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Has Cloud Put a Dent in the Data Storage Market?

Is cloud taking a bite out of high-margin data storage?

While many would say it’s not a matter of “if” but “when,” this week has sparked some storage industry experts to ponder whether the high-margin data storage market is beginning to feel the impact of cloud adoption. To elaborate, let me direct your attention to two of this week’s announcements.

First, results from the IDC Worldwide Quarterly Disk Storage Systems Tracker for Q4 2011 indicate a slowdown in the growth of storage spending toward the end of last year. According to IDC, Q4 2011 saw a 3.5% increase in disk storage revenues as compared to Q4 2010. While this is far from a decline, it does represent a decrease in the 7.7% year-over-year growth seen for all of 2011.

Of course, this end of year slowdown could be the result of a number of factors, not the least of which is the disk supply disruption caused by Thai flooding. Interestingly, Dave Raffo postulates in a recent article that rather than the disk shortage, cloud and deduplication may instead be responsible for the revenue decline, as both conspire to reduce the amount of storage capacity businesses require.  In fact, in the case of cloud, the bulk of the margin is shifted from the storage vendors to the cloud providers. It would, of course, be speculative to assume we have hit this inflection point, but it will be interesting to see what the next few quarters have in store.

Second, Google’s announcement of its new ecosystem of enterprise cloud storage solutions, featuring a number of vendors enabling businesses to consume cloud storage with an enterprise-class look-and-feel, security and high performance was noteworthy. Certainly the $30B+ data storage market is an attractive target for cloud storage providers. Google cloud storage offers enterprise-class SLAs, sophisticated security and access controls, a high-performance network and aggressive pricing. To facilitate deployment of Google cloud storage, TwinStrata announced the availability of a free 1TB iSCSI gateway for Google cloud storage customers, presenting a simple and secure way to integrate cloud storage into the enterprise for  a number of use cases including backup, archive, storage consolidation among others. Overall, Google’s announcement is expected to further drive the industry trend toward cloud storage infrastructure.

So are we at a turning point where cloud storage is becoming a mainstream alternative to traditional on-premise storage? Let us know what you think and stay tuned…

More Stories By Nicos Vekiarides

Nicos Vekiarides is the Chief Executive Officer & Co-Founder of TwinStrata. He has spent over 20 years in enterprise data storage, both as a business manager and as an entrepreneur and founder in startup companies.

Prior to TwinStrata, he served as VP of Product Strategy and Technology at Incipient, Inc., where he helped deliver the industry's first storage virtualization solution embedded in a switch. Prior to Incipient, he was General Manager of the storage virtualization business at Hewlett-Packard. Vekiarides came to HP with the acquisition of StorageApps where he was the founding VP of Engineering. At StorageApps, he built a team that brought to market the industry's first storage virtualization appliance. Prior to StorageApps, he spent a number of years in the data storage industry working at Sun Microsystems and Encore Computer. At Encore, he architected and delivered Encore Computer's SP data replication products that were a key factor in the acquisition of Encore's storage division by Sun Microsystems.

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