A series of investments in storage service providers (SSPs) by storage vendors has caught the attention of integrators that want to see how the trend will affect their business.

The U.S. SSP market is expected to reach $5.6 billion in 2004, compared with only $139 million this year, says Doug Chandler, program manager for storage and data management services at IDC.

Vendors are trying to understand this market, and one way to do so is by investing in SSP start-ups, says Chandler. "It's too early to tell what will happen with SSPs, but vendors don't want to miss the train," he says.

Several vendors boarded the investment train this year.

StorageNetworks, which had one of the year's most successful IPOs, received funding from Dell, Compaq, Sun, Network Applications, Veritas and Fibre Channel switch vendor Brocade.

HP invested in LogicStream; Veritas and EMC invested in Xdrive; and EMC invested in Driveway, Skydesk, iDrive and Click2Send. Storage Technology and Exabyte each spun off SSPs this year.

Spokespeople from Sun, EMC and Compaq say SSP investments help build brand loyalty.

An EMC spokesman says the company focuses its SSP investments in the consumer space to generate increased demand without conflicting with its core business. EMC's investment in Driveway came after the company was already using EMC equipment, so the two were unrelated, says Christopher Logan, president and CEO of Driveway.

Xdrive got a credibility boost thanks to investments from vendors such as EMC and Veritas, says Keith Pinter, executive vice president at the company.

The overall effect of SSPs on the market is of more concern than which companies invest in them, says Terry Grulke, product manager at StorNet, Englewood, Colo.