Case Study: Do storage buyers ignore Cisco and Sony?
Excellent products from excellent suppliers garner slight market share rewards. Why?
By Chris Mellor | Published: 09:00, 11 November 2004
An editor's view
What suppliers do you use for storage kit? The main sources according to an amalgam of market share and revenue numbers from IDC, Gartner and many others is either storage specialists like EMC and Network Appliance, or server systems vendors such as IBM, HP and Dell. Within the specialist arena, specific storage kit comes from specific sub-groups of specialist vendors.
Thus the out-and-out, most popular SAN switch supplier is Brocade, followed by McDATA, QLogic, and CNT with Cisco in there somewhere.
For tape products it's StorageTek at the high end followed by ADIC and a raft of other suppliers: Overland Storage; Quantum; Qualstar; SpectraLogic and others.
For disks it's Seagate, Western Digital, Maxtor and Hitachi GST.
For drive arrays it's EMC, HDS, Engenio and others.
For tape drives it's the LTO trio - Quantum with IBM and HP. It's Quantum with its DLT line, StorageTek and IBM with proprietary/mainframe lines and Sony with AIT, not forgetting Exabyte.
I'm looking in overview mode here and skipping over dozens of smaller hardware and large/small software storage players with excellent products. I'm also ignoring tightly-focused, niche/developing technology players like 3Par, Exagrid, Xyratex, etc.
The general picture is that long-term storage specialists and server systems vendors fare well and are trusted by customers. New entrants who are generalists or dominant in some other related sphere do not do well.
Good products, excellent suppliers, poorish sales
Thus Sony, with a great tape line offering tremendous density for the physical size of its tapes has not got a commensurate share of the tape market; commensurate that is with what you might expect from the strength of its technology.
Similarly Cisco, the undisputed leader in networking kit, has failed to make that much impression with its storage networking products such as the MDS 9000 director. The products have excellent features. Cisco is an excellent supplier, yet customers prefer to buy SAN switches and directors made by Brocade, McDATA, QLogic and CNT instead.
Why is this? Why do customers prefer to buy storage products with traditional known and trusted brand names instead of comparable, at least, and possibly better in some technical ways, products from newcomers?
My suspicion is that storage buyers are conservative. Data is precious, so very precious, and when we view our bits as stored bits then we trust very few suppliers. When we view our data as networked stored bits we have the same mindset. When we view our data as just passing through network pipes then, please, let us buy your routers Cisco. When we view our bits as music bits then Sony Walkmans and CD players are fine.
There is something different about storage. New non-specialist storage suppliers with no track record of presence and success in the storage market are shunned.
It's all relative of course. Sony sells thousands of AIT/S-AIT drives and Cisco makes millions of dollars from MDS 9000 sales. It's just that they don't sell as many as you would expect.
Certainly Cisco came into the storage market expecting to have a $5 billion/year business. It seems a long, long way short of that. Thestreet.com quotes Steve Berg, a Punk Zielger analyst, as saying he thinks Cisco has a less than 15 percent storage networking market share. He reckons that Brocade earned $153 million in its recent quarter, McDATA $100 million and Cisco $40 million. That suggests Cisco's annual storage networking revenues are around $160 million, a tremendously long way south of $5,000 million.
Part of the problem, I think, is that good though both Sony and Cisco's products are, they are not truly great products that change the storage game in their areas. Our industry is characterised by strong competition on technical grounds to deliver more storage capacity, accessed faster, occupying less space, protecting previous storage purchases and preventing and recovering from data loss. There are many excellent storage products out there.
To have a few more good ones from the likes of Cisco and Sony, good and reputable companies both, is good for everyone. But it doesn't - hasn't - got them the sales they think they might warrant and deserve.
Well - stick with it. The leaders in our storage industry are not overnight successes. Brocade, EMC, StorageTek, ADIC and all the other well-known and successful storage suppliers have earned buyers' respect through several generations of product development and tight focus on what they do best. Rewards to come to suppliers that persist and develop and deliver great product. Cisco and Sony have shown that they can do this elsewhere, obviously. Let's hope that they continue keeping other suppliers on their toes in storage. That way we all benefit.