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The network storage market in India grew 30% in FY 2005-06, registering revenue of Rs 559 crore. As EMC retained it slim lead over HP, the story from 2004-05 was repeated in 2005-06 as well. In terms of verticals, while telecom continued to provide the maximum business to the storage vendors, its position was no longer predominant. BFSI, manufacturing, and the IT and ITeS were not far behind. While telecom took a little more than 20% of the total network security spend in FY 2005-06, the share of each of the other three verticals was slightly less than 20%.

Trends
However, disappointment came in from the government sector. With large number of projects such as SWANs, it was expected that the government would also contribute a major share to the total network storage spend. But a lot of those deals got delayed. If these deals had materialized, the government sector could have substantially increased its share of the total network storage market in India.

Major players focused on large deals. These deals were mostly in the nature of data centers being connected to each other and to disaster recovery centers.

The telecom and banking sectors drove up the network storage market. While banks have traditionally been generating huge amounts of data from their transactions, they were looking to enhance their storage capacities with the opening up of e-commerce and Internet-enabled services, and services such as cheque truncation services. Many banks went in for total branch automation, which created more need for storage solutions. Despite lack of compliance related storage, overall demands rose last year. Compliance however, was unlikely to have created much demand for network storage business in any big way. There are two likely reasons for this.

Currently, compliance is not very high on the agenda of the organizations outside the BFSI space. But, as other verticals will grow, and their non-compliance with regard to mandatory storage of data comes to be highlighted, they will have to start contributing to the storage business. Most IT and ITeS companies have contributed to the storage business under compliance pressures such as Sarbanes-Oxley Act, Gramm-Leach-Bliley Act, EU Data Protection Act, and HIPAA (Health Insurance Portability and Accountability Act). However, as most of these organization's critical data gets stored outside the country, they contributed mainly to the storage switching part of the network storage industry.

Technology Trends
The storage industry saw a shift towards shared storage, virtualization and storage resource management. The trend of consolidating of disparate silos of storage continued in the last fiscal. DR and BC also had considerable mind share, thanks in part to the Mumbai floods.

Enterprises connected their data centers with disaster recovery centers and extended their SAN across the locations. That drove the demand for storage switching. The adoption of FCIP (fiber channel over IP) was another trend. This enabled the organizations to connect their fiber channel to their LANs. This also allowed the organizations to have a single device take over the fiber channel site and the IP site, and connect them with a Metro Ethernet type of connectivity to do the storage replication.

Such deployments were a prominent trend. The single variation in this trend was the media, which ranged from proprietary media such as a leased line, to Metro Ethernet.

The organizations also warmed up to the implementation information lifecycle management (ILM). All the major vendors, such as IBM, Sun, NetApp, EMC and HP had solutions to offer towards this strategy. ILM strategies typically have three phases: consolidation of multiple storage solutions, application-specific ILM, and eventually a unified ILM. While its adoption gained strength in India during the last fiscal, most of the companies were in the first phase and concentrated on consolidating multiple storage solutions.

Telecom players took to it because they generate huge amounts of data on a daily basis, which now needs to be stored for compliance purposes. Most of the telecom companies deployed ILM strategies last year. Some of these include Reliance Communications, Hutch, Bharti, and TTSL.

The need for more and better storage was also felt by enterprises. Also, there was a large amount of business for the vendors due to the organizations going in for content management. The enterprise content management market heated up and Cairn Energy and Infosys invested in these solutions.

Last year was the adoption of server-less storage. This offered more economical storage solutions and helped the mid tier market grow. Despite all these, the size of the network storage market still remained small, at about Rs 559 crore in comparison to the total IT market of about Rs 25,000 crore.

Therefore, the vendors aggressively focused on their channel strategies bringing in more products that would appeal to the SMB market. This was to help them get a more balanced customer mix. Many also came up with low cost SANs (Storage Area Networks) to target the SMBs.

Vendors reached new geographies. Some vendors such as EMC dug their heels deep in India by rolling out plans for expansion and new R&D labs. The company plans an investment of $250 mn over through 2007.

The companies also focused on reigning in the complexity of deploying their solutions. Companies such as EMC played to the galleries showing off that novices could deploy their AXAs in less than 20 minutes.

Virtualizations has always been an integral part of SANs. Last year, it was pursued as a goal in itself. Till now virtualization was approached under various efforts such as storage pooling, data migration, and replication in a SAN environment. However, the management of multiple storage devices is tedious and time consuming. Virtualization helped the administrator to backup, archive, and recover data more easily, and in less time, by disguising the complexity of the SAN with virtualization. The SAN resources became just another resource on the network.

However, virtualization could not cross the cusp of hype to reach large-scale adoption.

The Players
The biggest storage deal last year was from ITC. With its participation in that project, EMC took home around Rs 18 crore. Some of its deals that brought it between Rs 4-5 crore were with TCS, Hutch, Motorola, and Siemens.

EMC also did Rs 3-4 crore business with Mahindra & Mahindra and ONGC Jorhat; Rs 2-3 crore business with Coca Cola, US Software, and eServe. And about a crore of business was done with Airport Authority of India, Flextronics, and Freescale.

Though NetApp had a market share of around 13% in India, it still had a customer base of around 250 customers. Prana Studio, which is into animation, post-production and editing, is using a NAS storage solution from NetApp.

Future Holds Good
The players last year started to move beyond the large market segment. They fine-tuned their marketing strategies to reach the mid segments of the market. As smaller businesses grow into new geographies and new operations, they too would require networked data centers, disaster recovery centers, business continuity centers, and SANs. The coming year is likely to see a greater move among the vendors to democratize their customer base.

Alok Singh
aloksi@cybermedia.co.in