Enterprise Storage: Warming Trend Ahead?

Now that quarterly results are in, David Morgenstern thinks storage vendors have cause for hope. He nominates a surprising white knight to champion their economic recovery.

The flurry of quarterly statements over the past several weeks put smiles on the faces of many in the storage industry.

Even where results were mixed, the mood may well have been upbeat, since a new driver is making its mark on enterprise storage. And I bet its not what you think.

Many observers looked forward to EMCs statements . Executives last week put a game face on its quarterly and year-end results, both losses. At the same time, the company pointed to "double-digit sequential revenue growth" in each of its major business categories as well as increasing demand this year.

McData last week reported climbing profits for its third and fourth quarters. This upbeat news was tempered by a loss for the entire year of $10 million on $328.3 million in revenue.

According to Gartner/Dataquest, shipments of SAN (storage-area networks) and NAS (network-attached storage) showed modest growth in 2002 after a mighty 22 percent jump in 2001. Meanwhile, the price per gigabyte last year fell between 40 percent and 50 percent. With the arrival of lower-cost products on the market, unit sales climbed as profits declined.

Yet some companies beat the trend, such as QLogic, which reported Fibre Channel revenues of $80.6 million for its third fiscal quarter ended Dec. 29. That was up 44 percent from the same quarter in 2001.

Hard disk manufacturer Western Digital reported that it had shipped 10.3 million drives in its second fiscal quarter ended Dec. 27, up from 7.7 million units in the year-ago quarter. The company said its revenues were up 29 percent sequentially. Of course, Western Digital plays in the general storage market.

So what hidden persuader could bring on smiles to the faces of enterprise storage vendors? I nominate the WorldCom meltdown.

How soon we forget. Remember the quickest collapse of an industry? The mega-accounting fiasco. The many missing records. And the follow-along outrage over Wall Street analysts who said one thing to the public and another to their buddies.

While there was plenty of discourse around this fiasco, the evidence was mostly digital. For the financial industry, SEC regulation requires trading firms to preserve all digital records for three years. It all adds up to some significant storage on a regular basis.

This archive is more than just a pile of trading records, presentations and memos. It comprises everything, including e-mail and even instant messages. Communication is now a specialty in the content management field. Microsoft will get on the bandwagon with MSN Messenger Connect for Enterprises, gateway software that will log, audit and secure IM messages.

Certainly, this practice will expand to other companies outside the financial market. I bet enterprises of all sizes will employ these technologies as they mature—at the least to prepare for information discovery motions from stockholder lawsuits. And shouldnt room be made for voice, collaboration and Web-conferencing sessions in the archive?

Now that will add up to some really significant storage.

David Morgenstern is a longtime reporter of the storage industry as well as a veteran of the dotcom boom in the storage-rich fields of professional content creation and digital video.