It's All About Software

Software is the subtext at SNW this week

April 18, 2007

3 Min Read
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Two days into the SNW show here in San Diego and the message is clear: Software, more than hardware, is the future of storage.

It's a message that should surprise no one.

On EMC's first-quarter earnings call this morning, software was listed as the fastest-growing segment of the company's $2.975 billion quarterly revenues. (See EMC Announces Record Q1.) Software sales grew 29 percent year-over-year, while system sales grew 6 percent, and services revenue grew 21 percent.

Given these figures, CEO Joe Tucci stated the obvious when he listed software as a service (SAAS) as a key focal point for upcoming EMC announcements. Haven't companies like Arsenal Digital, AmeriVault, Evault, and Iron Mountain been boasting big growth in online backup and other SAAS offerings for months now? (See Arsenal Touts Rapid Restoral.)

Apparently, the big storage players are finally ready to jump aboard. Symantec also today announced that its own SAAS offering, Symantec Protection Network Online Backup Service, has gone into beta testing for release later this year. (See Symantec Intros SAAS Platform.)Meanwhile, the rage in hosted Exchange and "on demand applications" continues, justifying acquisitions and claims for Fortiva, HP, IBM, and NetApp. (See On Demand In Demand and Exchange Issues Spawn Services.) Intermedia.NET, a hosted Exchange player, took the email mike to boast that its first-quarter 2007 revenues were up 29 percent sequentially, with new customer accounts growing 34 percent.

Intermedia.NET believes Microsoft itself is focused on hosted Exchange. "Our belief [is] that Microsoft is focusing more on SaaS-style hosted versions of Exchange, specifically, in order to get the mid-market to upgrade to the new version," writes Intermedia.NET spokeswoman Lisa Coleman in an email today.

Much attention at this show coalesces on VMware, the king of this particular Mardi Gras. Everyone's claiming varying levels of partnership with the virtualization vendor, or at the very least support for VMware's goals and products.

And why not? These days, if you're not on the virtualization bandwagon, it could run you over. Customers are keenly interested, clamoring to make the most of expensive hardware, while tapping advanced features that can speed data management and protection.

The numbers tell the tale: VMware marked record quarterly revenue in EMC's earnings report. Sales were up 95 percent year-over-year, reaching $256 million this quarter. VMware's annualized run rate, the company claims, is now more than $1 billion. And EMC says it's on track for initial SEC filing on its proposed VMware partial IPO, which is set for sometime this summer. (See VMware IPO in the Offing.)Virtualization software seems to be driving some hardware sales. "A lot of our clients are looking for virtualization because they want to add servers, not take them out," says John Sloan, senior research analyst at the Info-Tech Research Group. He notes that certain advanced features of virtualized environments are only possible with SAN or NAS support, and that customers looking to grow their reliance on expanded server support can be the ones seeking fresh arrays.

Bottom line? To gauge the direction of storage networking, look what's happening in software.

Mary Jander, Site Editor, Byte and Switch

  • EMC Corp. (NYSE: EMC)

  • Fortiva Inc.

  • IBM Corp. (NYSE: IBM)

  • Info-Tech Research Group

  • Intermedia.Net Inc.

  • Microsoft Corp. (Nasdaq: MSFT)

  • Network Appliance Inc. (Nasdaq: NTAP)

  • Symantec Corp. (Nasdaq: SYMC)

  • VMware Inc.

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