100MBps and 126 devices per loop, and connectivity distance of up to 10 kilometers. For configuration flexibility, it can be implemented in everything from point-to-point connections to switched fabric networks with hubs and switches.
The advent of Fibre Channel this year enabled early implementations of SANs. Put simply, a SAN is a "high-speed network that establishes a direct connection between storage elements and servers," according to Strategic Research Corp., a market research firm in Santa Barbara, CA. Dataquest, a market research firm in San Jose, offers a more detailed definition of a SAN: "A cluster of storage systems that may or may not include servers; connected via Fibre Channel, SCSI, ESCON, or other host interface technologies; that has at least one storage network device (e.g., hub, switch, router, director, or bridge) that manages all or a portion of the data flow throughout the environment."
For IT managers, the potential benefits of SANs are fast data access, easy and virtually unlimited scalability, long connection distances, high availability, and centralized management of storage resources. The SAN market is difficult to track, so estimates of the size of the market vary widely. One research firm predicts that the SAN market will top $5 billion by 2000, while another firm expects the market to be only $1.7 billion by 2002 (or only about 4% of total spending on RAID devices). This year, a number of large IT organizations began rolling out SANs. Examples include Burlington Coat Factory, Unocal, IBM Global Services, and a slew of video production houses.
And, cementing the legitimacy of Fibre Channel SANs, 3Com announced its SAN plans last month--the first instance of one of the leading network equipment vendors entering the market. Networking giants such as Cisco are expected to follow suit next year.
However, Fibre Channel hardware is still relatively expensive, and there are ongoing interoperability challenges. But organizations such as the Fibre Channel Loop Community (www.fcloop.com) are working to iron out those difficulties. The FCLC, in conjunction with the University of New Hampshire`s InterOperability Lab (IOL), regularly hosts "PlugFest" interoperability events. (For a detailed look at Fibre Channel interoperability, see next month`s Special Report.) Another organization that promises to smooth the transition to the promised SAN--the Storage Networking Industry Association (www.snia.com)--was formed last year to provide a forum for setting standards for emerging technologies such as SANs and network-attached storage (NAS). The group will focus on issues such as files systems, clusters, and SAN management. SAN or non-SAN, the market for Fibre Channel products is beginning to boom. For example, Dataquest expects the market for RAID subsystems with Fibre Channel host connections to grow from $884 million this year to $4.5 billion in 1999.
A year ago, only one disk drive manufacturer--Seagate--was shipping Fibre Channel drives. Since then, Fujitsu and IBM have begun shipping, and most of the other leading drive manufacturers will follow suit next year. Similarly, virtually no other Fibre Channel devices were available one year ago. Now, almost every RAID, controller and adapter vendor--as well as a number of hub and switch vendors--have introduced Fibre Channel devices. Even tape library vendors have introduced Fibre Channel converters (or routers or bridges) from vendors such as Crossroads and Atto to enable their libraries to work in Fibre Channel networks. Examples include ADIC/Emass, Exabyte, Quantum/ATL, Spectra Logic, and Storage Technology. Although the benefits of Fibre Channel SANs are fairly clear for vendors and IT managers, another group stands to benefit significantly from SANs: storage-centric and network-savvy systems integrators and VARs. This is because, although SANs look simple on a napkin, they`re very difficult to implement and integrate. Most corporations will need help, whether from a large vendor or a third-party integrator.
Despite all the progress on Fibre Channel and storage networking technology, SCSI remains the dominant server-level interface and, according to storage analysts, that will be the case for at least the next few years. This year, the latest iteration of this decade-old bus emerged--Ultra2 LVD SCSI, with a bus speed of 80MBps. Virtually all of the leading drive/controller/adapter vendors have introduced Ultra2 LVD devices over the past few months, putting a strain on those vendors` R&D departments as they simultaneously strive to rush Fibre Channel products out the door.
In addition, the SCSI community, led by the SCSI Trade Association (www.sta.com) finalized specs for the next generation Ultra3 SCSI and the interim Ultra160/m interfaces. Another major trend over the last year was an increased movement toward network-attached storage devices. Pioneered years ago by vendors such as Auspex and Network Appliance, "NAS is a storage array that connects directly to the messaging network via a LAN interface such as Ethernet, using common communications protocols," according to Strategic Research. The market for NAS devices is expected to approach $4 billion by 2000. More than two dozen vendors have shipped NAS devices over the last year, including Creative Design Solutions (CDS), Meridian Data, MTI, and Procom. NAS devices range from RAID boxes to CD servers and tape libraries equipped with "thin servers."
Tape Formats Proliferate
This year also provided a lot of activity in the tape market. A year ago, the market seemed poised to settle into a sort of homeostasis: DLT was established, AIT provided an interesting low-cost alternative, Exabyte was back on track with their 8mm technology, the low end was becoming less confusing, and IBM and StorageTek were still raking it in at the high end. Then the HP/IBM/Seagate troika announced yet another tape technology--Linear Tape Open--which is due in product form next year; technologies like Tandberg`s SLR gained legitimacy with backing from large systems vendors such as Compaq and Sun; and a number of other vendors boldly launched, or at least announced, new tape formats. In fact, at least six new midrange tape formats--all incompatible with each other--are expected over the next year.
LTO is one of the more promising new tape formats, yet this "standard" actually consists of two formats: Accelis, for fast data access and retrieval, and Ultrium, for high-capacity backup and archiving. LTO is expected to compete primarily with Quantum`s next-generation DLT drives, called SuperDLT or SDLT, as well as Exabyte`s Mammoth-2 and Sony`s AIT-2. With the proliferation of formats, increased competition and falling prices, it`s no surprise that merger mania has entered the tape market. Examples: Quantum`s recent acquisition of ATL Products, and ADIC`s merger with Emass. Tape analysts expect the trend to continue.
Although the overall tape drive market continues to decline, due in part to slumping sales of formats such as quarter-inch minicartridge, some segments remain strong. Examples include DLT and the half-inch cartridge format.
On the Optical Horizon
With the exception of the DVD drum roll, the optical sector of the storage industry was relatively quiet over the last year. Now, however, the optical industry has its own version of the Navigator-Explorer wars: DVD-RAM vs. DVD+RW (and a host of other dark horses), both of which are rewritable implementations of DVD.
Over the last year, industry analysts cooled down their predictions for the DVD market--both the read-only and rewritable segments. For example, Dataquest reduced its expectations for rewritable DVD drive shipments in 1998 from 475,000 units to only 75,000 units. The research firm also scaled back its long-term projections, from 17 million units in 2001 to only 1.9 million units.
Meanwhile, DVD-ROM is starting to gain ground, although not as fast as originally expected. Dataquest expects DVD-ROM shipments to reach 5.7 million units this year, with shipments eclipsing CD-ROM shipments near the end of 2000.
At the same time, sales of CD-ROM and CD-RW drives have remained robust. For example, International Data Corp., a market research firm in Framingham, MA, predicts shipments of 4 million to 5 million CD-RW units this year. One of the hottest developments in the optical arena is TeraStor`s near-field recording (NFR) technology, which marries technologies from the optical and rigid disk drive disciplines. However, after repeated delays, TeraStor recently postponed shipments again.
Products based on NFR are now due in the second quarter of next year. Initial implementations of NFR devices will be in a removable 5.25-inch format, with 10GB per cartridge, an average seek time of less than 18ms, and a Wide Ultra SCSI interface with a burst transfer rate of 40MBps (6MBps sustained). Suggested retail pricing is expected to fall in the $699 to $799 per drive range. A 20GB version is due later next year at prices ranging from $999 to $1,199.
Software Gains in Importance
On the software front, the last year was characterized by much ado about nothing surrounding the release of Windows NT 5.0, which may not ship until the next millennium. In its effort to leave no stone unturned, Microsoft has partnered with a number of storage management software vendors--including Eastman Software, HighGround Systems and Veritas Software--to bring enterprise-level storage management functionality to NT, including storage resource management, a volume manager, and hierarchical storage management functionality. However, most of those features will not be available until NT 5.0--recently renamed NT 2000--ships.
One of the key software trends over the last year was a push toward the centralized management of distributed storage resources. One result of this is an accompanying trend away from point products to comprehensive suites--sometimes called enterprise storage resource management (ESRM)--from vendors such as Boole & Babbage (which is about to be acquired by BMC software), Computer Associates, IBM and Sterling Software, which are bringing into the open-systems arena their mainframe-based expertise in storage management software. Other SRM candidates potentially include vendors such as HighGround, Legato, and Veritas (which is set to acquire most of Seagate Software next month).
The trend toward storage resource management and the centralization of management is being driven by escalating costs. Studies have shown that for every buck IT managers spend on storage hardware purchases, they spend anywhere from $2 to $7 per MB annually just to manage that storage. Adding to the cost problem, storage accounts for an increasingly large percent of total systems expenditures. For example, Dataquest estimates that in the NT market this year, storage represented 40% to 52% of total server costs.
Another software trend over the last year was an increased interest in HSM, a technology with great promise but, so far, relatively little acceptance in the open systems market. Put simply, HSM automatically migrates infrequently accessed files from hard disks to less expensive media, such as tape. Analysts expect the market for HSM tools to pick up as IT managers struggle to contain spiraling storage management costs.
As evidence of how important storage management software has become, the total market for these tools ballooned to more than $2 billion last year, an increase of 19% over the previous year. Dataquest predicts that the market will hit $4.8 billion in 2002.
M&A Mania Hits Storage Market
As in the general computer industry, 1998 was a year of mergers and acquisitions in the storage market. On the RAID front, Artecon and Storage Dimensions merged, as did Andataco and IPL. High-end tape manufacturer Ampex acquired MicroNet Technology, a RAID and thin-server vendor. And LSI Logic recently completed its acquisition of Symbios, after Adaptec?s attempted acquisition fell through.
Also, RAID vendors stepped up their effort to acquire software expertise via acquisition. For example, EMC bought Conley Software, and nStor acquired Borg Adaptive Technology.
On the tape front, Quantum bought ATL Products, and ADIC acquired Emass. And on the software side, Veritas bought TeleBackup Systems?a remote backup software developer?and is expected to complete its acquisition of Seagate Software next month.