Its evident the storage service provider (SSP) space is chock-a-block. We counted no fewer than 14 separate startups in this area with a total of $542 million in funding among them.
Still, SSPs dont have it easy. Its a different business model from the one "enjoyed" by equipment providers, as they need sufficient funds upfront to build networks that will provide enough coverage to compete with the players already out there. And this is expensive. The flip side is that the ensuing revenue stream will be constant, as opposed to an equipment provider's having to sweat out where the next contract is coming from.
Anyone considering putting a few dollars into another new startup in this sector should consider the circumstances of StorageNetworks Inc. (Nasdaq: STOR), one of the existing players. Yesterday it announced a $32 million net loss in its second quarter and laid off 220 employees, one third of its staff. (see StorageNetworks: Big Layoff)
Next on the chart for receiving the most funding are startups building high-performance storage systems companies. Funding totals $303 million at present. Mind you, that figure got a big boost earlier this month when 3PARdata Inc. announced a massive $100 million round (see 3PARdata Snags $100M).
Interestingly, there are only four major players in this sector 3PARdata, Cereva Networks Inc., Yotta Yotta, and TrueSAN Networks Inc. These companies are building high-end systems that include the ability to store massive amounts of storage as well as switch it over Fibre Channel and gigabit Ethernet networks. A tall order it seems, as these systems are obviously not cheap to build (see Top Ten Private Storage Networking Companies).
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