2005 Top Ten: '06 Storage Predictions

As we look into our crystal ball for 2006, we see...

Well, first, heres what we don’t see: SAS, SATA, email archiving, virtualization, and 4-Gbp/s Fibre Channel. Sure, we know they’re coming but you don’t need a crystal ball to see them. And you certainly don’t need us to tell you that.

Our crystal ball cuts through the snow and fog that tends to accumulate inside these things this time of year and goes beyond the obvious to reveal a few surprises about 2006. Of course, they won’t surprise you when they happen because you’ll have already read it here.

With our blinders completely off, here goes:

The Big Get BiggerAnd smaller in number. In tandem with continued consolidation across storage vendors of all sizes, we think this just may be the year for a couple of the top-tier types to combine forces. We're talking about that slice of companies that includes EMC, Hewlett-Packard, Hitachi Data Systems, IBM, and Network Appliance. A year ago, we might have predicted a divestiture of some sort from HP, given the rocky path it was on, but it's stabilized pretty well in the last few quarters.

The likeliest pairing from our ivory tower of market research and press releases? IBM and NetApp. The two got a lot closer in 2005 with a partnership on everything from IP SAN and NAS gear to network management software, and they made no bones about their motivation: Stick it to EMC. Some would argue the two companies don't need to merge to make that happen. But maybe IBM's broader reach is just what NetApp needs to really shine after the Decru acquisition. Regardless, that's a pairing that bears keeping a close eye on in the year ahead. And 2006 could be the year SAN switch vendors Brocade and McData finally merge to battle Cisco more efficiently.

Startups Cash Out

By now, it’s clear a successful storage startup -- and even some not-so-successful ones -- are much more likely to get acquired than to go IPO. Expect that trend to continue in 2006. Established storage vendors are happy to let startups innovate and buy the ones that come up with useful technology. All the major storage companies are shopping for startups with technology that fill holes in their product lines. Likely targets include CDP vendors Revivio, Mimosa Systems, TimeSpring, and Storactive, virtual tape library vendors Sepaton and Diligent, and WAN/WAFS vendors Riverbed, Availl, and Tacit Networks, compression vendors Avamar and Data Domain, change management startup Onaro, and disaster recover startups Kashya, Sanrad, and XOsoft. And don’t be shocked to see a major systems vendor (Hitachi perhaps?) swallow enterprise NAS vendor BlueArc.

An IPO or Two No networked storage companies took the plunge in 2005, and we don’t anticipate a mad rush to the public markets in 2006. The time is right for a handful of storage companies, though, and we expect at least one to go public. Backup software vendor CommVault is the most obvious, and many Wall Street analysts and storage insiders are surprised the Oceanport, N.J. outfit hasn’t gone public yet. We expect CommVault to file for an IPO early next year while fielding acquisition offers before deciding its most lucrative exit strategy. Other software candidates include replication/migration vendor Softek, backup vendor Asigra, and application acceleration firm NetEx. Systems vendors 3PAR and Isilon are longer shots who are more likely to wait until 2007.

InfiniBand In the Data Center

No, this isn’t a prediction left over from 2002. InfiniBand got knocked off its high horse years ago, but made significant strides this year. Silicon Graphics and Verari Systems are selling native InfiniBand systems produced by Engenio, and DataDirect also offers native InfiniBand systems. Isilon gives customers of its NAS clustered systems a choice between InfiniBand and Ethernet switches, and reports 90 percent choose InfiniBand. And InfiniBand is now a key piece of Cisco’s plan to rule the data center. InfiniBand faces a challenge from 10-Gbit/s Ethernet, but only one of them is ready and affordable now.

Embracing Encryption

Security data on disk and especially on tape media was big news in 2005, following a series of high-profile data losses. Auto encrypting tape drives, which adds encryption just after compression, has been touted as a possible answer to users’ security nightmares although the technology is still in its infancy. Tape encryption products from Decru, NeoScale, Kasten Chase, and Vormetric have been getting attention but not many sales yet. With encryption in backup software getting more sophisticated, users need to figure out the best way to encrypt before picking their encryption method.We think drive-level encryption will win out; although not exclusively in appliances from Decru and its competitors. Sun Microsystems, Quantum, and Spectra Logic are working on building encryption into their tape drives -- removing the need to install a separate device. And with Decru's new owner NetApp pushes encryption appliances, those will probably start showing up in more enterprises as well.

Increasingly at Your Service

Like InfiniBand, managed storage services seemed like a concept that would never catch on a few years back. That's changed, and managed data services have also staged a comeback. For instance, vendors such as Brocade Communications Systems and AT&T Corp., are looking to roll out new services strategies next year in an attempt to cash in on users’ desire to better manage infrastructure and expenditure. AT&T’s push into application-based utility computing could help users cut their software costs and increase the pressure on rival vendors in this space such as Sun, HP and IBM Corp. The end result? Users getting more bang for their utility computing buck.

Blade Backlash

Blade servers, if you were to believe certain vendors, are the best thing that has happened to the data center and, some users are already reaping the benefits of the technology. But blade servers can be a two-edged sword. Despite the marketing frenzy, they can come at a high price and use up lots of power. Simply put, they're not for everybody. Despite having advantages -- particularly where space is an issue -- we expect IT managers to view them with an increasingly critical eye in 2006.

And the Whip Comes Down

In our post-Enron/post-WorldCom world, legislators have grown fond of passing laws requiring more care and privacy where data handling (and retention) is concerned. From the U.S. Congress to various state legislatures, they're demanding more transparency and responsibility with the way personal data is collected, used, and stored. The SEC and countless state commissions have grumbled about corporate responsibility and the need to protect consumers during this epidemic of identity theft.

And yet the list of companies reporting lost or stolen data grows by the quarter -- millions of names, SSNs, phone numbers, and birthdates floating around the ether. While regulatory passivity may have been prudent as these laws took effect, our fervent hope and prediction for 2006 is that the grace period will be declared oficially over, and these companies will start to face some hefty fines for this kind of exposure. We're guessing they'll likely be levied by a bellwether state like New York, California, or Illinois, rather than by distracted feds.

— The Editors, Byte and Switch

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