Emerging NAS vendors face an uphill battle

Anders Lofgren

Network-attached storage (NAS) devices have to continue to evolve

technologically in terms of scalability, performance, availability and

manageability. NAS was developed to address an underserved market – the

departmental, workgroup segment with users who have collaborative computing

needs (sharing files) and, more importantly, ease of management to serve the

non-technical nature of its initial target customer. Instead of buying a file

server, customers could buy a NAS product customized for file sharing. NAS has

now begun to move up the value chain and is moving into the high-end space – a

territory now being targeted by the startups. However, it is a crowded market

with many vendors potentially (some of the companies have yet to deliver a

product) competing for IT budget dollars from an increasingly conservative

customer. The barriers will be too great for many of these startups since it is

difficult to determine their competitive advantage over current solutions.

There is clearly a market opportunity for emerging NAS technologies since

both NAS and storage area network (SAN) (as well as direct attached storage,

DAS) have a place in the enterprise. Future NAS technologies need to address the

following areas:

• Scalability: NAS devices need to scale beyond current capacity levels.
• Manageability: NAS is positioned as inexpensive and easy to manage. This
  
  is the case with a single NAS but not necessarily the case with multiple
  
  devices. With more devices, the management advantage becomes less apparent.
• Performance: NAS needs to address performance issues with database
  
  applications running on file systems.
• Future storage needs: Future storage needs will be addressed both by block
  
  and file-based storage. File-based storage has several advantages that will
  
  drive the need for either NAS or some kind of global file system.

Despite the clear market opportunity, there are significant barriers that may

limit the chances of success:

• NetApp and EMC control the current NAS market: These two vendors continue
  
  to be very popular solutions for customers looking for the benefits of SANs
  
  but without the complexity and cost.
• Increasingly, these are the solutions being adopted by customers with
  
  high-end needs.
• Microsoft’s increasing influence: Microsoft has positioned itself in the
  
  NAS market with the availability of its SAK (server appliance kit). This
  
  embedded OS has currently positioned MS as a player in the low-end to
  
  midrange market, but the company is undoubtedly setting its sights higher
  
  for the future.
• Too many startups: This is an increasingly crowded marketplace with a
  
  number of startups vying for customers’ attention. Market consolidation
  
  will occur as funding, time to market and, more importantly, time to revenue
  
  become issues. The market cannot sustain the current number of startups.
• Software NAS: Software NAS implementations are gaining some traction as an
  
  alternative to the HW/SW combination. The separation of the HW and SW does
  
  run counter to one of NAS’ primary advantages – the complete, all-in-one
  
  solution. However, SW NAS does give users the flexibility in terms of their
  
  disk components and allows re-use of SAN capacity.
• SAN integration: Many of the emerging startups are focusing simply on NAS.
  
  Few appear to be addressing a critical issue for customers: how to integrate
  
  NAS and SAN into an overall storage infrastructure. This is especially
  
  important for those customers who have already made significant investments
  
  in SAN. From a resource perspective, the larger, established vendors are
  
  much better positioned to address this need for customers.
• Distribution channels: Many of the existing storage and server vendors are
  
  already selling NAS products, so few of them have needs to partner with the
  
  startups. Sun would be the only major company today that does not have a NAS
  
  solution, but within nine months, it will have addressed this area. Selling
  
  direct will be very difficult, and if the midrange market is to be targeted,
  
  the VARs and SIs will be the best channel. The company that establishes the
  
  OEM partnerships will have the highest chance for success.
• Market conditions: The economic conditions are not amenable to new
  
  startups since IT budgets are already stretched thin and many organizations
  
  are in a maintenance mode rather than expansion into new product areas and
  
  technologies.
• Target customer: Many of these startups are targeting high-end markets
  
  when the market opportunity may be greater in the midrange. In the midrange
  
  market, SANs have made few inroads, budgets are smaller (negating the
  
  potential for FC SANs in many cases), and ease of management is critical
  
  based on the expertise level of the IT staff. It is a perfect market for NAS
  
  and largely a market whose needs are being met primarily by NetApp. In other
  
  words, there is some room for competitive products.
• Software support: Most, if not all, of these devices are not supported
  
  under many of the major storage management software packages. This results
  
  in two problems: (1) integration into current storage management
  
  infrastructure will be difficult and (2) it creates a vendor lock-in
  
  situation since both hardware and software will need to be purchased from
  
  the same vendor. Given the current state of the storage industry, the latter
  
  issue is not too dissimilar from current storage hardware products. However,
  
  it is important for end users to consider the products in the context of an
  
  overall storage architecture rather than as a point solution.

It would be unfair to say that these challenges are insurmountable, but it

does demonstrate that only one or two of the startups will make it through the

next 24 months. Especially if economic prospects do not improve and IT budgets

remain constrained. As far as market leaders, it would be difficult to prove any

kind of leadership position. There are many small companies with little or no

revenue, unknown financial status, uncertain economic conditions,

time-to-revenue concerns, etc. For example, Cereva Networks, developer of a

highly scalable storage system with value-add software functions, recently

ceased operations. The company was not in the NAS market but in the related

storage system market. With almost $200 million in funding from established VCs,

it is indicative of some of the problems even the best funded startups face. For

end users, these companies bear watching, but implementations are full of risks.

In other words, it is a wait-and see situation. However, there is minimal risk

in prototyping products in test labs, but the big question, beyond the obvious

questions of business viability, will be how these new products will integrate

into the existing architecture, since wholesale replacements are unlikely. In

other words, unless the benefits of these new products are so compelling that a

major architectural change needs to occur, these companies need to address how

they seamlessly fit into the existing storage infrastructure.