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Cover Story
Mid-market storage
Storage players are training their marketing guns on the
Indian SMB segment. Shivani Shinde reports
 About
54 percent of the IT spend in the country comes from small and mid-sized businesses
(SMBs), and this market segment is growing at 20 percent per annum. According
to IDC, there are about 10 million organisations that can be classified as SMBs.
These organisations spend about Rs 3,400 crore on IT products and services.
Of these, medium businesses constitute about a million and the rest are SMBs
and SOHOs.
Enterprise application software (EAS) vendors were first off the block in addressing
the needs of this segment. Now it’s the turn of storage vendors.
It’s hard to get a grip on the exact size of the SMB storage market. There
are no dedicated studies on the mid-market. That said, players such as IBM,
EMC, Sun Microsystems and HP—all of whom are active in the large enterprise
segment—have focussed strategies to address this sector. According to IDC,
the total external disc storage market was pegged at 10 petabytes in the first
half of 2006, which signifies a growth of 123 percent over the same period last
year. In revenue terms, the market size was $97 million, a growth of 45 percent
over the corresponding period in 2005. IDC, and most other analyst groups, divide
the SMB market into three.
- Organisations with an employee strength of 100 to 499
are tagged as medium businesses.
- Those with 10 to 99 employees are classified as small
businesses.
- Those with less than 10 employees fall under the category
of SOHO.
IDC states that vendors are targeting the medium segment which consists of about
a million organisations. As of now the small business and SOHO community of
nine million businesses is not being addressed.
Analysts believe that margins in the SMB segment depend on a company’s
channel strategy. Sanjit Sinha, General Manager, Research, IDC, feels that vendors
like IBM and HP already have a strong channel strategy due to their server business,
and hence they are in a better position to lead the SMB storage market. He believes
that EMC with its aggressive SMB focus is also doing well.
Says Sudhir Nayar, Director, Partner Sales and Storage, Sun, “Most mid-range
products available in the market support a mix of FC and SATA drives, along
with enterprise features such as snapshot copy, internal volume copy and replication,
giving a customer the capability to design tiered storage to meet its need for
both fast access and high capacity, and plan and implement the DR strategies
accordingly.”
Customers not only expect to have a ‘No Single Point of Failure’ architecture,
but they are also demanding zero downtime. As a result, vendors are providing
products with dynamic capacity and volume expansion, RAID-level changes, etc.
| Although the action is still concentrated around
Tier I cities, vendors have realised that they have to expand their reach
to tap Tier II and III markets too. Road shows are seen as a good way to
do this. Tandberg conducts three-city road shows every quarter. It also
conducts product training, proof of concept sessions and builds general
awareness of disaster recovery for its partners. So far it has covered Bangalore,
Mumbai, New Delhi, Hyderabad, Pune and Ahmedabad in 2006. The next show
is scheduled in Jan 07 and the company is going to Chennai, Kolkata and
Cochin.
Quantum has a presence in most cities—Delhi, Mumbai,
Pune, Hyderabad, Chennai and is headquartered at Bangalore. It has added
dedicated sales managers at Delhi and Mumbai. These Managers will conduct
product training and focus on QA – Quantum Alliance—their vehicle
to get to partners by way of training, technical support, White papers,
Attack & defence papers, new product & technology info. Quantum’s
team supports and helps sales that are through partners only.
HP has established beach-heads in Tier II and III cities
such as Hyderabad, Pune and Ahmedabad. It is also expanding its partner
network to broaden its reach by providing them with training and certification.
Several partners are already on the HP network, providing solutions for
servers; storage is a natural extension.
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Intensified focus
So why are the biggies targeting SMBs? There are two reasons. The SMB segment
in India largely remains on direct attached storage (DAS). Although the numbers
for network attached storage (NAS) are rising, DAS accounts for the bulk of
SMB storage. Secondly, today’s SMB could be tomorrow’s large enterprise.
The needs of SMBs are similar to those of large enterprises, barring a few subtle
variations. Unlike a large enterprise, an SMB doesn’t have the luxury of
an IT team, and hence looks for solutions that are plug-and-play. Moreover,
an SMB will typically go in for a solution sold by the local reseller rather
than go directly to the vendor.
It is only in the last two or three years that the vendors have come out with
dedicated strategies to address the mid-market. For instance, EMC announced
its SMB focus in early 2005 with the launch of its Insignia SMB line and AX150
storage array. IBM’s first initiative for SMBs was announced in Q1 2005.
| Gartner values the Indian storage market
at $73.1 million |
| Vendor |
Revenues ($ million) |
Percent share |
| IBM |
16.93 |
23.1 |
| EMC |
14.39 |
19.7 |
| HP |
12.7 |
17.3 |
Even those vendors who do not have an SMB strategy per se are working on one.
Take the case of Network Appliance that recently launched the S500, an SMB storage
product for the US market. Soumitra Agarwal, the company’s Marketing Director,
assured Express Computer that NetApp would soon introduce the same product in
the Indian market. The vendors who already had a strategy in place redoubled
their efforts this year. HDS and Sun are good examples of this trend. Although
Sun has had an SMB-focussed strategy for the past three years, they rolled out
a strategic regional partner programme in 2006 to extend the company’s
reach to the next 15 towns outside the metros to cover an additional 37 percent
of the Indian IT market.
Saturation in the large enterprise segment has forced vendors to look at SMBs
for a steady stream of revenue. Vendors largely agree that although large deals
give them a good amount of revenue, there is no consistency and therefore it
is imperative that they focus on the SMB market. Till 2004, IBM had reported
almost flat revenues. However, from early 2005 its revenues have changed dramatically
and insiders believe that this is due to the SMB focus.
| Perhaps the most important criterion to be successful
in the SMB market is channel strategy. As most mid-market companies are
focussed on running their businesses and do not have internal resources
to support their IT environment, they rely on local partners as trusted
advisors to address their immediate technology needs. Agrees Rahul Guha,
Director, Channel Development, HDS, “The Indian SMB storage market
is yet to be tapped by vendors, and we feel that in this segment liaisoning
with channel partners is the best way to address them.”
IBM for instance has divided its channel strategy into
three categories: face-based coverage, tele-coverage and very focussed
businesses (VFBs). The first category consists of large enterprise accounts
where the company deals with them on a one-on-one basis. The second is
dedicated to the mid-market involving mechanisms such as tele-sales, supported
by partners on the field. The VFB category is solely addressed by Big
Blue’s channel partners who operate in non-metros and typically focus
on the top five to 10 companies in Tier II and III markets. As of now,
IBM has 75 partners. Any change in strategy at IBM is communicated to
them through newsletters or information links.
At Symantec, partners play an important role in
targeting the small and mid-tier segment. For large territories, Symantec
has a direct sales agent, and for Tier II and III cities they work with
distributors such as Ingram Micro and Redington.
Says Pravir Arora, Head, Channels, CA India and Saarc,
“Organisations may have various types of hardware, even if it is
just a crude mechanism of storing data on CDs. When it comes to recovering
data, it’s important to have the right kind of software and technology
to retrieve a particular file.” About the channel front Arora comments,
“For us to reach out to Tier II and III cities, we continue to invest
in partner resources by training and skill-building on an ongoing basis.
We have a dedicated team that works with partners and executes go-to-market
strategies.”
EMC will beef up its Velocity Partner Programme to resell
its recently-introduced Insignia line of products that include Clariion
AX150, Retrospect, RepliStor SMB Edition, VisualSRM SMB Edition and eRoom
SMB Edition. It has appointed Select Technologies as a distributor for
this line in India. Redington has also expanded its EMC portfolio to include
the EMC Insignia products.
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Untapped vistas
Aman Munglani, Principal Research Analyst, Storage, Gartner, believes that as
storage expenditure is not a priority in the SMB segment, proper education and
awareness regarding storage requirements is a must. “We see uptake and
with vendors doing the job of educating the users. The market is [potentially]
huge.”
This is true for both primary and secondary storage vendors. For Quantum India
the mid-market accounts for not less than 20 percent of its revenues in the
APAC region. Similarly, for Tandberg, the Indian SMB market is huge with about
60 percent of the company’s business in India accruing from the SMB market.
An interesting trend in the SMB storage space is that the growth of storage
shipments is now independent of the server market. In the past, vendors who
also had a server line (IBM, HP and Sun, to name the big three in the Indian
market) would often bundle a DAS box with a server.
Says K Jaishankar, MD of Ingram Micro, “The strategy is still the same,
and even the technology positioning is the same. The only difference is the
scale or data size. We find that most customers are already aware of the pros
and cons involved, and that they have a good knowledge of storage technology.
Of course, there are instances wherein our partners are in the process of educating
SMB customers on various storage technologies.”
IBM has set up an Innovative Centre. Shailesh Agarwal, Country Manager, Storage,
IBM India says that “people are unaware of or uncomfortable with storage
technology vis-à-vis server technology. At the innovation centre they
can check out any technology, and do their proof of concept and benchmarking.”
Agarwal says that IBM has received phenomenal feedback after the 2,000 sq ft
centre was opened two months back in Bangalore.
EMC is all geared up to wow SMBs. Manoj Chugh, Country Manager, EMC India and
Saarc says, “When we decided to get into the SMB segment we did a study
and found that everyone was offering point products. That’s where our strategy
differs.” EMC has tools that take care of all aspects of storage. They
have provided for NAS as it helps in consolidation, back-up and DR-related software,
and have incorporated their eRoom collaboration tool, among others.
The mindset at an SMB differs from that in a large enterprise. Declares Manoj
Suvarna, Country Head, StorageWorks Division, HP India Sales, “SMBs do
not buy products, they buy solutions.” That’s why it is crucial for
vendors to establish an early beachhead and offer a portfolio of solutions that
match the technology needs and budgets of their SMB customers. Having strong
partner relationships is critical in establishing a stronghold in this marketplace.
Customer loyalty is minimal, and every sale is on a transaction basis. Awareness,
good customer experience and partner mindshare should be the key elements of
any go-to-market strategy.
HP recently announced its All-in-One strategy for the SMB market. The idea is
to provide storage capacity as needed for application servers through iSCSI
SANs, Windows file serving for end-users through NAS, data protection, and simple
application-centric management. These products are available in the range of
1 to 3 TB, and pricing starts from Rs 3 lakh. In fact, last year HP launched
a dedicated programme called Simply Storageworks targeting growing businesses;
the programme brought together all the elements of storage from ‘My first
SAN’ to ‘Easy as NAS.’
| Secondary storage |
| With network storage becoming the focus among SMBs,
back-up is also getting its share of attention.
Says Ashok Kumar, Sales Director (South & West Asia,
Australia/New Zealand), Tandberg Data (Asia), “The SMBs believe in
having a one-stop solution for their storage back-ups, reliable and consistent
technology, prompt and ready post-sales service, as well as a value-for-money
solution. The trend is to also go in for a reliable back-up solution that
is centred on both disc and tape.”
Here too companies need a dedicated focus on SMBs. Along
with a dedicated channel partner and marketing strategy, pricing is a
crucial factor. This is true of any product being offered to SMBs.
Kumar feels that there is a need to launch special products
for the SMB market because SMBs are always looking for simple and reliable
back-up solutions with a specific budget. “Based on our experience,
particularly in the Indian market, the value of a back-up is limited to
less than Rs 1 lakh for a single server solution and Rs 2 lakh for an
automated one.”
As in the case of primary storage, vendors in this category
are also coming out with SMB-specific products. For instance, Tandberg’s
latest special product for the SMB market is the RDX Quikstor, an alternative
medium for data back-up and archival for servers and workstations.
Advanced features that were hitherto only available on
tape back-up solutions geared for the large enterprise are now available
in products being marketed to SMBs. Quantum has introduced a number of
security features in its tape drive products, ranging from password protection
on tape media (to act as a deterrent against theft) to supplying encryption
devices that work with hardware back-up solutions.
Last year, Quantum announced the availability of the
DLT-V4 drive for the mid-market. It supports features such as DLTSage
for predictive and preventive diagnostic manageability and meeting regulatory
compliance requirements through standard media and Write Once Read Many
capability. “With a starting price of Rs 50,000 and a three-year
warranty, it is an ideal choice for SMBs to meet near- and long-term storage
needs, either as a stand-alone product or as part of an entry-level server
solution,” states Sunny John, Quantum’s Country Manager for
India.
The market is huge, and the fight to grab the attention
of the SMB has just begun.
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The software side
Anand Naik, Director, Systems Engineering, Symantec India and Saarc, believes
that the mid-market segment accounts for a significant part of Symantec’s
business. “SMBs are facing the same problems that large enterprises had
been facing. Problems faced by this segment are related to data integrity, e-mail
back-up as well as critical applications and compliance.” Symantec, under
its Veritas range of products, offers Backup Exec Systems Recovery, pcAnywhere
and Control Compliance.
Rajendra Dhavale, Consulting Director, CA, while discussing the trend among
SMBs, says that they are not interested in plain vanilla back-up and restore
solutions. “We recently acquired XOSoft. Its replication offering is useful
to both SMB and enterprise users.” CA’s WANSync product handles real-time
replication. “WANSync is a data protection solution that uses asynchronous
real-time replication over a WAN and is quite useful for those with SQL Server
or Oracle environment,” explains Dhavale.
The company also has BrightStor ARCserve, a suite of products targeting SMBs
that deliver an end-to-end solution for servers, desktops, laptops, applications,
databases and e-mail at an SMB. It supports platforms including Windows, Linux
and Netware.
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