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Unequal and uneven-those are the words that best describe the performances and happenings last fiscal. The overall market grew by 14 percent in value terms, but vendors clocked unusually different growth rates-from over 350 percent to 65 percent to a negative 18 percent.

Was there a single-largest reason for such disparity?

Different people would give different answers to this question, but if one were to keep it simple, the answer would be-EMC.

Like it or not, the pure-play network storage vendor upset equations-and market shares.

A Dark Horse?
In line with the global showing, EMC pulled up an impressive performance in India too.

According to V&D estimates, at the end of the fiscal 2004–05, EMC inched past the erstwhile market leader HP with a 25 percent market share in revenue terms, thanks to some very large wins.

However, HP managed to retain its leadership in terms of capacity shipment, something that was again in keeping with the global trend. In revenue terms as well, it was only marginally behind EMC at 24 percent.

Two things seem to have worked for EMC in India, after a rather bad patch. One, of course, was the strengthening of software capabilities, something that applies to the company's success globally. Two, the new leadership that took charge in the middle of FY 2003–04 and oversaw first full year of operation this time.

Over the past few years, EMC's dependence on hardware has come down significantly. The past series of acquisitions-Legato, Documentum, and Vmware-helped EMC offer a host of new solutions and make a quick turnaround.

Also, with hardware nearly being a commodity, the revenue growth and the margins increasingly come from software.

That also partly explains why EMC was able to lead in revenue terms even though it didn't lead in capacity shipment.

Another reason was its better time-to-market ability as compared to other vendors. Some of its competitors were late with their low-cost, high-capacity offerings. There were also some product transition issues.

Yet another improvement, as part of EMC's global emphasis, was on the channels and partnerships front, something that helped the company in India to do very crisp executions.

For high-end storage systems, EMC pitched with its Symmetrix DMX Series. The offerings included DMX800, DMX1000 single-bay, DMX2000 double-bay, and DMX3000 triple-bay systems.

For mid-size SAN environments, EMC put its Clariion CX series forward, which was priced at Rs 5.4 lakh onwards. For entry-level SAN, the offering was the Clariion AX100, which had a starting price of Rs 2.85 lakh.

In the NAS space, EMC competed with its NetWin range of products.

The only vendor that came anywhere close to EMC in overall performance was Network Appliance (NetApp). Its performance was significantly better than its global performance. While the company is reported to have posted a revenue increase of above 25 percent worldwide, it showed a rise of above 65 percent in India.

Enterprises Open Up
That enterprises are willing to spend more, though not lavishly on network storage systems, is common knowledge. Increasingly, they see such systems as means to improve operational efficiencies and costs.

In this light, enterprises looked for reliable network storage systems for their mission-critical applications. So, contrary to the perception otherwise, fiber channel (FC) SANs were widely deployed during FY 2004–05. It may surprise quite a few, if not many, that FC SANs constituted more than two-thirds of the overall SAN market in India during the period.

Also, SAN market revenues were significantly more than NAS market revenues. According to industry sources, while the SAN shipments were easily over Rs 265 crore, NAS shipments stood dwarfed at around Rs 95 crore.

Given that the competition in the SAN space was for a larger pie, it was relatively easier out there as compared to the NAS space. Too many vendors fought for the smaller NAS pie with roughly similar offerings.

Clearly, the real value game was in the FC SAN space, where EMC scored an edge over others and thus could bring the apple cart home.

A Bigger Picture
The total network storage market in India in FY 2004–05 was about Rs 430 crore. As discussed earlier, SAN and NAS would contribute Rs 270 crore and Rs 100 crore respectively to the total. Standalone shipment of network storage software would be in the range of Rs 55 crore. The remaining Rs 5 crore would have come from CAS-content attachable storage-a new category being pushed by EMC.

It will be pertinent to note here that network storage infrastructure hardware-director and fabric switches-accounted for at least Rs 45 crore. The major players here are Brocade, Cisco, and McData. According to industry sources, Brocade was the leader in this particular space, commanding more than 60 percent of the market share.

V&D estimates CyberMedia Research

EMC staged perhaps the biggest upset ever in the Indian network storage market, to take away 25 percent of the revenue pie. HP came second with 23 percent. NetApp, with 18 percent market share, pulled up a neat third over the rest.

Some of the largest orders during FY 2004–05 were bagged by EMC and that's largely the reason for its numero uno status today.

The biggest win of the year for EMC came from the telecom vertical. The network storage leader is understood to have bagged an order worth nearly Rs 35 crore from Tata Teleservices.

The second biggest deal for EMC came from Reliance and was worth Rs 25 crore. The deployment was largely SAN in nature and was supposedly the only multi-hop disaster recovery installation in the country, with no single point of failure.

Some of the other significant customers of EMC included Cognizant, Bharti, Cisco, ITC, Hutchison, Citibank, and Freescale Semiconductor.

Some of the customers NetApp gained last year include Aviva Life Insurance, GE Capital, HDFC Standard Life, and Sasken Communications.

NetApp has been able to experience success in India despite a relatively shorter stint here. The company attributes this to its ability to partner well with other industry leaders to provide comprehensive storage solutions. One such solution was the IP SAN solution for HDFC Standard Life, which is a joint solution with FileNet.

NetApp also provided backup and data protection solutions in collaboration with Veritas. Veritas remained a strong player in the network storage software space.

How Others Responded
IBM launched DS 8000, DS 6000, and DS 4800 disk storage systems in FY 2004–05. It claims it will lead the market and leapfrog competition with further announcements. IBM is using DS 8000's logical portioning feature to make a strong marketing push against Hitachi and EMC in the SAN space.

According to IBM, the first DS 8000 is already installed for a banking customer. The first DS 6000s are also installed and running in manufacturing environments.

On the virtualization front, it's betting on its SAN volume controllers (SVCs) and SAN file systems (SFSs).

The SVCs are aimed at simplifying storage management and reducing the TCO through the promise of seamless manageability of high-end and mid-range storage. IBM says the government sector adopted the SFS to manage data.

Looking forward, IBM has also announced a tie up with NetApps to OEM its products.

The IP SAN proponent Intransa says it grew 100 percent quarter-over-quarter in Q1 2005.

It adds that IP SAN-based networked storage (true network storage) has grown in stature and is being observed by many end users.

The company has taken active initiatives to push IP SAN usage in the country. Among other things, it organized road shows along with its partners to educate customers about the benefits of IP SAN.

Intransa launched StorAR, an asynchronous remote replication solution, which it claims provides unlimited distance replication on IP SAN for all applications.

The company also launched IP7500, a 40 plus TB IP SAN in a rack for online storage consolidation on data centre applications.

Outlook
Vendors like EMC will look at IP SAN tactically, while Intransa will pronounce IP even more clearly as part of its strategy.

The advantage that IP has enjoyed in the last couple of years will however decrease somewhat as 4 GB FC SANs start catching up. These new solutions will pose threat to IP SANs by offering better price-performance ratios, especially in case of mission-critical environments.

This could lead to a new spell of pricing pressure on IP SAN, as a result of which pure-play IP SAN vendors could feel the pinch.

Also, network storage is becoming a specialist's domain and has developed an ecosystem of its own. This means that vendors like EMC, NetApp, HDS, and Intransa will pose tougher competition to those like IBM, Sun, and Dell.

Deepak Kumar