10 Storage Predictions For 2014

Top Of Mind In 2014: Reining In Storage Costs

The amount of data companies store continues to grow unabated. IDC, in its biannual Digital Universe Study, estimated in late 2012 that the digital universe could reach 40 zettabytes by 2020, an amount that exceeds previous forecasts by 5 zettabytes, resulting in a 50-fold growth from the beginning of 2010.

Managing that growth will require new ways to think about storage, and 2014 will see major developments in such technologies as flash storage, software-defined storage and storage clouds to help with the changes.

Yet underlying the trends are a couple of drags on the business, including potential drops in storage revenue across the board, as well as security issues from the National Security Agency (NSA) spy scandal, which could push a large part of the storage business away from U.S.-based companies.

Indeed, 2014 will be a very interesting year for storage.

10. Storage Revenue To Continue To Slide

2013 saw slight storage hardware and software revenue declines despite the economic recovery. This likely will turn into a long-term trend in 2014 as the price-per-GB of storage continues to fall even as capacity requirements strengthen.

How can this be, given all we've been told about the fast growth in data stored? First of all, the migration of data, particularly for backup or archive purposes, to the cloud will only grow. At the same time, customers will find software-based storage solutions that work with low-cost hardware an increasingly attractive option. Furthermore, the scandal caused by the NSA potentially installing back doors in U.S.-manufactured equipment will hit non-U.S. storage sales hard.

But don't feel too sorry for the legacy vendors who will see their sales shrink. While investors may lament the fall in revenue, those vendors will be leaders in adopting cloud- and software-only solutions, giving them improved margins as they cut back on hardware.

9. Storage Will Keep Getting Smarter

Storage vendors looking to meet customers' requirements for reining in storage capacity and costs will focus on increasing the intelligence of their offerings.

That intelligence will be increasingly found all over the storage architecture, including:

-- Intelligent archiving of data to disk, cloud and, yes, tape.

-- Optimization to take advantage of flash technology not only in the arrays but also in servers, and between servers and arrays.

-- Storage SLAs tied to business processes as well as to the level of optimization tied to the trade-offs between capacity and performance.

8. IPOs, Anyone?

2013 saw two successful storage company IPOs, including that of Nimble Storage and Barracuda Networks, along with the less-than-successful IPO of flash storage maker Violin Memory.

For 2014, the storage IPO spotlight is very likely to be on the fast-growing file sync and share market, where Box and Dropbox have been rapidly expanding their offerings to be more business- and channel-friendly. Given their need to compete against more enterprise-focused providers like Egnyte or EMC's Syncplicity, an IPO would be a big boost for their marketing and R&D efforts.

7. Slowdown In Storage Acquisitions

While 2013 saw a huge number of acquisitions of storage technology developers, a slowdown can be expected in 2014, in large part because of the companies that could do such acquisitions may be content with digesting their 2013 meals. Dell has built its enterprise storage business on acquisitions of EqualLogic and Compellent, HP has rebuilt its storage business thanks to the acquisition of 3PAR and all the top vendors have acquired flash storage rivals.

There is still a little room for flash storage acquisitions, and a lot of room for software-defined storage acquisitions. But these will tend to be acquisitions of smaller companies by larger companies in 2014.

Investors also are not as likely to place huge bets on storage startups in 2014 as they did in 2013, but will likely look to see how well their current investments do before turning the funding hose to full stream.

6. Software-defined Storage: From Hype To Almost-But-Not-Quite Mainstream

New technologies, especially in the storage market, take time to go from buzz to something mainstream businesses will purchase. That won't happen for software-defined storage. Not yet, anyway. The move toward software-defined storage, which brings the functions of traditional storage solutions from proprietary hardware into software that can be run on industry-standard servers, is for now being driven primarily by startups that have no legacy hardware offerings, and that can afford to pooh-pooh the hardware part of the business.

However, the company most likely to push hardest on software-defined storage in 2014 is EMC, which is responding to the threat from software-focused upstarts by taking them head-on. Software-defined storage offerings also will come from server vendors such as Hewlett-Packard, IBM and Dell, who already offer industry-standard servers and for whom the storage business, while essential, has been dropping. Mainstream software-defined storage will be here in 2015.

5. Flash Competition: Old Guard vs. Upstarts

2014 will see NetApp unveil its brand-new FlashRay flash storage architecture, while its major storage peers such as EMC, Hitachi Data Systems, IBM, Hewlett-Packard and Dell continue to optimize their flash storage offerings. But rather than one of these breaking away from the pack, the competition between them will likely result in no major shift in market share between them.

For the traditional storage vendors, the real threat will come from upstarts such as Pure Storage and SolidFire, and a large number of hybrid vendors. These younger companies will be pushing hard on the message that their offerings, designed from the ground-up as performance-optimized solutions, are better suited for customers' need for speed than those of legacy vendors who, they will argue, are saddled with older architectures.

The upstarts will win the buzz game, but the larger vendors, with their installed bases and their well-tuned software and support capabilities, will thrive against their younger rivals.

4. Thanks, NSA: International Data Services, Cloud Providers To Grow At Expense Of U.S.

The scandal caused by the PRISM mass data surveillance program of the NSA is going to hit the top and bottom lines of U.S.-based providers of hosted and cloud services hard in 2014 as international customers shift their businesses to non-U.S. service providers.

For U.S. customers, the rush to move will be much less pronounced, as the majority of them really do not see non-U.S.-based hosters as alternatives. For them, the NSA scandal will cause a rush of a different sort to security technologies they see as making it more difficult for spy agencies to snoop on their data.

3. Renewed Emphasis On Security

High-profile data breaches and the expanding NSA spy scandal will bring security to the top of 2014 must-haves for customers of all sizes.

True, businesses have been talking about and implementing security plans for years. Yet as shown by the breaches and by Edward Snowden's release of NSA surveillance plans, businesses are still increasingly vulnerable to hacking, spying and other security issues.

Look for cloud and physical storage providers to heavily emphasize security in 2014, including ubiquitous use of encryption technologies, vigorous scrutinies of SLAs, and the adoption of technologies touted to be NSA-proof.

NSA-proof? How will we ever know for sure?

2. Dark Linings In Public Storage Clouds

Storage clouds are in for some rough winds in 2014 thanks to the demise of both Nirvanix and Trustyd, as well as Symantec's decision to end its Backup Exec.cloud offering.

Those closures, combined with public cloud providers' continuing moves to cut prices while adding enterprise capabilities, will make cloud storage offerings from companies such as Amazon, Rackspace and Microsoft increasingly attractive.

However, the real growth in cloud storage in 2014 will be from private clouds developed by partners for customers who want the flexibility of public clouds but require the kind of security and performance public clouds cannot offer.

1. Thumbs-down On Cloud Backup, Thumbs Up On Cloud DR

While cloud storage providers and their solution providers have been building nice businesses around cloud-based data backups, the focus of that business will change in 2014 to cloud-based disaster recovery.

Backups to the cloud make data available should access to the primary copy of that data be lost. But disaster recovery takes it a step further with such options as providing high-speed restores via physical media, or being combined with virtual servers that can be run from the cloud or on remote hardware to give access to data and enable restoration of operations should a company's data center be lost.

And, since cloud-based disaster recovery already encompasses cloud backups, the incremental cost to providing the former makes the option increasingly attractive to businesses.