Storage Markets predicts storage trends

By Ann Silverthorn

—Last November, InfoStor reported on a new Web-based tool called Storage Markets, which claims to predict technology trends for the storage industry better than traditional market research and end-user surveys. Vendors can sponsor technology questions as "IPOs," and storage professionals use "Bits" rather than currency to bid on the outcome of the posted questions.

"The real-time trading is influenced by industry events and the participation of new traders," explains John Ives, president of Storage Markets. "The predicted likelihood or probability will change over time as trading occurs. This characteristic of predictive markets is very valuable as it creates a real-time, continuously updated forecast."

Here's an update on some of the "trading" and predictions:

In early 2006, Ives said storage subsystem vendors were debating the timing of cost parity between 10,000rpm, 2.5-inch drives and 15,000rpm, 3.5-inch drives. Vendors' allocation of R&D resources was being driven by the timing of cost parity between the two disk formats. Storage Markets introduced a "security" based on parity between the two types of drives to occur in Q2 2007. After tracking several different models of disk drives, Storage Markets determined that cost parity occurred in April 2007. Storage Markets traders started predicting that cost parity would occur in Q2 2007 as early as July 2006. In this case, Storage Markets' traders correctly predicted this industry event.

Also in early 2006, storage system vendors were struggling with product road-map decisions related to designing systems with 2.5-inch, 4Gbps Fibre Channel disk drives. Ives says that most system vendors were not receiving consistent visibility into their disk-drive suppliers' road maps to make their own system-level decisions. Storage Markets began trading on the first 2.5-inch 4Gbps Fibre Channel drives reaching production in the first half of 2008. Since then, traders have pushed out the expected availability of these disk drives from 1H 2008 to 2H 2008. Ives reports there is now a significant chance that the drives may never be available.

Blade and storage vendors were debating in mid-2006 which backplane interconnect technology would dominate in 2009. A storage-component vendor sponsored this question, which is still active, on Storage Markets. Ives says, "Ethernet continues to be the predicted market-share leader of backplane interconnect technologies for blade servers in 2009. Traders currently suggest a 28% likelihood that Ethernet will be the leader in this space, while switched PCI Express sits at 24%.

The same vendor believed that iSCSI hype in early 2006 was clouding its planning decisions, so it sponsored a prediction that more storage systems will ship with iSCSI as opposed to Serial Attached SCSI (SAS) host ports in 2008. Ives reports that traders now believe that more storage subsystems will use SAS rather than iSCSI as a host connection. In November 2006, traders saw a 45% likelihood that SAS will have a higher market share than iSCSI in 2008. That probability has increased to 55% today, according to Ives.

Another debate currently exists between storage system vendors and their host bus adapter and drive suppliers about where in the overall storage architecture hardware encryption should reside. Storage Markets created a question that attempts to answer where traders believe encryption will occur. According to Ives, traders believe hardware-based data encryption will occur at the storage subsystem level at the end of 2008.

Ives says data de-duplication was another hotly discussed feature in storage systems and software last year. "Many vendors are attempting to cut through the hype in an effort to make better marketing and product road-map plans," says Ives. "Some of the air may have come out of the de-duplication balloon. Traders have pushed the date by which users will require de-duplication in more than 50% of new deployments from the second half of 2007 to the first half of 2008."

What is a predictive market?

Storage Markets uses a technique called a "predictive market" to answer questions associated with technology trends and transitions in the storage industry. Potentially correct answers to these questions are traded just like real-world stocks with market forces driving the stocks' prices. In essence, this creates a neutral environment where individual errors cancel out, leaving a probability that the particular answer will be correct. Storage professionals from all corners of the storage industry have registered to participate on the Website to trade their opinions and win the game.

Academia has studied predictive markets at length. They have back-tested
outcomes in elections and sporting events to see how the results compare with surveys, and they have found that predictive markets yield more-accurate predictions sooner. One possible reason for this is that the respondents tend to feel a more vested interest in the outcome when they place bets in the hopes of winning a game. In addition, in the case of Storage Markets, this method tends to entice respondents to indicate "what will happen" as opposed to "'what they would like to have happen." Storage Markets is a new concept, but it appears to provide an impartial way to view the real-time consensus of opinion on a variety of trends.

According to Storage Market officials, companies such as Google, Hewlett-Packard, Intel, Microsoft, and Yahoo are using predictive markets internally for sales forecasting, project management, and market research.

Related article:
Storage Markets claims to predict the future

This article was originally published on May 22, 2007