How Storage Startups Crack into The Giant Market

It’s no secret the storage system market is ruled by a handle of top-tier
vendors, such as EMC , IBM
, HP , Dell and
Hitachi Data Systems .

These companies command some 95 percent of a total disk storage
market that IDC said notched
$24.4 billion in 2006. But there’s still a few billion dollars to be made in
the storage system market by companies that don’t bear the behemoth names.

So what does it take for a startup to crack into a market that is all but
locked up by a handle of the world’s largest high-tech companies? Is it
luck? Performance? Simplicity? Economic efficiency?

Try a little of all of the above.

Gartner’s Roger Cox said startups accounted for 3.5 percent of the storage
system market in 2005, and he expects that number to be higher when the 2006
figures come out later this month.

Such alternative vendors include Pillar Data Systems, BlueArc, EqualLogic,
Lefthand Networks, 3PAR, Compellent and agámi Systems, which has recently
come to market.

StorageIO analyst Greg Schulz said that in the area of performance, bigger and
established doesn’t always mean faster. Moreover, more drives, host ports or
cache on a system do not guarantee faster performance.

Schulz pointed to agámi Systems, which recently introduced a hybrid storage server capable of concurrently storing file, or
network-attached storage (NAS) , and block-based data via
Internet-based storage area network technology, or iSCSI .

Other vendors make hybrid systems that handle SAN and NAS, but Schulz said
agámi promises very good performance — 1 gigabyte per second — with slower
and fewer disks because the company’s systems are efficiently put together.

“They will win on performance as a differentiator, or a combo of performance
and features,” Schulz said. “Agámi doesn’t have things popular in NAS like
clustering for high availability, yet they can replicate one agámi box to
the other, which gives you failover protection.”

Taneja Group Founder Arun Taneja said competition is so tough these days
that startups almost have to have a value proposition “where the listening
party has to consider himself to be stupid not to seriously look at it.

“It has to be so attractive and genuine that you cannot not do it,”
Taneja said. “That’s really what a startup has to do in this day and age to
get any traction particularly on enterprise. SMB receptivity is much better
to a startup because they don’t have the same restrictions big Wall Street
companies have.”

Taneja looked to a company like Lefthand Networks, which sells boxes like
everyone else but seeks to really differentiate with its provisioning

Taneja said Lefthand simplified iSCSI storage using a nodal architecture
that enables storage administrators to provision terabytes of storage in
roughly five clicks, or seconds.

This efficiency, Taneja said, basically made provisioning, which is a
nightmarish thing in the world of storage, “cuddly” for customers. Products
from the bigger vendors, Taneja said, might take as much as two days to
provision volumes.

“Storage admins are such harried animals,” he said. “If you’re a startup
that brought in a system that cut the admin’s provisioning time into
one-tenth what it was, you’ll get serious consideration.”

Analysts, however, can be fickle. What looks good one week could be the
result of a productive meeting of the minds between analyst and product
development heads.

It’s the users of the technologies, the guys in the data trenches, whose
voices may carry the most weight.

Next page: Customers back the little guy

Page 2 of 2

Customers Testify to Startups

Nick Colakovic, operations manager for First Industrial Realty, said his company gave some Adaptec SNAP servers and a patchwork machine the heave-ho for startup Compellent’s Storage Center.

Colakovic said First Industrial was attracted to Compellent’s thin provisioning, data-tiering, replication and boot from SAN capabilities, which enable arrays to automatically fire up servers.

“Compellent is performing quite well, and the product is very easy to manage,” Colakovic said.

First Industrial Realty chose Compellent’s product after doing an evaluation of systems from EMC, HDS, Pillar, Lefthand and HP. The deal clincher was in the management.

“The problem is the [other] vendors’ products are saddled with an antiquated management platform. You’d have to buy storage management products just to watch I/O stats in and out of the server. That’s just too much work.”

Todd Rayl, vice president of security services for Business Vitals, expressed similar satisfaction with the Axiom 500 from Pillar, which replaced an EMC 8430 array.

Rayl, whose company provides security services, said Business Vitals plucked Pillar from an evaluation that included EMC, NetApp, Compellent and Lefthand Networks. Business Vitals did a “try-and-buy” with Pillar to make sure the Axiom 500 was the right fit and took the leap of faith to the tune of 10 terabytes .

“One of the main reasons that we selected Pillar is that they’ve got an interesting concept and architecture in terms of how it scales,” Rayl said.

“In a SAN, you’ve got a single processor that drives multiple shelves of disks or arrays. With Pillar, every time you add storage, you add additional cache, memory and processing power to the overall system. As you scale, you increase performance.”

Pillar’s simplified licensing model didn’t hurt, either.

“The guys that have been around for awhile seem to nickel and dime you for every little thing that you want to do on a system, such as the number of hosts that you want to attach to it,” Rayl said. “It’s just mind-numbing.”

Rayl added: “When you deal with the EMCs, the NetApps and the IBMs of the world, it is so difficult to deal with those companies sometimes because they are just not flexible. Smaller companies and their ability to adapt to change quickly or customer requests are much more nimble, and it’s refreshing.”

With testimonials like that, startups can certainly make a play for their piece of the large storage system pie, especially if they can help CIOs save some bucks or offer some features the big guys don’t have.

“The hope of the smaller startups is they can get into an account where a customer is seeing IBM, EMC, Sun, HP, HDS, NetApp, and they see sticker shock,” Schulz said. “Get in there and say ‘you can get the same amount of storage from us for 25 to 100 percent less.’ It’s not necessarily about better performance but about functionality and key cost savings.”

But there are not absolutes.

Schulz said that while smaller vendors love to make the claim that they are cheaper than the big guys, he hears stories all the time that startups are getting undercut them.

“People who know how to shop or work with different VARs [value-added resellers] can find better deals anywhere,” Schulz said. “It’s a matter of ‘what do I need’ versus ‘what are you going to give me for this cost?'”

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