Storage Forecast: Clear, Sunny

The Dow may wobble, the Fed may fuss, and who knows what's really happening with IT spending trends. But any dark clouds on the horizon have given no pause to storage investors.

You don't have to dig to come up with evidence of confidence in the backup and archiving sector. Data Domain late last week signaled its intention to go public in a sizable way. (See Data Domain Prices $78M IPO.) And just few days apart, two startups generated more than $22 million in new rounds of funding, one so secretive that it only lists its products as "hardware and software." (See Storewiz Notches $9M and Secretive Storspeed Sights $13M.)

We're not suggesting you rebalance your 401(k) portfolio or start investing like it's 1999. But it's striking how much cash is getting poured into storage. Whether such investment is intended to develop new products or to groom a company for acquisition we'll leave for another time.

We've covered VC investments totaling more than $274 million since Jan. 1 in Byte and Switch. Four of those rounds make up a sizable chunk of that amount: de-dupe/VTL maker Sepaton; WAN optimizer Expand; blade vendor Verari; and archiving specialist Mimosa. (See Sepaton Scores $22M, Expand Gets $21M, Verari Speeds Off With $20M, and Mimosa Raises $17M.) Gigabit Ethernet switch vendor Force10 trumped them all with a sweet round of its own. (See Force10 Round Hits $113M .)

As James Rogers notes in his writeup on Data Domain this morning, the storage IPO market is similarly flourishing. Virtualization darling VMware and data warehousing vendor Netezza have also filed S-1s this year; the only questions now are when they will float shares and at what price. The IPO rumor mill also continues to crank where Voltaire and Force10 are concerned.Interest rate hike? Plummeting consumer confidence? IT spending up, down, or slow? Who cares. We've got cash for archiving, de-dupe, virtualization, switches of every possible flavor. And as a few storage startups have already demonstrated, a lack of profitability is not a barrier to going public.

We know from experience what happens with fools and their money. Are VCs and institutional investors really so indifferent to the last tech bubble? Maybe. Smart money keeps one eye on the horizon, regardless of what today's weather looks like.

Terry Sweeney, Editor in Chief, Byte and Switch