They owe their rise to simple economics: Customers can save a significant amount of money by contracting for storage with a network, rather than building their own storage facilities.
Take Exodus Communications. The Internet hosting service now counts 4,000 customers as storage utility users. "Over the last six months, we're seeing the numbers skyrocket" for storage for a diverse set of customers, from dot-coms to traditional enterprises, says Brian Schwarz, product marketing manager at the company.
Other suppliers of storage as a utility service include Centripetal, Electronic Data Systems, IBM Global Services and StorageNetworks. They are joined by partners acting as market makers or intermediaries with end users, such as Enron Broadband Services and Xdrive Technologies. Representatives at these companies say they are in the best growth market since Britney Spears made poster makers millions of dollars.
"Until now, storage has always been produced with the idea of one user and one set of products. Now it's being shared across the network," says John Clavin, vice president of marketing at StorageNetworks, a 3-year-old company that analysts view as the first pure play in storage as a network utility.
StorageNetworks has 52 points of presence in North America and Europe and 170 customers, up from five at the end of 1999. Its customers believe they are getting storage cheaper over a network than they can build it themselves - in fact, 20 percent to 30 percent cheaper, Clavin says.
GartnerGroup Dataquest projects that what amounted to an embryonic US$10 million business in 1999 will grow to an $8 billion business by 2003. "Most of the initial growth will occur within Internet data centres, accounting for 80 percent of the overall market by 2003," GartnerGroup Dataquest analyst Adam Couture wrote in his report, The Storage Utility Market: Strap In and Hold Tight.
That means the biggest appetite for network storage comes from online businesses, including Internet service providers and hosting services, as well as e-commerce sites fielding catalogs, capturing customer visit information and executing transactions. The other 20 percent of the market is in providing storage as a network utility to corporate data centers, Couture says.
