Enterprise Equipment: Network Storage: On the Growth Path

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The network storage market surged ahead during 2006-07 with impressive growth. All the vendors saw new opportunities with concepts like consolidation and compliance getting more and more mainstream. EMC, IBM, HP and NetApp continued to dominate the network storage space with a slew of offerings. In terms of vertical-wise consumption, BFSI and telecom were aggressive buyers, leading to buoyant growth in this segment. Over the year, customers also realized the availability and utilization issues associated with direct-attached storage (DAS) and invested in network storage. Large enterprises as well as SMEs realized that existing storage infrastructure had to be augmented to handle the rapidly growing enterprise data.

MARKET DYNAMICS
Storage assumed the role of a critical IT enabler. Effective storage management was the mantra that all vendors offered to the clients.

Enterprises in India continue to store more information and more types of information than ever before. They also need to ensure that this information is safely retained for rapid recovery. This is indeed a challenge for CIOs, as they need the right set of tools, technologies, and skills for maintaining the storage systems. CIOs over the year also looked at solutions that had lesser TCO and greater RoI. In a way, the year that went by pushed network storage one step forward in the maturity curve, as buyers took informed decisions. In line with the buyer mindset, the mainline storage vendors offered solutions that met consumers' requirements.

The storage market in FY '06-07 is estimated at Rs 995 crore registering a growth of 78 percent. EMC leads the table and had taken a multi-pronged approach of offering its solutions based on four building blocks that cut across aspects like store, protect, optimize and leverage. EMC attacked the Indian market with great aggression over the year; it has also committed an investment of $500 mn in India that will go into developing various storage-based solutions. Telecom and media, IT/ITeS together turned out to be one of the biggest growth drivers for EMC during 2006-07. It signed on customers like New India Assurance, Qualcomm, ICICI Bank, SBI, Bank of India, Ericsson, and Hindalco among others.

Meanwhile, Network Appliance also saw its stature growing in India. Today, NetApp is among the top network storage vendors in the country. It also significantly ramped up its product development operations at Bangalore during the year. NetApp won significant repeat business from its existing customers and a good number of new ones like Rediff.com, Reliance Communications, Hindustan Times, Bennett Coleman, etc.

Market Drivers

The key drivers that shaped the networked storage market in India were:

New applications that increased the demand for additional storage

Need to retain data from regulatory and internal control perspectives

Need to backup data in the data center as well as at a DR site for 24x7 availability; this requires storage consolidation as a first step

Explosion in unstructured information, emails, and database sizes

Increasing competition leading to the need for data-driven decision making

In many organizations, the need to support multimedia content for internal and external audiences also contributed to the growth of storage requirements

Increasing digitization of paper content in areas like eGovernance, document management and workflow automation

More effective email management

According to industry experts, there were several market accelerators for network storage over the last year. For instance, the SMB market in India evinced greater interest, mostly through reseller partners. Many vendors have seen the huge potential in this market segment and are re-focusing their strategies. Meanwhile, IT spending by customers has become application driven. Verticals like BFSI aggressively expanded their core banking solutions, and added and connected new branches, thus creating a second storage buying wave. Pure play storage-only vendors garnered good client wins here. Shifting of application functions into storage systems and making them "application-aware" emerged as one of the biggest opportunities, as well as a challenge, for the storage industry in the next several years. Customers increasingly demanded storage solutions rather than just storage hardware. Tiered storage became a widely accepted concept and gained further acceptance by virtue of its ability to lower the capital costs of storage infrastructure and the ongoing operational costs.

Meanwhile, vendors like Cisco also cashed in on the storage networking boom by offering a range of storage switching solutions. Cisco launched its MDS 9124 multilayer fabric switch powered by the Cisco SAN operating system. Original storage manufacturer and solution technology integrator partners extended their support to this new switch.