Report: Midmarket Moving to SANs

Storage networking vendors may want to take a close look at catering to midsized corporations, which are on track to rapidly increase their adoption of SANs over the next three years, according to a recent Infonetics Research Inc. survey (see Infonetics: Security Drives Spending).

According to the firm's study, SAN-attached storage use among medium-sized businesses should increase from 34 percent in 2003 to 52 percent in 2005 -- an increase of more than half. By comparison, the number of large enterprises using storage networking products is expected to increase less dramatically, remaining flat (at 76 percent) between 2004 and 2005. The percentage of small businesses using such products, meanwhile, will grow from 39 percent next year to 42 percent in 2005, Infonetics says.

"This is certainly a good validation of the potential in the [midrange] market," says Neil Osipuk, an Infonetics analyst. "I think it would be a smart move for companies to look to that segment and expand their product portfolios... Were already seeing more companies targeting that part of the market."

One example, he says, is McData Corp.’s (Nasdaq: MCDTA) 8-to-24 port Sphereon 4500 switch, which has been a rousing success (see McData Lowers Boom on Brocade and McData Picks Brocade's Pocket).

Figure 1: Use of Storage Interconnection ProductsSource: Infonetics Research

The June 2003 report, "User and Service Provider Plans for Data Centers and Hosting, North America 2003," lays out general spending trends for data center infrastructure markets, including storage. Based on a survey of 240 organizations in North America -- 80 small, 80 medium, and 80 large -- the report determines that concerns over security, followed by storage, are the two main reasons organizations of all sizes are expanding their data centers.

"I would say storage is getting stronger, especially in light of all of the new regulations coming out," Osipuk says. "That’s certainly one of the drivers."

In another finding from the report, new regulations and a heightened concern over disaster recovery are pushing more large organizations to interconnect their geographically separated SANs. By 2005, Infonetics expects one third of all companies with multiple SANs to connect them over metro area networks. “This allows organizations to leverage their various SAN locations and is good for disaster recovery,” Osipuk says. “It’s also a good opportunity for service providers to offer storage services.” (See our report on Storage Over Optical.)

Figure 2: Multiple SANs Over Metro NetworksSource: Infonetics Research

Infonetics didn’t measure market share in the study, but it did ask its end users which companies they thought topped the charts.Hewlett-Packard Co. (NYSE: HPQ) came in first place, with EMC Corp. (NYSE: EMC) in second. Interestingly, Cisco Systems Inc. (Nasdaq: CSCO) jumped to third place on this year's survey, from seventh a year ago. "They’re certainly gaining mindshare with end users," Osipuk says.

— Eugénie Larson, Senior Editor, Byte and Switch