It's a great time to be an SMB

A lot of InfoStor’s readers qualify as small to medium-sized businesses (SMBs), and if you’re in that camp you’re lucky, because virtually every storage vendor has set its sights on this market. And that means stiff competition and low prices.

And the competition for the hearts and wallets of SMBs is not just among the second- and third-tier storage vendors; virtually all of the big guns are aimed at this market, and recent product introductions seem palatable to SMBs with tight budgets.

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Why are the large storage vendors so ardent in courting SMBs? For one, US SMBs spent about $13.5 billion on storage last year, according to the Yankee Group research and consulting firm, and that spending is expected to increase a whopping 14% this year. (Among very small businesses-10 to 99 employees-storage spending is expected to increase 18.7% this year.)

And a lot of those SMBs haven’t even deployed network storage yet. For example, according to the Yankee Group survey, about 45% of SMBs with fewer than 499 employees-and 35% of mid-market enterprise with 500 to 999 employees-have not yet deployed network storage. That’s a huge “greenfield” opportunity for storage vendors.

For a detailed report on the Yankee Group’s Small & Medium Business Storage Survey, see “Trends in the SMB storage market,” by Sanjeev Aggarwal and Sal Capizzi, in this issue, p. 34. For information on the full report, visit www.yankeegroup.com.

An example of how the big guns are addressing this market is Network Appliance’s recent introduction of the StoreVault S500 (see “NetApp targets SMBs with hybrid array,” p. 1). The StoreVault S500 supports NAS, iSCSI SAN, and Fibre Channel SAN connectivity at an SMB-friendly price of about $5,000 for a 1TB configuration plus some software.

It’s interesting to note how SMB spending on storage breaks out. For example, of the $13.5 billion spent last year, $7.1 billion (52%) was spent on storage hardware, $2.8 billion (21%) on storage management software, and a surprising $3.6 billion (27%) on storage services (see figure). And as more and more SMBs adopt network storage (NAS or SAN, iSCSI or Fibre Channel) I would expect spending on storage services to grow even faster than the other categories.

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Dave Simpson

This article was originally published on August 01, 2006