2006: The B&S Report Card

Time for final grades on our fearless 2006 predictions

December 29, 2006

6 Min Read
Network Computing logo

Before we tell you what we think will happen in the storage world in 2007, we thought wed go back and look at how well we told you what would happen in 2006.

We've dredged up our intrepid 2006 forecast with 20/20 hindsight and graded ourselves on how closely each prediction came to reality. (See 2005 Top Ten: '06 Storage Predictions.) Feel free to weigh in with your own grades.

Prediction: The Big Get Bigger
Reality: Switch, Tape Library, WAFS, Chips Firms Hook UpGrade: A-

A year ago, we thought we would see a handful of top-tier storage companies consolidate. And while the acquisition frenzy of 2006 consisted mostly of large companies buying smaller firms to fill holes in their product lines, there was a good bit of consolidation.

The most notable example was Brocade's $713 million pickup of switch rival McData, but the biggest deal of the year was LSI’s $4 billion payout for storage chip rival Agere. The tape library industry also consolidated with Quantum's $770 million acquisition of ADIC and Tandberg's $28 million buyout of Exabyte. There were also two WAFS consolidation acquisitions -- Packeteer picked up Tacit for $78 million and Citrix bought Orbital Data for $50 million.While we missed with our out-on-a-limb forecast that IBM would acquire Network Appliance, we redeemed ourselves by predicting that "2006 could be the year SAN switch vendors Brocade and McData finally merge to battle Cisco more efficiently."

Prediction: Startups Cash Out

Reality: A Banner Year for BuyoutsGrade: A

We hit the nail on the head that major storage companies would fork over for startups with important technology. We said CDP, WAFS, disaster recover, and data compression would be hot areas.

Six of the 15 companies we mentioned as prime candidates got scooped up. We did leave out services and virtualization -- big 2006 acquisition targets -- and came close on this one: "Don’t be shocked to see a major systems vendor (Hitachi perhaps?) swallow enterprise NAS vendor BlueArc."

Prediction: An IPO or Two

Reality: Try Four Or FiveGrade: A

Forecasting two storage IPOs in one year might have seemed bold a year ago, but we actually undershot. We were right about CommVault filing early in 2006, and we listed Isilon as a long shot. But we failed to see WAFS startup Riverbed’s meteoric rise and replication vendor Double-Take’s emergence. InfiniBand chip vendor Mellanox has also filed to go public but won’t price shares this year.

Prediction: InfiniBand In the Data Center

Reality:Not Yet Grade: D Maybe QLogic CEO H.K. Desai and his advisors believe this -- they bought up InfiniBand startups PathScale and SilverStorm this year. But while those deals and Mellanox’s pending IPO prove InfiniBand is alive and well, it only took baby steps toward becoming a mainstream data center play in 2006. InfiniBand’s long-term chances of making it in the data center may rest on how well it plays with Ethernet.

Next Page: Encryption Embraced

Prediction: Encryption Embraced

Reality: Security Blanket Spreads Out

Grade: BWe were right that encryption devices would proliferate. They moved further into tape drives and software, and more vendors took steps to acquire and implement the technology. What we failed to note was that key management would trump encryption itself, and lack of good multivendor key management would stall user acceptance of encryption.

Prediction: Managed Services Increase

Reality: Service Offerings Proliferate

Grade: A

Unlike InfiniBand, managed storage services’ comeback has been real. Amazon, AT&T, Savvis, and Verizon pushed managed services this year, and hard drive vendor Seagate will follow after its $185 million acquisition of EVault closes. Although the push to IT outsourcing isn’t storage specific, email management and disaster recovery are big drivers of services.

Prediction: Blade Backlash

Reality: Users Are Cool With Blades, Heat and All

Grade: D

Yes, they’re still too hot, but users are warming to the advantages of blade servers. Besides saving space, blades help handle multiple server workloads required by virtualization and let firms use Ethernet and iSCSI in their storage networks. Meanwhile, Hewlett-Packard and IBM keep rolling out updates and new ways of keeping their blades cool.

Prediction: The Whip Comes DownReality: It Falls on Backdaters and Data Losers

Grade: A

The storage industry and regulators made a lot of news together in 2006. Organizations such as National Association of Securities Dealers (NASD) and New York Stock Exchange (NYSE) Regulatory Inc. handed out a slew of fines to organizations that failed to properly manage email and other electronic records.

There were also changes to the Federal Rules of Civil Procedure (FRCP), which govern lawsuits. New rules that took effect December 1 change the way firms must manage their records and have storage vendors falling over themselves to offer their assistance -- at a price.

Storage vendors also came under the whip for a different legal issue. The SEC and federal government crackdown on companies that improperly accounted for backdated stock options hit the storage industry hard. Former Brocade CEO Greg Reyes and human resources VP Stephanie Johnson were indicted, and AMCC, Broadcom, CA, Dell, F5 Networks, Marvell Technology Group, and Vitesse have also come under investigation.

— The Editors, Byte and Switch

Stay informed! Sign up to get expert advice and insight delivered direct to your inbox

You May Also Like

More Insights