I think the reconstruction of many portfolios will begin with networked storage because it remains a durable trend with very high visibility.
Here are some excerpts that bear this point out:
...And the storage business is moving to keep pace, analysts said. It's growing at a minimum of 25 percent in the mainframe space, and up to 100 percent in the open systems area, said Ed Broderick, an analyst at the Robert Frances Group, Poughkeepsie, NY...
Storage Moving To Front Of Tech Pack
techweb.com
...But that's where its power lies: IT has evolved to where the choice of storage is more strategic than that of the server. During the data warehouse boom, the essential triumvirate was server, storage, and database. Now, if last spring's ECOstructure e-business "blueprints" initiative between Cisco, Oracle, and EMC was any indication, we should kick out servers and add networks. As EMC sees it, the days of the server "stack" are over; companies that view information as a critical shared resource cannot afford to have data locked up in proprietary server systems. Today's highest-value applications, such as CRM and B2B e-commerce, depend on intelligent information sharing. Servers come and go; storage, where the shared information resource resides, stays...
The 12 Most Influential Companies in IT
iemagazine.com
The lay of the land in networked storage:
...According to International Data Corporation (IDC), up to 70% of the world's corporate data exists on legacy mainframe systems, most of which use storage networks based on the IBM ESCON storage protocol. Once the most advanced interconnect available, ESCON is migrating to IBM's new FICON interconnect, which blends ESCON control with the new technology of fibre channel storage networking. IBM has begun FICON channel shipments that are expected to be the replacement technology for these very large ESCON-based systems. This technology 'refresh' means that thousands of customers that have ESCON storage networks are faced with a total replacement of those networks, if unable to upgrade to the new technologies...
...IBM began shipping FICON channels in their S/390 in 1998, and more recently these channels are included in the new IBM zSeries of servers announced in October. With FICON channel rates of 100MB/s compared to the ESCON rate of 17MB/s, and distance limitations eased from 3km to 100km, these enterprise systems are now capable of larger, faster I/O networks to support exploding e-business infrastructures. "Large users of ESCON networks experiencing connectivity, addressing and distance limitations can improve performance by migrating to the FICON environment that incorporates the signaling and transmission speeds of Fibre Channel," said James Opfer, Principal Analyst of Gartner/Dataquest. "This migration won't come overnight, however. ESCON and FICON devices will coexist with simultaneous mainframe support. Network products that support this coexistence have an important role to play." Further benefit can be derived by simultaneous support of fibre channel attached servers and storage, allowing a true single point for storage management in the data center...
siliconinvestor.com
...The FICON-supporting ED-5000-McDATA's third-generation Director-leverages the seven-year collaboration between McDATA and IBM. ED-5000, Release 3, incorporates the experience and expertise gained from two prior generations of ESCON Directors...
mcdata.com
Additionally, IBM is finally shipping its seventh-generation mainframes -- the ominously named zSeries. In addition to offering twice the processing power at around 50% of the cost of the previous generation, IBM is also changing the dynamics of the mainframe software business which has traditonally been priced on a MIPs (million of instructions per second) basis. Under this system, mainframe software has accounted for as much as 3x the cost of the hardware and this finally provoked outcries of price-gouging from several loyal mainframe customers earlier this year in light of the roadmap of IBM, which has effectively become a mainframe monopoly again with the recent withdrawals of Hitachi and Fujitsu (Amdahl). This time around, IBM is implementing a new pricing structure in which the customer pays for a certain level of processing power BUT receives the next level of processing power with billing to commence ONLY once the customer decides to 'turn on and off' the additional processors depending on business requirements. There is an anecdotal report on one of the IBM message boards that IBM was able to ship 250 mainframes during the last quarter and the current expectation is that most of the remaining market for mainframes will upgrade to the new mainframes during the next 4-8 quarters.
Anyway, based on IDC's preliminary reports on 2000 market share in which EMC gained share over IBM/Compaq and HWP/Hitachi, EMC will probably continue to capture 3 out of every 5 external storage systems sold with these new mainframes. IBM will probably start to improve on its 1 out of 10 attach rate and will start to catch up with Hitachi's 1 out of 5 attach rate.
This also bodes well for McDATA, Inrange and Emulex. Inrange, of course, came on strong during the last 3 years to become the preferred second source for ESCON directors and long-distance channel extensions (second to CNT). Emulex is the only HBA vendor with FICON products. And McDATA controls the largest ESCON director installed base (85+% market share). It was the ONLY vendor to provide multiple FICON upgrades (over $30M of FICON bridge cards sold during the last 6 quarters, first to provide native FICON support) to its ESCON installed base. McData will also probably continue to be the dominant Fibre channel director OEM (85+% market share) in 2000 with a fast-growing fabric switch business as the director-based SANs sold primarily by EMC begin to expand. Based on EMC's original 6-12 month post-IPO window for spinning off McDATA, February 6, 2001 (181st day) is the earliest date that EMC can transfer McDATA shares to its shareholders.
Lastly, EMC's current guidance is that they will update their annual forecasts when they report 4th quarter results.
I think that EMC will roll its $12 billion EY2001 target into a FY2002 target. The latest surveys regarding IT spending indicates that bulk of the transition from ESCON to FICON to Fibre Channel SANs will take place in 2001 (30+%) and 2002 (40+%) which matches the timing of the mainframe/high-end Unix upgrade cycle, the progress of standards in the Fibre Channel switch market (EY2000), the scheduled transition from 1 Gbps to 2 Gbps FC, and the transition of corporate networks from 100 Mbps (Fast Ethernet) to 1000 Mbps (Gigabit Ethernet). Note that the original SAN environment (ESCON) flourished between 1995 and 1999 when most corporate networks made the transition from 10 Mbps to 100 Mbps. |
