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12/10/2010
02:20 PM
George Crump
George Crump
Commentary
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Is The Storage Industry Consolidated?

There have long been predictions that the storage industry would consolidate down to three or four vendors. A few weeks ago EMC made a bid to buy Isilon and yesterday Dell made a bid to buy Compellent for $876 million dollars. These deals come on the heels of the dramatic HP - Dell bidding war over 3PAR. Is the storage industry consolidated? Not even close.

There have long been predictions that the storage industry would consolidate down to three or four vendors. A few weeks ago EMC made a bid to buy Isilon and yesterday Dell made a bid to buy Compellent for $876 million dollars. These deals come on the heels of the dramatic HP - Dell bidding war over 3PAR. Is the storage industry consolidated? Not even close.As a point of disclosure I'm breaking my own rule of not mentioning vendor names in this blog since company names are the point of this piece. It is important to note that many of the vendors listed in this entry either have been or currently are clients of Storage Switzerland (indicated by "*").

Clearly, if the above deals go through we will see some consolidation of the industry. Dell, as I predicted in a blog soon after it lost the *3PAR deal, "Don't Worry Dell Knew What It Was Doing", may end up with a higher-end storage vendor in Compellent than their EqualLogic offering. But this one will come at a significantly lower cost than if they had won the 3PAR battle. A *Compellent and Dell combination will have more product overlap to deal with than 3PAR-Dell but I think it is manageable.

For a more detailed analysis of the Dell-Compellent combination see the assessment on our web site. What I want to focus on in this entry is to explain why we are not heading to a consolidation of the storage industry. The first proof is actually found in these larger vendors. HP, Dell, *IBM and *EMC all have, or will have, as these transactions close, multiple storage offerings that actually compete with each other within their own product lines. In fact, in some cases they have multiple options for each category, SAN, NAS, archive disk and backup disk. Even NetApp which has stayed with a single storage platform for the most part has added a cloud storage specific offering when they acquired *Bycast. In many cases each of these former stand alone companies now acts as independent business units within their larger acquiring organization. I'm not saying this is necessarily a bad strategy for these companies but it's certainly not consolidation either.

Then you have the other guys, right now in my opinion being lead by *Pillar Data Systems and *Xiotech. Both of these companies as we discussed in our article "The Advantages To 'Alternative' Tier One Storage Vendors" tend to be on the innovative, front end of the storage development cycle. They are not alone though. There are many other storage vendors that are innovating their way into be considered part of that next wave of enterprise storage alternatives, companies like: *BlueArc, *Coraid, *Nexsan, Nimble Storage, *Nimbus and *Promise Technology, to name a few.

Beyond this we will also see another tier that are primarily hardware vendors integrating off the shelf storage software solutions like ZFS try to compete in this market. Companies like Greenbytes, *Nexenta Systems and IceWeb are all taking the ZFS code and adding value to it to create their own unique offerings for the marketplace.

Not to be forgotten in all of this are the new storage vendors that are providing cloud storage as a primary storage tier including companies like Cirtas, *Nasuni and *StorSimple. While these companies often get slotted into the middle to smaller part of the market they are all working on establishing themselves in larger and larger enterprises.

In short, the storage industry is far from being "consolidated", it is expanding and I believe, at a faster pace than ever. The reason I mentioned vendors is this entry was to drive home that point and I probably only mentioned half of the names that I could have. Our briefing schedule is full week after week with new vendors that are attempting to crack into the mid-range to enterprise storage market. I don't see any indication that would lead me to believe this will slow down. In addition as I stated earlier, even when these companies get bought by larger companies they are not really absorbed, but most often set up as stand alone business units. The storage industry will not be "consolidated" anytime soon and likely not ever.

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George Crump is lead analyst of Storage Switzerland, an IT analyst firm focused on the storage and virtualization segments. Find Storage Switzerland's disclosure statement here.

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