El,
This is what I found but couldn't find the percentages.
--
nytimes.com
January 15, 2001
EMC's Big Bet on Data Storage
By BARNABY J. FEDER
hanks to the Internet and the
rapid global expansion of
computing, humans and their
machines will create more
information in the next three years
than in the 300,000 years of
history dating to the earliest cave
paintings and beyond.
That was what researchers at the
School of Information
Management and Systems at the
University of California at
Berkeley forecast late last year,
much to the delight of the EMC
Corporation, the data storage giant
that sponsored their work.
EMC was quick to pitch the study
to Wall Street, adding it to
analysts' projections that spending
on data storage products is
drawing even with spending on
computers themselves and that it
will account for 70 percent of
information technology budgets by
2005. EMC also included its own
projection that an individual —
EMC likes to call him Tommy in
its advertisements — could easily
have a terabyte (the equivalent of
250 million pages of text) of stored
personal records, photos and
other data by 2005.
The obvious outcome of such
trends, of course, would be
mind-boggling growth for data storage products and, more to EMC's
point, full-scale storage systems intelligent enough to support the
Internet's need for constant access to data. "Data needs to live
someplace," says Michael C. Ruettgers, EMC's chief executive. "There's
almost no value if it's just put away."
EMC's need to keep Wall Street awed is directly linked to its track
record. It became the biggest gainer on the New York Stock Exchange
in the 1990's by grabbing leadership of the market from I.B.M.,
producing both astonishing profits and sizzling growth. Then, as other
technology giants stumbled in 2000, its shares gained another 10 percent
to finish the year at $66.50. From such a pinnacle, convincing the Street
the best is yet to come will be no mean feat.
But there are plenty of other companies beating the same drum, from
giants like I.B.M., Compaq Computer and Sun Microsystems to
fast-growing newcomers like Network Appliance, Brocade
Communications and Veritas Software.
"Storage is becoming the heart and soul of all business," said Linda
Sanford, senior vice president for I.B.M.'s storage group. "What you
know about your customers, suppliers and partners will differentiate you
at the end of the day."
Trouble is, even if the vendors and analysts are right about the growth,
investors may well have become unrealistically optimistic about how
easily it will translate into profits. The publicly traded industry leaders
tumbled last fall but are still trading at nosebleed levels that leave little
room for earnings disappointments.
The impact on data storage of a general slowdown in technology
spending is Wall Street's current fear, but storage companies also have to
contend with tougher competition. New technology is driving down
prices, just as in traditional computer markets. In addition, networking
giants like Cisco Systems and discount computer specialists like Dell
Computer are moving in, while rising interest from venture capital firms is
spawning a steady stream of start-ups scrambling to define niches.
They are fighting over a rapidly shifting landscape that the International
Data Corporation estimates was worth at least $70 billion in 2000,
depending on which technologies and services are included.
"Storage is getting to be as complex as servers and networks," said Dave
G. Hill, an analyst at the Aberdeen Group, an information technology
research firm in Boston.
One sector of the storage market focuses on data used in computations
that is stored in caches on microprocessors, on memory chips or inches
away on disks inside a computer. At the other end of the technology
spectrum is tape-based storage, which provides a low-cost if somewhat
less convenient alternative to disk storage.
But the heart of the action these days revolves around disk-based
storage systems outside the computer. The newest hardware building
blocks are specialized file servers, some not much bigger than a VCR,
that allow users to add storage capacity directly to Internet networks
without buying full-scale server computers. The workhorses for big
enterprises, though, are refrigerator-size storage arrays of disks that
support one or more mainframes or networks of smaller computers.
Steady advances in the disks and the software that manages them are
producing astonishing performance gains. Remember Moore's Law, the
longstanding rule that shrinking circuitry allows chip companies like Intel
to double the speed of processors every 18 months? Well, that amazing
progression — from the room-size computing monsters of the 1950's to
far more powerful fingernail-size chips — pales in comparison with
advances in data storage. EMC, for example, says that the volumes of
data it will stuff into shoebox-size devices by 2005 would have required
covering an area the size of Argentina if 1950's technology were still in
use.
For all that, the hottest storage battleground is not storage hardware but
software, switches and other components that meld the storage devices
into intelligent networks and keep them online. Brocade Communications'
market leadership in Fiber Channel, a specialized protocol for designing
such storage networks, drove its shares from an initial public offering
price in May 1999 of $2.38, adjusted for splits, to $133.72 last
October, though it has since retreated to Friday's close of $90.13.
Veritas's strength in software to manage incompatible storage products
from numerous different vendors helped its shares climb from a
split-adjusted initial price of 53 cents a share in 1993, to a secondary
offering in August 1999 at $22.14 and a peak of $174 last March. It
closed on Friday at $96.19.
Storage services are also booming as big data users hire consultants, rent
outside capacity or simply turn over the entire problem to technology
management experts like I.B.M. Global Services or new specialists like
StorageNetworks, a two-year-old start-up based in Waltham, Mass.
International Data estimates that the service sector had revenues of more
than $24 billion last year and says its sales should top $40 billion in 2003.
If there is anyplace where the sometimes conflicting visions of storage's
future intersect, it has to be the headquarters of EMC in the Boston
suburb of Hopkinton. EMC, like I.B.M. in the past, strives to design
equipment that performs best with EMC software, so that customers
become locked into it as a vendor. And, like I.B.M.'s mainframe
business in the 1960's, EMC counts on its reputation for reliability and
service support to make it the safe, if premium-price, choice for
information managers. But company officials say any resemblance ends
there and that no one will catch EMC off guard as EMC itself did I.B.M.
in the storage business.
"We live in the graveyard of the complacent," Mr. Ruettgers said, noting
that his commute from his home north of Boston takes him past offices
once occupied by now departed industry leaders like Wang, Digital
Equipment, Prime Computer and Data General.
EMC's strategy assumes that information pipelines — bandwidth in the
industry's jargon — will become so huge and fast that it will no longer be
necessary to store data locally to ensure quick access. Such bandwidth,
in EMC's estimate, will allow as much as 90 percent of data to be
centralized in the kind of big businesses that have been EMC's prime
customers. From medical files to movies to financial records, data
consumers would download what they need when they need it, but
would not necessarily store it on their own computers.
The best architecture for such data reservoirs is still up for grabs,
however. Some data will reside in dedicated, maximum-security systems
linked to particular computers. Some will be in cheap file servers
attached to the Internet, known as NAS for network attached storage. A
lot of it is likely to end up in networks of storage devices known as
SAN's (for storage area networks) that would be linked to the Internet,
computers and tape storage systems through specialized servers.
How things develop depends on evolving network equipment and
software as much as on the storage devices themselves. "In areas where
the landscape isn't as clear as we'd like, we're placing multiple bets," said
Frank Houck, EMC's executive vice president for products and
offerings.
Big bets, too, judging from EMC's vow to invest $2.5 billion over the
next two years in research and development, more than 75 percent of it
in software.
What if projections like the Berkeley study prove to be wildly inflated?
What if people become smarter about saving only what they really need?
The industry's answer is another question: why would they bother? With
storage prices headed from about 40 cents a megabyte today to less than
a cent in 2005 and the industry moving toward making access to storage
as easy as the universal dial tone on the telephone, Mr. Ruettgers says,
"It's going to take too much energy to throw things away."
Besides, he points out, the Berkeley figures may well be too
conservative, since they exclude any estimates for duplicate storage of
information once it is created, one of the fastest-growing segments of the
business. |
