SMB Storage Face-Off

According to Baeverstad, the reason for HP and its tier-one peers to declare war on each other and on more established tier-two and tier-three vendors over small-business storage is simple: The SMB market is huge.

"It's a $90 billion spend opportunity in 2007," Baeverstad said. "Sixty-plus percent of the market for SMBs today is still direct-attach storage. Customers are looking to move to networked storage but haven't seen a compelling reason."

And that means opportunity for HP, EMC and NetApp, Schultz said. "[More than] 40 percent of the SMB market goes to tier-two and tier-three vendors," he said. "This says there's an opportunity for us to move into this marketplace and drive branded solutions."

The move by tier-one storage vendors into the small-business space already has started to impact the smaller vendors, VARs said.

Connected has been using Snap appliances from Adaptec for small businesses and has worked in the past with Dell's version of EMC's AX100 appliance, but the VAR is moving customer deals requiring 1 Tbyte or more of storage to NetApp's StoreVault line, Urso said.

"StoreVault does both NAS and iSCSI for Exchange and financial databases," he said. "And the iSCSI, RAID 4 and snapshot capabilities are attractive."

The tier-two and tier-three vendors, many of whom, unlike their larger competitors, have no direct sales arms, are not expected to give up this market without a fight. While it's true that tier-one vendors are pushing into small business, only time will tell if they can follow through, said Steve Rogers, director of technical marketing at Adaptec.

"Adaptec has always been SMB/SME-focused," Rogers said. "We are not new to this space. We have a lot of brand loyalty. And we have spent years building a strong channel. We have no channel conflict."

For smaller vendors like Adaptec, tier-one vendors dropping entry-level prices to $5,000 is not an issue, Rogers said. "Dell has been thrashing pricing for years, and hasn't affected us," he said.

And that $5,000 price can be misleading, he said. For instance, for $5,000, NetApp's StoreVault will give NAS capabilities. But for 2 Tbytes of capacity with NAS and iSCSI, the cost jumps to $11,000, compared with a similar Snap appliance with a $5,500 price tag.

And the $5,000 AX150 is an iSCSI appliance only, with no NAS capability, he said.

Rogers acknowledged that customer perceptions of Adaptec's Snap line has been affected by a retrenching of the line in the past year and by the fact that the line has not changed for some time. However, he said that will change as the company completely refreshes its line later this month.