Go-To Technologies Of The VARBusiness 500

Storage may not be sexy, but you know what? It sells. Yes, It's true that in the sizzle department disk arrays, tape libraries, even more modern SANs don't get the juices flowing the way a cool speech application or handheld IP device might. But that lack of sparkle is more than made up for in steady sales.

Consider the following: An exclusive survey of VARBusiness 500 companies indicated that four of the top five most popular technologies sold today are servers (74 percent of the companies surveyed), storage hardware (73 percent), networking equipment (73 percent) and security software (70 percent). But in terms of what's driving new business, the creme de la creme of the largest North American VARs identified storage as their No. 1 growth technology for 2005. In fact, nearly three-quarters of VARs surveyed already sell and implement storage solutions. And of that group, 41 percent said they expect their storage sales to increase by 5 percent or more this year. Compare that to the more tempered optimism around servers: Though nearly three-quarters of VARs say they sell x86-based servers, only 20 percent of these companies anticipate their sales in that arena to jump by 5 percent or higher this year.

If you think about it, the storage trajectory makes sense: Electronic data is multiplying in galactic proportions. This, of course, leads to the question of where to put it all so that users can access it in real-time. Even Microsoft, the world leader in software that is now hell-bent on achieving additional gains in security and business applications, concedes that storage is where the action is. At a recent press event designed to update the market on progress made with Sun Microsystems, Microsoft CEO Steve Ballmer said, "If you look at a part of the market that's really booming and growing, it's storage." You can bet that some storage companies are wondering what that means for the future of their bottom lines.

Compliance mandates are forcing corporations worldwide to provide for long-term archiving of e-mail and other electronic information and documents. At the same time, users are producing more spreadsheets, PowerPoint presentations, digital recordings and video clips than ever. Even if companies purge all the copies of Jib Jab's rendition of "This Land Is Your Land," featuring the "voices" of George W. Bush and John Kerry, from their hard drives, there is still more content than ever to manage and protect. This perfect storm has dramatically upped the demand for storage capacity, performance and management, turning a once ho-hum afterthought into one of the IT industry's hottest markets today. Just think about the growth of vendors like stalwart EMC and upstart Network Appliance, and you will understand the demand.

"Clearly, one of the reasons we are experiencing growth to the extent that we are is the traction we are enjoying with the VAR and solution-provider community," says John Koury, vice president of global channel marketing at EMC, Hopkinton, Mass.

While the company continues to refine and improve its programs and benefits for solution providers, EMC has yet to crack the list of the leading vendors relied upon by VARBusiness 500 companies. Microsoft once again ranks No. 1 as the vendor 58 percent of VARBusiness 500 members say is essential to their businesses. That's a 5 percent gain over last year. Hewlett-Packard ranks as the second most important company (52 percent), up from fourth last year, in spite of recent setbacks. Conversely, IBM slips from second last year to fourth this year, with close to 50 percent. Cisco Systems stays the course at third for two years in a row with 52 percent. Rounding out the five most important vendors for the VARBusiness 500 is Sun, finishing a distant fifth (27 percent of those surveyed named it as important), but making the list just the same.

As for the technologies those companies produce, clearly the numbers suggest that unheralded, unsexy storage is translating into serious business. And, like other great opportunities, VARBusiness 500 companies say the technology is evolving.

"Storage isn't that expensive relative to what it used to be, but it has grown like a weed and needs to be better controlled," says David Nolan, senior vice president of professional services and network solutions at Forsythe Solutions, a Skokie, Ill.-based solution provider that ranks No. 95 on the VARBusiness 500 list for 2005.

Nolan says that the "need to control" is driving sales of storage-management solutions, such as software products from Veritas, in addition to traditional storage hardware systems. Of all of Forsythe's IT practices, which range from security to IP communications, the company is generating the most business from storage opportunities today.

Alas, venerable storage isn't the only technology with the wind at its back. Security, a perennial hot tech, along with Voice over IP (VoIP), which is (finally) leading the convergence charge, rank Nos. 2 and 3, respectively, on VARs' growth lists for 2005. Not surprising, security and storage were the leading technologies cited by VARs in last year's survey. This year, security makes two appearances in the Top 10 list of most carried technologies: security software, which 70 percent of VARs resell, and security appliances, a burgeoning business where 59 percent of solution providers play.

Let's take a deeper look at some of the top-selling products and solutions that VARs are counting on to drive business in 2005, and to identify those technologies that appear--for now at least--to be on the downswing.