Just a couple months after introducing what has proven to be its first serious move to embrace the channel, Dell surprised the market with its first major acquisition.

That acquisition, iSCSI pioneer EqualLogic, closed in January, and got attention for several reasons. It made Dell a leader in a technology that it did not resell or OEM from others. It gave Dell an instant, ready-made channel to go to with its new channel strategy. It took the company a half-year or so to convince key EqualLogic solution providers to commit to working with Dell's EqualLogic products, but Dell did win them over.

The acquisition also made Dell an instant competitor to its biggest storage partner, EMC. Dell's portion of EMC's sales revenue since the acquisition has started falling, although both companies will say all's well.

At $1.4 billion, the acquisition was considered by many to be expensive, but Dell had to go that high to beat potential competitors, especially HP, which is rumored to have also been in the running.

HP didn't get EqualLogic. But it got the next best thing, and at a considerably lower cost, $360 million, when it acquired iSCSI rival LeftHand Networks in September.

HP's acquisition of LeftHand gave a big boost to the iSCSI market, and also helped legitimize the concept of virtual storage appliances. LeftHand is one of the pioneers in building iSCSI, or any storage appliance, on top of a virtual server, making it possible for customers to add storage to a virtual infrastructure without necessarily adding additional hardware.

EMC acquired SMB/SOHO storage hardware manufacturer Iomega in April, put it together with the Mozy online storage technology it acquired in late 2007 and its Retrospect SMB backup software and unveiled itself as a complete channel-friendly small business storage vendor.

Funny thing was, EMC wasn't kidding. Unlike the stodgy old direct seller of enterprise storage it was just a couple of years ago, EMC has completed its transformation into one of the most channel-friendly vendors of storage, or of pretty much any technology.

Need proof? Solution providers voted EMC the most channel-friendly vendor in both the storage hardware and the storage software categories in the VARBusiness Annual Report Card survey in 2008. And they did so by a wider margin over its competitors than for any other vendor in any other category.

Solution providers are still pretty bullish on their storage business as customers engage them for help in services and other ways to better store, manage and protect their growing data repositories.

However, storage sales at the vendor level slowed quickly in 2008 as customers tightened budgets and tried to get their arms around the management issues resulting from past hardware purchases.

IDC said in December of 2008 that third quarter disk-based storage sales grew a measly 1.1 percent compared to the same quarter in 2007. That compared to a 4.3 percent year-over-year growth when it reported sales in December 2007.

Server virtualization at no cost is helping drive new storage business.

Server virtualization market leader VMware in July said it would start offering its ESXi technology as a free download, a nice discount over the some $400 per virtual server it previously charged.

The move was in response to Microsoft's release early this year of its Hyper-V server virtualization technology, which it is including as part of its new Windows Server 2008 operating system.

The availability of "free" server virtualization, the price of which does not include services and additions enough to make any solution provider drool with anticipation, is helping fuel a boom in the adoption of the technology.

And that is huge news for solution providers with a storage practice, as virtual server infrastructures pretty much all need to be attached to a SAN. That allows things like dynamic server and data migration, and the building of very disaster-resistant infrastructures. Many solution providers also use such an infrastructure to build low-cost disaster-recovery solutions.

There has been talk of cloud computing for some time, but 2008 saw the clouds get more clear as vendors, especially storage vendors, discussed their strategies.

The leadership in the cloud computing push for now comes from the storage market. The past two years saw a flurry of acquisitions by storage vendors of companies that developed online storage technologies, but 2008 saw those vendors turn them into real products.

Seagate this year unveiled a new wholly owned business, i365, based on four acquisitions including EVault. EMC turned its Mozy acquisition into its first managed service. HP almost didn't go online with its acquisition of an Australian technology that burped when it was first introduced with the HP name. IBM made the online storage technology it got with the Arsenal Digital acquisition available. And Symantec brought the SwapDrive technology it acquired this year to its channels.

For many of these companies, online storage has become more than just a product offering. They are turning the technology into a platform on which the vendors can hang other online and managed services. For instance, Symantec and EMC both plan to offer security-as-a-service on top of their online backup platforms.

Solid-state drives, or SSDs, have been around for years, but 2008 marked the turning point for the technology as it finally became a mainstream product.

The catalyst for the mainstreaming of SSDs was EMC's move in January to make the drives an option in its flagship Symmetrix line of arrays and the subsequent availability of the drives for EMC's Clariion line.

Since then, SSDs have been adopted for new storage arrays from Sun Microsystems and from Hitachi Data Systems. Toshiba and others offer them as an option in notebook PCs.

Availability of SSDs also moved toward critical mass in 2008 as traditional hard drive vendors like Fujitsu, Hitachi Global Storage Technologies, Samsung, Seagate and Western Digital all released products or at least plans to build the devices.

They were also joined this year by companies that typically do not play in the hard drive space, including Intel, SanDisk, and STEC.

SSDs will grow in importance as customers look for ways to improve server and storage performance and, in some cases, even reduce excess storage capacity that was purchased to improve application importance.

Years after one would have thought that nearly every single data-carrying device would have been encrypted, it finally started happening in 2008.

The year saw almost every hard drive manufacturer add native encryption to their drives. These included drives aimed at midsize and enterprise data center users with their racks full of customer data, and drives for mobile PC users whose computers are regularly stolen or forgotten or left at the airport security checkpoint.

Fujitsu, Hitachi GST and Seagate all unveiled mobile hard drives with native encryption technology in 2008, while Seagate added encryption to its enterprise-class SAS hard drives.

Meanwhile, HP added encryption key management as a product of its storage line, while Brocade added encryption to its fabric-based SAN equipment. BUSlink, CMS, Iomega, Seagate and others are now selling encrypted portable hard drives. Encrypted thumb drives are available from companies like Anywhere, CMS Peripherals and IronKey.

The storage industry came out with several new products in 2008, but the majority were just enhancements to existing products.

One product that represents a new class of storage was the Intelligent Storage Element, or ISE, from Xiotech.

ISE is a self-contained sealed storage module complete with hard drives; redundant managed reliability controllers with local RAID, cache and drive management software; redundant power and cooling; and battery backup for up to 96 hours of protection.

ISE is designed to fix itself should any problem happen with the hardware without the need to remove the device and with no impact to applications or data. The company said that it takes a failure of 30 percent of the ISE to affect the module.

The ISE came with Xiotech's acquisition in November 2007 of the Advanced Storage Architecture group of Seagate Technology.

2008 saw a revolving door as some key storage people moved elsewhere.

Julie Parrish (pictured) left her position as Symantec's vice president of global channels in October and a month later wound up as NetApp's new vice president of worldwide channel sales. She was joined by Todd Palmer, ex-CA, who is now NetApp's new vice president of Americas channels.

Leonard Iventosch, who for years handled worldwide and Americas channel sales as NetApp's vice president of global channels, suddenly left that company in July and disappeared for three months before turning up as the vice president of global channels and OEM at Isilon Systems, where he is in charge of turning that company into a channel-centric vendor.

Meanwhile, Mark Gonzalez, a former Hewlett-Packard executive in charge of that company's $7.5 billion server and storage business, in October was hired as the new president of Nth Generation Computing, a $40 million solution provider. Gonzalez, a longtime friend of Nth's CEO, Rich Baldwin, is taking over management of the VAR while Baldwin focuses on growing the business, perhaps with acquisitions.

LeftHand Networks got in a bunch of trouble when it hired Richard Shea in late June as vice president of North American sales. Problem is, Shea left iSCSI rival EqualLogic right after that company was acquired by Dell. Dell was not happy, and in late July sued LeftHand over the hiring of Shea.