New market data on the storage industry is out and the news does not look good for SAN, NAS and other forms of traditional data preservation.
According to a recent outlook from Wikibon, we are on the cusp of a digital extinction event as today’s complex network storage architectures give way to more nimble server-side solutions. The firm predicts that within 10 years, 90 percent of storage revenues will flow toward server SAN or hyperscale server SAN solutions, marking a 150 percent annual growth rate from today’s current market estimate of about $1 billion. At best, traditional SAN and NAS may eke out meager existences within long-term data retention infrastructure in which the frequency of data access is low but metadata retrieval is fairly steady.
The reason behind this shift is not hard to discern, says SUSE’s Jason Phippen. Enterprise SAN and NAS solutions are expensive, complex and not terribly flexible when it comes to the dynamic data requirements of emerging enterprise applications. So as organizations gravitate toward Big Data analytics, data mobility and the sensor-driven world of the Internet of Things, they will need storage infrastructure that is faster, more dynamic and less costly to deploy. Transitioning to more modular infrastructure coupled with software-defined storage architecture is already lowering costs by half and enabling exactly the kind of operational functionality that will characterize enterprise storage requirements for years to come.
You can already see the waters roiling in the storage markets of today. According to IDC, the storage industry shipped more than 28 exabytes in the first quarter of 2014, a 41.4 percent jump over the same period last year, and this produced about $8.8 billion in revenues for server vendors, a heathy 6.8 percent gain. A closer look at the numbers, however, reveals that spending on traditional external arrays is starting to stall while internal server deployments rose an impressive 23.3 percent. As well, hyperscale and cloud-facing systems are up by a similar margin to now account for about 12.6 percent of overall sales. All of this points to one conclusion: Emerging storage architectures are on the rise while traditional enterprise solutions are waning.
And then, of course, there is the elephant in the room in any discussion surrounding the storage market: EMC. The company surprised Wall Street by beating the estimated 41 cents per share estimate for the second quarter by two cents, with revenue on the order of $6.1 billion, a 3 percent gain. However, as CEO Joe Tucci readily admitted, the results were mixed in that traditional storage products are lagging while emerging, Flash-based systems are on the upswing, with some product lines on target for 50 percent growth this year. Like much of the traditional IT vendor community, EMC has a very tight rope to walk over the next decade: preserving the revenue streams from today’s platforms long enough to give emerging systems a chance to make up the difference. Given that the whole point of the new technology is to provide more storage at less cost, the data universe will have to expand considerably in order for EMC and others to justify their current stock valuations to investors.
All of this can only benefit the enterprise, of course, but only those that are willing to shed the old way of doing things and tie business processes to emerging infrastructure and the new productivity applications it supports. The transition will have its share of winners and losers, but the enterprise industry as a whole, and the digital economy in general, should benefit greatly.
Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata, Carpathia and NetMagic.