Nice article in tomorrow's IBD - 'Computers and Technology Section'. MTI quoted several times. Very well explained regarding MTI's NT position. Of course, MTI does both Unix and NT which the article does not state - stating that space essentially belongs to EMC. Anyway, very nice article. Let's see if we have a little pop in the morning.
-Jay
________________
Storage Makers Hope NT Holds The
Profits Of Unix
Date: 12/18/97
Author: Norm Alster
Will history repeat itself? That's the $10 billion question for
the firms that build storage subsystems for computers based
on Microsoft Corp.'s NT software.
Smaller companies hope that NT - a networking operating
system considered the next wave in corporate computing
-forms along the lines of Unix, the last big wave. If it does,
there will be ample opportunity for MTI Technology Corp.,
Zitel Corp., Box Hill Systems Corp. and other upstarts to
snatch storage business from the computer systems giants.
Storage represents a growing share of the price of computer
systems. In high-end Unix, storage can represent more than
half of the total system cost. Analysts expect much the same
of NT. That's why David Vellante, vice president at
International Data Corp., expects NT storage, a $3.2 billion
business in '97, to be a $10.2 billion business by '01.
Today, Compaq Computer Corp., Digital Equipment Corp.
and other big makers of the servers that drive networks reel
in most of the money spent on storage. Most of their NT
servers have storage built in. But over time, observers expect
NT to follow Unix. That means more storage will be sold
separately.
External storage creates an opportunity for independent
vendors. In Unix, for example, EMC Corp. has carved out a
$1 billion business selling disk-drive subsystems that work
with the computers of firms such as Hewlett-Packard Co.
and Sun Microsystems Inc.
Why will customers want storage that sits outside their
servers? ''The internal real estate (within the server) cannot
provide the required capacity,'' noted Kevin Liebl, vice
president of marketing at Anaheim, Calif.-based MTI.
NT computers now run simple applications. But the porting
of popular database management systems, along with gains in
processing capacity and reliability, should someday qualify
NT for bigger jobs.
''When the market embraces large capacity applications,
customers can go external,'' Liebl said.
Currently, 95% of NT storage is internal to the server,
estimates Tom Lahive, an analyst with Dataquest Inc. But by
2000, just 70% of NT storage will be internal, he forecasts.
At that point, the major server makers will face more
competition from storage specialists - and from each other.
''I think you're going to have a decoupling of the storage and
the server,'' predicted Randy Serafini, director of marketing at
Fremont, Calif.-based Zitel. ''Third-party storage providers
can flourish in those environments.''
Barriers to entry in NT storage aren't high. By now, the RAID
(redundant array of independent disks) technology used in
large-scale storage is well understood. RAID storage systems
lash together multiple disk drives to provide relatively cheap
and reliable data access.
Low-end NT RAID systems, which now comprise the bulk
of the NT storage market, tie together just five or six drives.
Some NT offerings already tie together as many as 16 disk
drives. Eventually, these systems will consolidate data from
multiple servers and approach the capacity and performance
of Unix systems.
Even now, Serafini sees a number of viable niches in NT
storage. He cites gaps in the storage offerings of Palo Alto,
Calif.-based Hewlett-Packard.
''There are some pretty-good-sized holes in their offerings,''
said Serafini.
HP uses storage subsystems from Data General Corp. at the
low end of its server line. At the high end, it uses systems
sold by EMC. In between, there's opportunity, says Serafini.
''They don't have a good midrange solution,'' he said.
Compaq, by contrast, has produced its own storage as it's
grown its NT server business. But Compaq storage isn't
strong at the growing high end, argues Serafini. ''They don't
have a high-end solution,'' he said.
IDC analyst Lahive has broken down the developing NT
market. Server vendors such as Compaq and HP control the
bulk of the market with their internal, low-end NT storage,
Lahive explains. Eventually, the server makers will develop
their own external offerings and compete in the growing
midrange sector with a variety of independents. But for these
storage specialists, the best opportunity likely will be at the
fast-growing high end. Lahive expects MTI, Zitel and EMC to
sell in this space.
New York-based Box Hill, a thriving independent in Unix
storage, will address the high-end NT storage market.
Demand for high-end NT storage, however, has been a bit
slow in developing, says firm Chief Executive Philip Black.
Box Hill's Unix customer base, centered on Wall Street, is
''still holding back,'' he said.
But Black sees signs of interest in NT from customers that do
video editing and other jobs that require storing images.
Hopkinton, Mass.-based EMC, which has moved its offerings
down from massive mainframes to Unix and now to NT,
could again emerge as the leading independent.
''I think EMC is positioned as well as anybody,'' noted IDC's
Vellante. He also likes the NT prospects of Westboro,
Mass.-based Data General, which has built a $500 million
storage business in Unix.
But Vellante doubts that NT storage will ever match Unix in
producing such success stories among makers of storage
subsystems. ''I don't expect NT to create another EMC,'' said
Vellante.
Distribution is one factor that favors the server giants. ''The
key to NT is indirect channels. The server vendors right now
own that,'' Vellante said.
NT storage may never prove to be as profitable as Unix. ''It's
a harder market to make money in. It's PC economics,'' said
Vellante.
One upstart that may have the right business model, says
Vellante, is Ridge Technologies . Former Sun and Apple
Computer Inc. executives founded the San Jose, Calif., firm.
Ridge is focused on the low-cost strategy required for what
will likely be a high-volume but low-margin business, says
Vellante.
(C) Copyright 1997 Investors Business Daily, Inc.
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