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Thank you — It’s been a great year for storage

by Hu Yoshida on Dec 20, 2010

vsp-2011As 2010 draws to a close, and we are making our final rounds, we recognize that this has been an extraordinary year for storage compared to where we were at the end of 2009.  The sharp downturn that occurred in late 2008 and carried through most of 2009 saw a sharp recovery in 2010.  Many customers tell me that this was the year to make up for storage investments that they deferred in the prior year. While the economy had slowed down, the demand for data continued to expand. A lot of the investment this year was more an extension of existing footprint rather than a new investment cycle which would have required additional startup costs. This past year for Hitachi Data Systems, we saw significant increases in software and services as we focused on helping our customer make more efficient use of their existing storage assets through virtualization and Dynamic Tiering.

Major economic downturns such the one as we just experienced, create a major inflection point in technology during the recovery. After the dot com bust in 2001/2002, we saw the movement to storage area networks (SANs) and blade servers. Data centers that were bursting at the seams with 1 and 2 TB storage frames were able to free up space by consolidating to a few 18 to 20 TB storage frames connected through FC SANs to rack-mounted server farms. In 2000, we introduced the 9900 Lightning storage system with an internal switch architecture which enabled us to replace 6 to 8 competitive storage frames with shared bus architectures. As a result, we went from about 10 % market share to more than 30% market share in enterprise storage. This downturn has created an inflection point for storage virtualization in all of its many forms, external storage virtualization, internal volume virtualization, virtual tiering, file and block virtualization. On the server side, we are seeing server virtualization going into mainstream production on X86 platforms.

Economic downturns also tend to resynchronize the normal investment cycles for customers to a common starting point. Storage investment cycles normally run 3 to 5 years. This cycle time is due to factors like maintenance contracts, depreciation schedules, leasing terms, and price erosion due to higher capacity disk technologies. Storage investment cycles also depended on the different vendor product cycles. Vendor product cycles overlap each other and for a short time, one vendor might be considered to be ahead of the others in terms of technology and value. Some customers choose a single vendor and their investment cycles often follow that vendor’s product cycle. Other customers have a dual vendor strategy so that they can have a steady stream of technology.  In 2011, we believe most customers will be looking to start a new investment cycle based on the latest technologies that will ensure their competitiveness for the next 3 to 5 years.

The investment markets know this and during 2010, we saw a frenzy of acquisitions for storage technology companies marked by billion dollar bidding wars. All the vendors recognize the urgency of delivering technology that will catch this investment cycle in 2011. Technologies that are hot are data reduction technologies like dedupe, thin provisioning and virtualization technologies that can scale capacity and performance on demand. Technologies that reduce space, power and cooling costs like SAS and 2.5 inch  Small Form Factor drives will also be in demand.  Often space and power have a bigger impact on storage decisions since it provides the most tangible benefits of new technology. Seeing the floor space immediately shrink by 40% when a box is installed has a greater impact than implementing thin provisioning and doing the migration over time. It is even better if you can provide both Small Form Factor drives, and thin provisioning.

Thank you for reading this blog and providing your insights this year. It has been an exciting year, but there is more excitement ahead in 2011. This will be a critical year for technology investments. One of my resolutions for the New Year is to be more active on this blog and engage in more dialogue with other bloggers. No doubt, there will be no shortage of topics to blog about.

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Comments (3 )

Jerry Zeisler on 21 Dec 2010 at 7:55 am

Was it the “9800 Lightning” or the “9900 Lightning?” I think you have a typo. And Happy Holidays Hu!

Hu Yoshida on 21 Dec 2010 at 12:01 pm

Thank you, and happy holidays to you as well!

Vinay Babu on 22 Dec 2010 at 6:39 am

Wish you very happy and prosperous new year 2011.

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