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The expanding infrastructure needs of customers is a top demand driver for storage solutions, say more than half of solution providers surveyed in Everything Channel's 2008 State of Technology: Storage survey. The same number--57 percent--say that cutting storage costs is just as important to their clients.
Does it seem like we have a dilemma on our hands? Not so fast. More storage for less money is quite possibly the most important story in high-tech over the past five years, with the rate of storage hardware improvements arguably outpacing even the Moore's Law-driven trajectory of increased processor performance at lower and lower prices.
"It's just amazing how inexpensive storage is now," said Brian Corn of Source Code Corp. Corn, vice president of marketing and business development at the Norwood, Mass.-based system integrator, said Source Code--like 55 percent of surveyed solution providers--is still seeing revenue growth in its storage products and services business.
Storage hardware sales remain the largest revenue earner in solution providers' storage mix, and Corn has some ideas about the components that are driving sales for white-box builders like Source Code.
With 1.5-TB drives available from the likes of Seagate Technology Inc., Scotts Valley, Calif., the hard disk business is booming, Corn said. The rise of SATA, too, is driving hard disk sales--though the success of this data transfer interface has stifled the more dependable, and more expensive, SAS technology.
"Seagate's still really trying to crank SAS up. But it's a slow adopter for us, and I attribute that to the success of SATA. It's so inexpensive, and even though the failure rates are higher, the cost savings are worth it to a lot of people," Corn said.
Add in a technology like iSCSI, which Corn describes as "a poor man's SAN" that vastly simplifies the management of basic storage arrays for administrators, and the complement of storage offerings for VARs has never been better.
But if hard disk capacity and innovation are getting better every day, the real future of storage lies in solid state, according to Corn. Jonny Brownleader, vice president of sales at RocketDisk Inc., a Beverly Hills, Calif.-based distributor of SSDs, agrees.
Brownleader predicts SSDs will continue to get cheaper. "Prices will keep dropping month-on-month," he said. But he warns storage sellers to pay attention to differences between multi-level cell (MLC)-based drives and single-level cell (SLC)-based SSDs. RocketDisk only sells more dependable, albeit costlier, SLC components from China-based Memoright Co. and Toshiba subsidiary Mtron Co., but Brownleader is closely monitoring advances in MLC technology.
Nor does solid state's future lie only in client systems, though that's where the technology's biggest impact has been so far, Corn said. The Source Code executive predicts that fully half of all storage drives could be solid state within five years, and that includes a robust presence in data centers.
"We're starting to see some action on the server side as well," Corn added, "especially with Intel's introduction of their SSDs."
While managed services are growing in the storage arena, VARs say that traditional storage systems such as NAS and SANs continue to generate profit and create opportunity.
According to Everything Channel's 2008 State of Technology: Storage survey, almost half of the VARs surveyed--49 percent--maintain that storage hardware dominates the majority of their revenue source.
No doubt, storage hardware's domination might slowly change as partners make the transition to service-based models. And while only 32 percent of surveyed VARs say that storage services is their biggest revenue generator, partners anticipate that revenue from services will continue to grow in 2009.
Partners say that while traditional storage system offerings are still profitable, they're increasingly required to include value-added components that often come in the form of implementation or consulting services, in order to stay competitive in the marketplace.
"For the ability to drive better margin, there has to be professional services. You're solving major business problems," said Joe Kadlec, vice president and senior partner of Consiliant Technologies LLC, based in Irvine, Calif.
According to the survey, almost 60 percent of partners say that they are currently applying a hybrid services/hardware model, deploying on-premises hardware linked to either a third-party Internet-based service or an Internet-based storage solution hosted by the partner.
Partners also maintain that storage systems continue to be profitable due to the fact that they are increasingly being adopted by lower market segments. Of those surveyed, an overwhelming majority of storage systems VARs indicated their target market was medium businesses with 100 to 499 employees--a trend that is driven, in part, by surmounting disaster recovery and regulatory compliance needs.
"These smaller and midsize companies now have to provide for disaster recovery whereas they didn't have to three or four years ago," Kadlec said. "Typically, they don't have that in-house."