IBM's 'Storage Router' a challenge to EMC

By Eric Auchard

SAN FRANCISCO - IBM on Friday will take aim at the heart of data storage equipment leader EMC Corp.'s market with a product that will allow EMC buyers to switch to IBM.

IBM is shipping an ungraded version of a product known as storage virtualization software that allows customers of EMC's fast-growing mid-range storage line to use equipment from any of the industry's big three players -- EMC, IBM and Hitachi -- and thus freeing up customers locked into EMC storage only.

"IBM is almost maniacally focused on taking share away from EMC," Ron Riffe, IBM's storage software strategist, said in an interview.

Last week IBM shipped an upgraded storage product line called Shark, its first refresh of the equipment since 1999.

Now, with software designed to free up EMC customers, IBM believes it finally has the means to win market share from EMC.

Storage virtualization software allows customers to move massive pools of data back and forth between different storage equipment devices, allowing network administrators to make the most of resources and cutting the cost of buying new hardware.

For decades most data storage equipment sold by one vendor or another had only been able to share data with other equipment from the same vendor. On average around 50 percent of storage capacity goes unused because of this lock-in that forces customers to rely on a primary vendor.

EMC RESPONDS

IBM has sold storage virtualization for more than a year and its existing products allow customers to interchange storage equipment from IBM, Hitachi Data Systems, Hewlett-Packard and the high-end Symmetrix product line of EMC.

The upgraded version -- called the SAN Volume Controller -- allows IBM to take EMC head-on at the heart of EMC's storage business, its CLARiiON mid-range line -- which grew 56 percent in the third quarter on the same period last year.

Key EMC partner Dell Inc. resells a low-end version of CLARiiON priced at around $4,000. The higher capacity versions EMC sells can cost tens of thousands of dollars.

In recent days EMC has acknowledged that IBM is posing more of a challenge and anticipated IBM's new product.

EMC marketing chief Howard Elias said in an interview that EMC has announced its own version of storage virtualization, which he says will ship during the second quarter of 2005.

This product, which it has dubbed the Storage Router -- has been co-developed with Cisco, Brocade and McData. EMC also is set to upgrade its storage hardware line as early as Feb. 2005 and by August at the latest.

"Clearly IBM is more competitive than they were. I do believe that IBM will be able to stabilize their losses and maybe gain back a little share in their existing customer base," Elias said of the near-term market outlook.

Elias cited data from research firm IDC showing EMC with 45 percent of the market among the big three rivals, up from 38 percent a few years ago.

Tony Asaro, an analyst with storage research firm Enterprise Strategy Group, said that the storage virtualization market is primed to take off. And IBM is capturing an early lead in what promises to be the next industry battleground.

His firm's survey showed virtualization offers a 24 percent saving on storage hardware, 16 percent lower software costs and a 19 percent saving on network administration, he said.

"It's probably true that virtualization is a 2006 story for EMC. But for the rest of the market it is already available. It is being deployed. Customers are using it," Asaro said.