Storage Special: Trends

India Storage Inc.: Consolidation and virtualisation will rule

The growing needs for both data storage and data protection have been dictating enterprise storage expenditure. Overall, it’s demand that is driving the Indian storage market, says RAHUL NEEL MANI

The storage industry is shifting from its direct-attached model to a networked storage model, increasing the importance of software and services as the competitive differentiator, says M Ganesh

Storage is one aspect of information technology that, despite the economic slowdown and slashed IT budgets, is still attracting lots of funds. This is because enterprise storage expenditure is directly proportional to the growing needs of both data storage and data protection (disaster recovery, backup, etc). Research firm Forrester suggests that demand for data storage capacity is increasing at an astounding 52 percent every year. Indeed, e-Mori reports that investment in storage systems now accounts for around 50 percent of overall corporate IT budgets.

The escalating demand for storage has given birth to unconventional, sophisticated media to store terabytes of data in one single device/box. Enterprises have realised the need to look ahead, to forecast the future of the sector and avoid technologies that are heading towards a dead-end. Instead of opting for the direct attached storage (DAS) approach, they are now considering a fully networked approach such as a combination of network attached storage (NAS) and storage area networks (SAN). Overall, it’s demand that is driving the storage market.

According to IDC, the Indian storage (hardware) industry was at $103.1 million in 2002 and is expected to grow up to $119.6 million by this year-end. In terms of storage volumes, the market stood at a size of 2239.4 TB and this is likely to grow to 3762.2 TB by the end of 2003. "The size of data is expected to grow at a CAGR of 63 percent year-on-year for the 2002-07 time frame," says Naveen Mishra, senior analyst for Computing Products and Channels Research at IDC.

Vendor performance

Commenting on vendor performance, Mishra states that HP was the leader in the storage market in India. According to IDC, HP leads the Indian storage market in SANs, the overall tape business, tape automation and the external RAID market. It has a 38 percent market share in disk storage systems and roughly 52 percent market share in tape storage systems.

Storage software market growth

Gartner Research has predicted that SAN will account for 49 percent and NAS for 32 percent of the storage revenue pie in India by the year 2005.

The Gartner report also states that nearly 74.5 percent of corporations in India (75 percent in APEC) did not make any significant storage purchase in the year 2002. But the report says that the overall storage systems market will grow to $425.8 million in 2005—a CAGR of 26 percent.

According to IDC APEC, the storage software market will be at about $17 million, with sequential growth of about 45 percent in 2003. It was about $12 million in 2002. IDC also anticipates the storage software market in India to grow at 50 percent. In the software segment, backup and archive software dominates the scenario.

In a recently conducted study, IDC APEC has found that the overall storage software market will grow 27 percent—OSS (other storage software) and BAS (backup and archive software) are expected to generate strong interest in the market. The report says that BAS is enjoying a strong run in the SME segment. SRS (storage replication software) is achieving healthy growth rates through emphasis on transnational communications. Demand for SRM (storage resource management) is slowing down due to market saturation.

Key trends

As we move up the value chain, the demand for storage also keeps changing—especially in a cash-strapped scenario where enterprises have little to invest and IS managers are asked to maximise the utilisation of current resources, it becomes imperative to look for innovation. Thus, technologies/concepts like virtualisation and storage consolidation are gaining prominence.

Avijit Basu, marketing manager, NSSO, HP India, says, "Consolidation is the buzzword. Companies are going for centralised automated backup and storage consolidation. It can help in remote management, not changing media so often, lesser data loss concerns and low total cost of ownership (TCO)." On the other hand, B Chandrasekhar, Sun Microsystem’s India manager for storage, feels that new IP-oriented block protocols like iSCSI and FCIP will extend the reach to increase applicability and will lower the overall cost and manageability of networked storage. "As we see, large enterprises and SMEs are primarily investing in four key areas, namely data protection, data sharing, disaster recovery and data consolidation," he says.

Says M Ganesh, IBM India’s country manager for the Systems Group, "The storage industry is shifting from a direct-attached model to a networked storage model, increasing the importance of software and services as the competitive differentiator."

EMC country manager T M Srinivasan says that the year 2003 will see the subsiding of the NAS/SAN debate and give way to storage vendors recognising the advantages of networked storage. Srinivasan mentions three dominant trends:

• Move towards storage consolidation and networked storage;
• Increasing demand for tools to manage the growth of information and,
• The rising complexity of IT, and meeting service levels and ensuring business continuity.

The software lobby is also getting stronger and vociferous. Agendra Kumar, country manager, Veritas India, feels that there has been a shift towards storage software from hardware in the last few years.

It is evident that massive growth of data has troubled IT managers and forced them to think of automated backup/recovery software solutions and that’s where companies such as Veritas, Legato and CA score. Says P K Gupta, Legato’s director for Intercontinental Operations, "There will be some serious implementations of storage virtualisation as a SAN and NAS virtualisation appliance will emerge and that will further increase the demand for storage software." Arun Rao, national manager for Storage Business at Computer Associates also thinks that one of the most interesting trends to note this year has been the steady move towards data consolidation.

Demand drivers for storage

All the projected figures about the increasing demand for storage mentioned so far are undoubtedly impressive. But where will this demand come from? What will drive the growth of storage in India? Industries like telecom and BFSI are the clear leaders driving the demand for storage hardware and software in India. "The telecom and BFSI sectors are the key adopters of storage because they cannot afford a downtime of even a single minute. These are the two important sectors that will invest heavily in SAN solutions," says Mishra. Other sectors such as manufacturing and FMCG are also thinking of deploying SANs, he adds.

Disaster recovery and business continuity planning in the public and private sector are also giving a further boost to storage demand. "Realisation of the importance of information protection and high availability of data and applications, demand for automated backup and 24/7 service levels has further increased demand for storage products," says Gupta. Major implementations of enterprise applications such as ERP, CRM, SCM, BI, data warehousing and other e-business applications are all responsible for this increased demand.

Says Ganesh, "In the case of the manufacturing sector, enterprise resource planning software implementations across organisations has led to a spurt in data storage requirements." Rao of CA says that digital convergence—more images, audio and video data and an increasing demand for round-the-clock data availability, driven by the Internet, are propelling storage demand in India.

To sum it up, automation, virtualisation of storage resources, 24/7 data availability, running of critical apps like ERP, CRM and SCM will continue to drive demand for more storage products in the times to come.

Pricing and selling strategies

Pricing is a sensitive area for storage vendors. Despite the growing demand for storage products, competitive pricing, low TCO and better RoI of storage products will decide the future of the storage market in India. "As the TCO is too high, vendors have now started looking at low-cost storage options based on the needs of user companies," says Mishra. The key is that vendors need to understand exact customer requirements and recommend solutions accordingly. "The days of exorbitantly priced storage solutions are over, vendors need to show customers clear RoI gains," says Rao.

Says Alvin Kho, director for technical services at Brocade Communications Systems in Asia-Pacific, "The price of SAN is still not low enough to drive mass adoption. If prices come down, adoption will certainly go up." Therefore, major storage vendors have either reduced the prices of high-end boxes or have introduced a scaled down version for SMEs to fit their budgets.

Basu also feels that pricing will become more cost-effective. "The cost per megabyte of storage might come down by 20-24 percent in the coming years."

Overall, we can say that storage hardware and software costs have come down and have become increasingly affordable and competitive. IT departments have found that it is simpler and more effective to purchase storage and manage it using software tools. There has been a decline of nearly 30-40 percent in the prices of storage products—both software and hardware—and this will continue, as intelligent enterprises will further go in for storage consolidation and virtualisation.

Channel strategy

Ganesh says that IBM is looking at a distribution-based model for selling its low-end tape storage products in India. "This year has seen the integration of IBM’s servers and storage products into a single division called the IBM Systems Group. This was done with a view of giving us a competitive advantage in the marketplace by enhancing our ability to deliver integrated solutions consisting of hardware, software and services to customers—a clear differentiator for IBM versus competitors." HP has also integrated its server and storage division and calls it the Enterprise Sys tems Group. The mission being similar to IBM’s—effective sales at a low cost.

Veritas has a 100 percent channel model in India. "There is no direct selling done. We will continue to follow this pattern as this has proved to be a successful model in India. We do not see any changes in the existing selling and pricing strategies," says Kumar.

Technology trends

Let’s take a look at the new technologies /solutions that vendors have in store for India.

Says Chandrasekhar of Sun: "The next step in the evolution of intelligent storage networks is the development and deployment of an intelligent storage platform."

Gupta, on the other hand, feels that new technologies will include intelligent back ups, SAN and NAS appliances, storage virtualisation, iSCSI, snapshots, utility storage systems, disk-to-disk backups, serial ATA, e-mail management and archival for data retention. So, there’s plenty in the bag.

According to Arun Rao, most Indian enterprise companies are still at the DAS stage but they are slowly catching up with the new technologies. He feels that solutions for storage data protection, storage management and storage infrastructure will take the front seat.

So, the scenario will be more or less governed by three key technology trends—storage virtualisation, NAS-SAN convergence and storage consolidation.

Major concerns

Users are confronted with many difficulties and concerns both while buying and deploying storage solutions in their enterprise systems. Not only that, it has been observed in many instances that organisations in India often add storage resources in a haphazard manner. A majority of enterprises have not put in place a proper storage management policy. Many such concerns need to be addressed before a user adopts a storage system for his enterprise. "The biggest challenge is to sensitise enterprises that as storage requirements and application increase, it will become extremely costly for enterprises to maintain, backup and repair hundreds of distributed storage devices," says Chandrasekhar.

Mishra of IDC says that the most crucial concerns, apart from price, are reliability, scalability and manageability of storage systems.

Conclusion

The demand for and the size of the storage market in India will keep rising by virtue of the fact that almost all enterprises and SMEs are making efforts to run their businesses efficiently and in real-time. Increasing awareness of the need for disaster recovery and planning for business continuity are also driving this market. Storage software is soon going to proliferate in a big way in the Indian market as opposed to the current trend of hardware dominance. India will be second to Singapore as the fastest growing market for storage software. Hardware growth will also accelerate because of many new banking and non-banking financial institutions either expanding or opening shop in India. With liberalisation in the telecom sector and entry of new players with a host of services, the telecom customer base will also grow, giving further boost to the storage market. E-governance is another area which will fuel the growth of storage. In terms of concepts and technology trends storage consolidation and virtualisation are the two most important trends to be watched.

Market share of leading companies (2002)

Storage solutions for the present and future

Market share by technology (2003)