SANs: Reheat and Serve ?

NEW YORK -- StorageNext -- Experts pointed to overhyped technologies and underdelivered products in the world of storage networking startups here in a technology panel at the StorageNext2001 conference.

In fact, the What’s Hot, What’s Not” panel might have been characterized as the "What's Not, What's Not" panel. Experts said a hodgepodge of multiprotocol storage switching players are struggling to gain customer attention. But the investors see long-term potential for companies developing products that can simplify and manage storage over wide-area networks.

Panelists noted that certain battles of technology protocols were too early to call. Among these, competing specs -- such as Infiniband vs. 3GIO in the interconnect market and iSCSI vs. Fibre Channel over IP in the wide-area market -- are being played out slowly as customer adoption remains tepid, at best.

”It’s like the early days of networking,” said John Kain, partner with VantagePoint Venture Partners. “It’s a market with lots of different protocols, and nobody is sure which way it’s going to go.”

Several venture capitalists, in fact, were downright skeptical whether many storage players in the systems market will survive the shakeout from competition at the hands of Goliaths such as Brocade Communications Systems Inc. (Nasdaq: BRCD) and EMC Corp. (NYSE: EMC).”The group is over-funded and has under-delivered,” said Sunil S. Dhaliwal, a senior associate at Battery Ventures. “You see companies raising $150 million to $200 million trying to be the next Hitachi Data Systems (HDS) or EMC, and they’re going to get slaughtered."

Chris Baldwin, a partner at Charles River Ventures, said that most startups should avoid competing head-to-head with the larger players and instead focus on fringe problems that aren’t being solved for customers.

“You’ve got to look for where customers are unsatisfied,” said Baldwin. ”It’s like being a cattle rustler, you’ve got to come down out of the hills and break off a piece of the herd that’s not under control.”

But Baldwin noted that the larger companies are susceptible now, mostly because they have taken advantage of their customers by raising prices, driving the customers to look for more inexpensive products. “EMC and Veritas Software Corp. [Nasdaq: VRTS] have done startups a favor by holding up the price umbrella and reminding customers how much they’re paying."

Some panelist offered an optimistic note for the industry coming out of recession. Robert Montague, managing director with RBC Dain Rauscher Inc., said his firm conducted a survey of storage resellers and found that sales increased 6 percent in the third quarter of 2001 and were expected to increase another 24 percent in the fourth quarter.”There’s some pretty good acceleration in the channel,” said Montague. “This is a community of what customers see as hot technologies."

— R. Scott Raynovich, US Editor, Light Reading
http://www.lightreading.com