What’s in Store for Storage?

According to a new report “Store/Forward: iSCSI – Compelling Technology, Race to 10 Gigabit”, iSCSI could soon be one of the most important factors in the storage industry. The report by Bear Stearns technology analyst Andrew J. Neff, who gained acclaim for his prediction of the Hewlett-Packard/Compaq merger nine months in advance, is the latest in a continuing series of “Store/Forward” reports on the storage industry.

While Neff does not see iSCSI as a replacement for Fibre Channel technology in the near term, he believes that there may be immediate opportunities for iSCSI in certain markets, which are currently not target areas for Fibre Channel. Nonetheless, according to Neff, iSCSI could gain momentum as advancements over the next three to five years dramatically improve its performance and pricing. “However, it’s still too early to call a winner between the two technologies,” said Neff.

In the report, which is co-authored by associate analysts Naveen Bobba and William Hand, Neff concludes that the debate between Fibre Channel and iSCSI should not be viewed as an “either/or” situation, since Fibre Channel should continue to be the dominant storage networking technology in data centers for at least two to three years, while iSCSI can provide incremental market opportunities for networked storage by offering an easier and more affordable infrastructure for storage connectivity.

Neff also believes that iSCSI technology will have a broad impact on dozens of hi-tech companies like Cisco Systems, Hewlett-Packard, Intel and EMC. “There’s no doubt these companies will in some way be affected by this emerging technology,” said Neff. “It will be interesting to see how the companies position themselves.” Specifically, Neff believes Brocade Communications and Adaptec, which is early to market with iSCSI products, could be beneficiaries in light of the most likely scenarios of iSCSI technology adoption.

According to the study, networked storage is projected to grow from $8.5 billion in 2001 to $20 billion in 2005, or a compound annual growth rate of 24%. “In the near term, iSCSI can potentially accelerate the growth trajectory of the networked storage market,” said the Bear Stearns analyst. Neff believes that the main areas of growth for iSCSI will be in the departmental level, where networking is generally not viable today owing to cost and complexity issues, and in metro and wide area networks.