Two Companies Jockey to Offer Storage Utility
The ultimate storage goal is to be able to plug a server into a port in the wall and gain access to as much storage as needed, without having to preplan for the storage or manage it. The other part of that ideal is to pay for the storage the same way you pay for a utility, such as electricity or water, according to how much is used.
Some of the largest players in the storage industry, including Hewlett-Packard Co. and Compaq Computer Corp., have talked about the concept for the future. But established storage vendor Storage Technology (StorageTek, www.storagetek.com) and startup StorageNetworks Inc. (SNI, www.storagenetworks.com) are actually trying to deliver this kind of solution right now in the market.
While each company is taking a different approach, they are addressing the same basic need: storage that is available when needed and paid for as it is used.
Internet service providers (ISPs), dot-com companies and other fast-growing companies whose explosion of data rapidly outstrips their storage capacity and technical expertise, are obvious potential customers for the strategy. But can the concept catch on among Fortune 1,000 companies?
"That’s an open question yet," says David Hill, an analyst covering storage for Aberdeen Group (www.aberdeen.com).
StorageNetworks was the first of the competing pair to announce a business dedicated to the storage-as-utility concept. The company reports gathering venture capital at a rapid rate and is working on building the storage capacity and delivery and services infrastructure from scratch to develop the idea into reality.
"We want to take the data storage management problem away," says Tom Lahive, director of marketing at StorageNetworks and a former storage analyst with Dataquest (www.dataquest.com). "We’ll install it, operate it and manage it."
The company is on track to hire 250 storage, networking and datacenter professionals by the end of the year. Since being founded in September 1998 by former EMC Corp. (www.emc.com) and Andataco (www.andataco.com) employees, the company has picked up about 150 employees and has been locking down dark fiber leases around the country, Lahive says. A recent deal with storage behemoth EMC brought StorageNetworks’ a whopping 36 terabytes of storage capacity. SNI plans to raise the capacity to 2 petabytes over the next four years. The companies will also do joint marketing, seminars and trade shows under the deal.
SNI’s infrastructure is built on what the company calls Storage Points-of-Presence (Storage-POPs). These Storage-POPs in major metropolitan areas will house the disk systems from EMC and tape systems. The approach takes advantage of Fibre Channel’s ability to support storage connections over single-mode optical cable at distances up to about 20 miles -- providing full duplex data rates of 200 MB per second -- and to connect many computing and storage devices. Several Storage-POPs in a metropolitan area can be connected via Fibre Channel, while Storage-POPs in separate metropolitan areas will be connected via Fibre Channel-to-ATM bridges.
"Our customers can transfer terabyte levels of storage from New York over to Chicago," Lahive says. The capacity permits remote copying and an environment to test live production data.
The company opened its first Storage-POP in Houston. By the end of this month, the company plans to have Storage-POPs live in Boston, New York, Philadelphia, Atlanta, Chicago, Dallas, Denver, the Silicon Valley and Los Angeles, Lahive says. By the end of the first quarter of 2000, SNI’s plans to add centers in Washington, Tampa, Toronto, Seattle and Orlando.
The company’s initial subscription service offerings include a temporary virtual pool of offsite storage or a permanent offsite replication of data for disaster recovery situations. StorageNetworks also plans to sell storage consulting services.
The upshot of all that infrastructure is that StorageNetworks is focused on the delivery side of the utility definition. "A storage utility is really that when I have a storage need for my datacenter or my IT environment, all those resources are available to me via a port in the wall," Lahive explains.
StorageTek is approaching the storage-as-utility model more from the payment side than the delivery side.
The launched storage utility services that allow customers to pay for storage at a cost-per-megabyte-per-month rate, similar to the way one might pay for electricity or water.
StorageTek’s plan calls for putting storage devices in customer sites. The product line comes in four flavors: tape, disk, a flexible storage area network that allows customers to pay for the amount of storage they used at a particular time of day, and backup and disaster recovery. Options include onsite storage management by StorageTek employees, remote monitoring and remotely hosted storage.
StorageTek is aiming the service at the sub-enterprise market. The company will target large enterprises for direct sales of its storage subsystems, hosted and managed by the customers. Current customers of StorageTek’s storage utilities include Internet data centers and Internet companies. StorageTek plans to expand its reach to enterprise customers through partnerships with ISPs, Internet data centers, application service providers and telecommunications companies.
Darrell Royal, vice president of StorageTek’s solutions business group, says internal projections call for StorageTek to draw up to 10 percent of its revenue through the storage outsourcing business within three years. StorageTek is currently a $2.3 billion per year company.
Plans to develop the service would likely involve partnerships with telecommunications companies rather than StorageTek building its own infrastructure. "If we offer it remotely, it’s through linkages with telecommunications providers, where we will be locating capacity at their points of presence and trying to jointly go to market with solutions," Royal says. "We don’t think it’s cost effective for StorageTek to build a Fibre [Channel] network."
Some of the largest players in the storage market are eyeing the storage outsourcing/storage utility space, but they are not yet committing. For example, Michael C. Ruettgers, president of EMC, has said publicly that EMC is doing a handful of outsourcing trials. The agreement with SNI indicates that the company may follow its own model in the application service provider market, which has been to sell big storage systems to ASPs who then service individual customers.
Both of the companies active in the storage utility market are quick to point out the limitations of the other’s approach. "What you’re getting out of StorageTek is not a utility," SNI’s Lahive says. "They’re selling you their storage systems, their management systems and their services, they’re packaging it all together, and it’s physically residing at the customer site." Without the nationwide infrastructure in place with the Fibre Channel-to-ATM bridges, StorageTek’s solution can’t support the cross-country data movement SNI can, Lahive claims.
To StorageTek, its onsite solutions mean mobility. Its customer base isn’t limited to the Fibre Channel radius of storage facilities: The company can install its implementation of the utility service anywhere. StorageTek’s Royal sees another, more fundamental advantage in the onsite focus -- it’s what he thinks the market is ready for. "There’s probably a psychological hurdle before they want all of their critical application data to be remote," he says.
Adam Couture, a senior analyst covering desktop outsourcing for Dataquest, says the market research firm hasn’t yet quantified the demand for storage as a utility. "It’s very, very young," Couture says. "Depending on how you define it, maybe there’s one or two players there. And they have different models."
While the benefits are clear in theory, the current storage utility providers must prove they can execute effectively, industry observers say.
Aberdeen’s Hill expands on the concern StorageTek’s Royal raises about storing critical applications offsite. "These are your crown jewels," Hill says. "Every time you go through the wall to offsite, there’s always the question of the network. If you’re a CIO, you can delegate but you can’t abrogate. If something goes wrong, you have to answer the questions."
Jennifer Borden, a manager within the systems development and technology division at Ernst & Young (www.ey.com), predicts the market won’t take off among enterprise customers unless companies doing application service providing, such as EDS, Computer Sciences Corp. or IBM, step in. "It’s not just disk space," Borden says. "There are a lot of things that go into managing that kind of environment: [Service level agreements], reliability, backup and recovery, monitoring and security. There are quite a lot of issues once you start giving away or requiring someone to host your data. I would think you would want someone with quite a bit of experience."
It’s possible, too, that the offerings may never grow into a service that is sold directly to the enterprise on a large scale. Dataquest’s Couture and other analysts note that enterprise customers seem to either outsource everything or outsource nothing.
This tendency could lead the storage utility market to ISPs and application service providers -- both of which serve the Fortune 1,000.
"Our studies show that messaging is a big storage hog," Couture says. "But companies out there want to outsource all of their messaging capability, not just the storage. If I’m an ISP, and I want to provide messaging services in the Boston area, with an arrangement with a storage outsourcing company it can grow as I grow."