Toward the Commoditization of Storage

Special Report

If the application service provider (ASP) model heralds a return to the days of host-based computing, a new trend in the storage space -- that of the storage service provider (SSP) -- may complete the trend.

Not surprisingly, the SSP model also promises to make life substantially easier for IT departments that are wrestling with runaway storage capacity requirements, bringing with it as it does the long-term promise of transforming storage into, of all things, a commodity.

While analysts can’t say precisely how much of a market exists for storage outsourcing today, a number of signs suggest that the SSP space could explode in the coming years. According to Forrester Research Inc. (, storage requirements at some global 2,500 companies can effectively double inside of 18 months. Moreover, Forrester forecasts that by 2003, IT organizations will earmark up to 17 percent of their annual budgets for storage-related expenditures -- up from a mere 4 percent today.

As far as Ruya Atac, senior director of field marketing for Storage Networks Inc. (SNI, is concerned, these numbers don’t even account for the cost of managing all of that storage.

"Storage costs are going down, but the cost of managing all of that storage is going up," she maintains. "What’s happening is that if you look at the numbers again, you’ll find that for every dollar you spend expanding capacity, you’ll spend an additional 80 cents to manage it."

Along with competitor Centripetal Inc. (, SNI is a pioneer in the SSP space. SSPs propose to help dot-coms and other organizations deal with the problem of deploying and managing storage. The SSP model consolidates storage at either a single remote location or at a number of distributed storage points of presence.

In this sense, SSP vendors like SNI often find themselves partnering with large ASPs such as Exodus Communications Inc. ( and Globix Corp. ( to offer co-location services: A company contracts with an ASP vendor to host its applications and also contracts with an SSP -- or with an ASP offering SSP services under it own brand -- to provide storage outsourcing services at the same location.

The SSP model is a great fit for new e-business ventures that are accustomed to purchasing services -- application, network, and now storage -- on a commodity-type basis, says Ames Abbot, vice president of marketing at LiveVault Corp. (, a provider of both traditional LAN-based and new backup service provider-oriented (BSP) solutions. Like SSPs, BSPs purport to outsource a mission critical task -- backup -- for either remote storage with a reseller or on a collocation basis with an ASP.

"A lot of these [dot-coms and new e-commerce ventures] don’t have a lot of IT staff on site to support mission critical tasks like backup," he explains. "So this type of service provider model suits them well, because these are customers that are already used to buying bandwidth and power and pipe by the month. It’s not too much of a stretch to also make real-time backup a monthly service, too."

The problem is particularly acute in the burgeoning dot-com space, analysts and vendors concede. Companies such as IP telephony provider iBasis Inc. (, search engine and Internet portal site Excite Inc. (, free online storage provider Driveway Corp. (, and free mail service Critical Path Inc. ( can all boast of zero-to-multiterabyte success stories.

Excite, for example, has deployed over 110 TB of storage in a 20 month span, while Driveway once rolled out almost 40 TB of storage inside of a month.

"There are anecdotal stories around that a number of dot-com companies have had to deploy enormous amounts of storage very quickly," agrees Robert Gray, a research manager for storage systems at market research firm IDC ( "If you look at something like eBay, the number of objects that they have has increased from 1.5 million to 5.5 million items, and each of these objects have transaction data and indices associated with them -- and that data just keeps building."

And it’s precisely these dot-com customers that are excellent candidates for SSP solutions, maintains SNI’s Atac.

"For the dot-coms especially, what we provide gives them maybe the only certainty that they have in their business," she contends. "It’s really not worth it for them to invest in their own storage infrastructures because they have to take into account the overall cost of managing storage, the problem of ensuring storage scalability and the cost of expansion. But we can do all of that for them."

Most importantly, Atac notes, SSPs can effectively deliver storage as a commodity, selling growing dot-com start-ups additional storage -- or scaling storage back -- as they require it.

Indeed, it’s the commodity-like aspect of the SSP model that some pundits say provides a glimpse into the future of the storage industry itself. Because the SSP model carries as implicit within itself the ability for an organization to effectively "order" or "return" storage capacity to suit its expanding or shrinking needs, the SSP model actually breaks storage down into a commodity, IDC’s Gray says. Moreover, he adds that the SSP phenomenon could lead to the complete commoditization of storage as a whole.

If all of this stuff is carried to its extreme, if we get really reliable trusted links, and if we get all of these storage networks in place so storage can be made available to anyone, anywhere, then storage capacity will basically become a commodity.

"Why can’t storage one day be something that an enterprise [solicits bids for] in a storage exchange, saying ‘I need 5 TB of storage by the end of May, who can give me the best price on it?'" Gray asks.