Storage software may become another commodity
The threat of virtualisation
As technology sectors develop, advanced products carrying premium prices become commodities. For high-end storage hardware suppliers such as EMC, IBM and Hitachi, this has already been happening. Now the same may happen with some of the storage software too...
The commoditization of big-ticket disk boxes has spurred storage vendors to increase their focus on software. Most notably, it has driven EMC's efforts to transform itself into a software company with its ILM strategy and its purchase last year of three large software companies.
But some storage software is also threatened with commoditization. This reflects the metamorphosis of the storage industry into a more open market, one in which value will be delivered further up the technology stack, in ILM systems that are closer to applications.
Virtualization software poses threat
The software in question is the array-based firmware that all vendors sell with their mid-range or high-end disk boxes, and which provides key functions such as data mirroring and snapshotting. It counts for a lot. For EMC, array-based software represented about $750m of new license sales last year, about half of all its new software license revenue.
What threatens to commoditize these products is virtualization software. Running on an appliance or on a smart SAN switch, virtualization systems increase the flexibility of storage systems and reduce their running costs. Virtualization was the storage buzzword of 2001 when the technology first emerged. Among the big vendors that laid out virtualization promises that year was Hewlett-Packard, which underlined the importance of the v-word by spending $350m to acquire start-up StorageApps and its virtualization technology.
Since then the technology has only sold moderately well, and mostly only from start-ups. HP stumbled with its plans, and until recently no other large vendors had shipped the technology. Virtualization sales were slowed by customers' reluctance to buy unproven technology from start-ups, and by the downturn in IT spending.
Demand has grown
However, the need for technology that reduces storage overheads has continued to grow. IBM launched its first virtualization product nine months ago, since when it says about 250 high-end customers have installed the system - fair sales for what is a still a cutting-edge product. There has also been a parallel move in the storage industry to shift intelligence away from servers and arrays into the network and onto smart SAN switches. Running on this coming breed of SAN gear, virtualization software promises even more.
The key benefit of virtualization is that it separates applications and servers from storage, hugely increasing flexibility and utilization rates. But virtualization systems can also duplicate the replication functions of array-based software, sparing customers not only the need to buy those expensive products, but also allowing them to replicate between disk boxes made by different vendors. The fact that customers have, on a practical level, otherwise been unable to do this has created a high degree of lock-in for storage vendors.
These are very possibly the reasons why EMC is playing down the virtues of replication functions based within virtualization systems. EMC is developing virtualization software that will soon run on smart switches, but says that that for this product, mirroring or snapshotting would only be mildly useful, and may not feature at all.
Storage virtualization is relatively unproven, and nothing is certain. But the writing looks to be on the wall. EMC is simply in no hurry to hasten a change that would affect one of its major revenue streams, even though like others it has already anticipated the transformation in the storage market.