This Storage Bubble Goes to 11!

Participants at The 451 Storage Executive Event and The Gartner Data Center Summit at the end of 2013 were perplexed by the amount of investing in storage ventures and the resurgence of storage related IPOs. While there was general agreement that areas like flash based storage systems and object storage are very promising, the sheer number of new players and associated marketing “noise” was troubling. There was sincere interest to learn about new solution sets but it was hard to differentiate among the players and decipher exact what application/user environments they could best serve. As an example, there were a number of all flash array and hybrid-array vendors offering some combination of de-dup, compression, scale-out features and management. They offered compelling cost/performance metrics but in many cases, the end customer was left to figure out exactly where and how to fit it into their application and storage architectures.

SASI Perspective:

Yes, we are in a bubble. As you will read in our year end Storage Market Review in January, storage related venture funding with be close to $1B for the second year in a row and the IPO market has heated up with Violin, Nimble and security and data protection provider Barracuda going out in 2013. The more interesting question to us is who the winners and losers will be this time around and what are the key factors and company attributes required to be successful. In addition, what do the end-state next generation IT environments look like 5 to 10 years out? There are plenty of “visions” out there but it is still early days. What we are seeing is the commoditization of storage and the movement to web scale environments across public/private/hybrid clouds. In addition, we are seeing new levels of virtualization, automation and overall convergence which offers new levels of IT efficiency, continuity and scale. In terms of who the winners and losers will be, we see a few key “must haves” in this emerging IT landscape:

– Demonstrate a clear path to profitable growth in the face of flat to declining margins

– The ability to scale the business while driving down customer acquisition costs

– Developing product differentiation beyond lower cost

– Comprehension of where the company fits within the larger IT framework and locking in key strategic partners early

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