Microsoft's Azure means dark days for storage vendors
No silver lining here
Comment Another huge heaving grunt of a move as Microsoft shifts its great fat rear to sit more comfortably on the changing furniture of the computing industry and offer cloud computing services. It could be very bad news indeed for the storage industry.
Microsoft's Azure Services Platform - ASP as in 'we've been here before, surely' - lets customers have their data centre applications run in Microsoft data centres. Ray Ozzie, Microsoft's chief software architect, said he was building an infrastructure for the next fifty years: "We need to lay the groundwork with new types of system and storage applications for a world of parallel computing."
Microsoft joins Amazon and Google in offering cloud computing services and cites IDC, which says cloud computing will grow 16 per cent a year through to 2012. That's grim.
The thing is that cloud computing users buy less storage. Think about it. If Microsoft gets 10,000 customers for its remote data centre services then Microsoft buys servers and storage for the 10,000, while the 10,000 don't buy servers and storage for their apps that now live in the Redmond cloud. Let's suppose that Amazon, Google and Microsoft get 250,000 customers each. That's 750,000 businesses not buying servers and storage for their remotely run apps. Add in Dell, HP and IBM - they're just bound to pile in - and we could have six major cloud computing suppliers with half a million customers each by 2012, meaning 3 million fewer customers directly buying servers and storage for their apps, because they've been transferred to the Cloud.
Cloud computing means fewer and larger storage buyers. The server industry has already savagely consolidated. The storage industry has yet to do so. Judged from a server industry point of view the storage industry is ridiculously over-supplied. Let's list the tier one and two storage array suppliers - Dell, EMC, HP, HDS, IBM, and NetApp, then 3PAR, Compellent, Pillar and Sun. We can add in tier 3 suppliers (NEC, OnStor, Infortrend etc) and the virtual tape library (Overland, Quantum etc), de-duplication (Data Domain) and reference data (Copan, Nexsan) people and say there are getting on for twenty storage array suppliers.
Fewer buyers of storage who buy in larger numbers will encourage storage industry consolidation. Count the number of backup software suppliers - there are far too many. Every customer who moves over to the cloud will stop buying data centre storage hardware and software. They won't purchase arrays to store the data they don't hold any more, or business continuity and disaster recovery software to shift to backup data centres they no longer have, backup software, backup reporting software, security software for files they no longer need to protect, replication software for the data they no longer need to replicate ... you get the picture.
What has happened in the disk drive industry, in the disk array subsystem market and in the tape automation market - meaning supplier consolidation into fewer and fewer hands - will happen in the drive array and drive array-based software areas.
A mass take-up of cloud computing will be a disaster for the storage industry as we know it. Unless you are guaranteed a place as a supplier to successful cloud computing service providers then you should start praying it all flops.
Clouds rain, they bring thunder and lightning, hurricanes even. News that cloud computing is set to grow is bad news for the storage industry, bad news indeed. ®