The words of Nora Denzel, appointed leader of Hewlett-Packard's storage division in July, indicate just how far storage has come: "HP is transforming itself from a server company that happens to sell storage to a storage company that happens to sell servers," she said in an interview. That's a brazen message for a company with billions of dollars in annual server sales.
But companies are treating storage equipment as a separate system from the servers that tap into the data. In the last year, the growing importance of storage has boosted storage specialists' fortunes, spawned a host of start-ups, and shaken up the organisation charts of the world's biggest computing companies.
In September, IBM elevated its storage group to the same level as servers and global services -- the highest level in its corporate structure -- and named turnaround specialist Linda Sanford to whip its storage business into shape.
These moves highlight the increasing competitiveness of the storage business and the growing threat against storage specialists EMC and Network Appliance. HP, Hitachi Data Systems, Sun Microsystems, IBM, VA Linux Systems and Dell Computer are launching new products against EMC andNetwork Appliance, but for the first time, NetApp and EMC have begun competing with each other in earnest.
The storage industry is wrangling with two questions about the future: What will become of a high-end technology called storage area networking (SAN), and will companies buy storage equipment themselves or rely on outside companies called storage service providers (SSPs)?
For years, high-end companies have been advocating SANs as a way to centralise storage devices in a special, high-speed network separate from the rest of corporate computer networks. While ordinary computer networks typically are based on the Internet Protocol (IP), SANs are based on a communication technology called Fibre Channel.
In 2000, existing Fibre Channel network hardware makers such as QLogic, Brocade Communications Systems and Gadzoox were joined by two new publicly traded companies. EMC spinoff McData went public in August, while Inrange's IPO came in September. Not everyone fared well, however. Ancor was acquired by Qlogic, and Gadzoox stock plummeted on financial problems and executive changes.
SANs work reasonably well at their intended purpose, but they've been hampered by weak standards that have meant that many devices -- network switches, disk storage systems, SAN adapter cards in servers -- have been unable to communicate with each other unless laboriously tested.
"We can put a solution on the floor that will take care of the problem. EMC can too. The problem is they can't talk to each other," Dave Roberson, chief operating officer of Hitachi Data Systems, said in an interview.
Added Dick Watts, chief executive of storage start-up Scale8, "There was some sense of disappointment in how well the problems have been solved in SANs."
Ultimately, standards will emerge, whittling plump profit margins, Denzel predicts. Though EMC has been one of the prime beneficiaries of those margins, EMC chief technology officer Jim Rothnie claims to welcome the advent of standards that the company says will allow it to more than make up in volume what it loses in per-unit profit.
