2010: The Year Vendors Get Smarter or Go Home

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Hearing news about the difficulties currently being faced by Copan it struck me that the storage market has been a fairly tumultuous one in 2009. As disk prices have dropped over the last 2 or 3 years, and as virtualization has gained a foothold in enterprises, there has been a fair amount of innovation in the disk market with technologies such as deduplication and thin provisioning becoming hot topics. However, with the challenging economic environment shaping the decisions of investors and end-users, it has been a challenging time for any companies desperately trying to gain a foothold.

From an industry perspective there seem to be two camps forming – in one camp are the very big fish in the storage pond – the EMCs, HPs and NetApps of this world that continue to gobble up relatively small tadpoles and even some of the larger fish by way of acquisition.
In the other camp are those smaller storage vendors that have carved out a niche for themselves in an otherwise very crowded market. Copan is not alone in finding the going difficult as a host of companies are finding it hard to compete or offer differentiation from what is being offered by competitors.
As the big boys continue to build out their offerings via acquisition, and look to grab as large a slice as possible of the virtualization and cloud computing pie through partnerships, the smaller vendors clearly need to work harder and be more nimble and innovative to avoid being threatened. Companies that have muddled strategies or product portfolios which are all over the place are the ones that will be in trouble.
I haven’t even mentioned tape yet- perhaps a first for one of my blog entries. In an earlier blog post our CEO commented that in a few years there will be only a handful of tape vendors. Faced with a giant like IBM in the market it’s clear that we have to differentiate ourselves – the question is how? It would be easy to try and compete on price but ultimately that’s (a) the lowest common denominator and (b) the easiest way to get trumped when someone undercuts you.
Ultimately the only way to really compete in the long-term is on functionality and technology and with the amount of effort we put into research and development we think we have successfully carved out a leadership position. This doesn’t mean we’re expensive – it just means that end-users need to be aware of the ongoing OPEX savings they can make from a high-density, scalable tape library like the TFinity. Sometimes CAPEX doesn’t tell the complete story.
Yes – we do offer disk, but our primary business is secondary storage, which in our opinion is all about tape. End-users are faced with a bewildering array of options on the disk front, but those that need tape (and they really do need it) can realistically only go one of a few ways. We feel pretty strongly that on the performance and functionality front we’re the clear leader and we may even win out on price depending on whether you take a short- or long-term view.
So that’s the space we will continue to make our own, and we will look in with interest at what happens within the storage market in 2010 in terms of churn and further consolidation. While the bigger companies are getting bigger, the smaller companies are having to get smarter – if you’re not a jack of all trades you need to be a master of one.