The storage area networking (SAN) market is fast emerging as a
high-growth area, as network speeds increase and TCP/IP networks
become more widespread. The market is diverse, with in-company use as
well as Internet-connected storage. And it's diverse in its use of
technologies, using local interconnects such as SCSI, Fiber Channel
(FC), Enterprise Systems Connection (ESCON) and HIPPI -- and wide-area
interconnects such as Sonet, OC-3, OC-12 and DS-3/E3.
From the standpoint of a telecommunications company it is probably
important to look at TCP/IP external markets, especially since
companies such as Analysys Research, of Cambridge, UK, predict rapid
growth in voice-over-IP communications in the next 5 years. This
answer is organized in four sections:
1. Customer needs
2. Size of SAN market
3. Market leaders
4. Research resources
CUSTOMER NEEDS
---------------
Lower cost storage; off-site disaster recovery; and fewer backup
servers are just a few of the reasons that SAN services have grown as
high-speed IP services have become available.
According to studies done by Aberdeen Group and Evaluator Group, two
market research companies, the annual cost of running a large storage
system is 5-7 times the purchase price.
The best cost savings in using SAN services comes from increased asset
utilization; reduced office space; on-line recovery; and increased
availability. However, more than 25 different aspects of using SANs
have been identified as having hard or "soft" savings in Total Cost of
Ownership (TCO).
And on Sept. 11, 2001 the terrorist attacks in New York and Washington
moved disaster recovery planning far higher on management's priority
lists. The reasons are evident when looking at the costs of "outages"
or system downtime. Many organizations have measured these costs, but
these are from a Hitachi Data Systems white paper, "Business Case for
SANs" (undated):
http://www.hds.com/pdf/3SAN_ROI_Wht_Ppr.pdf
If any of the following businesses are in your target markets, these
are the costs on an hour of network downtime for each business,
according to Hitachi's David Merrill:
Brokerage operations: $6.45 million/hour
Credit card sales authorization: $2.6 million/hour
E-commerce: $600,000/hour
Internet banking: $420,000/hour
Point-of-sale/EFT: $210,000/hour
Average cost (survey of 400 companies): $100,000/hour
Airline reservation system: $89,500/hour
Cellular service activation: $41,000/hour
SIZE OF SAN MARKET
------------------
The total network backbone market is $5.3 billion, according to
Cahners In-Stat/MDR report, "New Networks to Reshape Backbone" (March,
2002), $2,995:
http://www.instat.com/abstract.asp?id=138&SKU=IN020457LN
Growth will exceed 140% per year, with forecast SAN market revenues of
$173 billion in 2006, according to Cahners. The report warns that
growth may be even faster, if a "killer application" emerges.
The Cahners data tracks pretty closely with that of a company called
Strategic Research, which has been specializing in the SAN market.
Though written in late 1997, Strategic Research predicted that the
market would rise to about $5 billion by 2000 in the report "Storage
Networking, the Next Network," (September, 1997):
http://www.sresearch.com/sp_cnt9709.htm
Strategic Research anticipated that Windows 2000 clustering technology
would account for about 40% of the SAN usage – obviously wrong because
of the delays in shipping NT5 (later announced as Windows 2000) and
the reduction in features for Microsoft's "Wolfpack" clustering
functionality. The research company also predicted that 40% of the
usage would be for electronic data interchange (EDI).
One final note: a more recent Strategic Research report "Taking SANs
to the Enterprise" (September, 1999) estimates that 25-35% of network
traffic passed over an SAN by 1999:
http://www.sresearch.com/sp_emc9809.htm
No good industry data appears to be available on the Internet
segmenting the SAN market by industry, though you'll see at the bottom
there are several research reports that do. You may be better using a
proxy – such as growth of voice-over-IP – to identify growth.
Analysys Research has monitored that area closely, particularly for
European telcos.
What isn't in dispute are the technologies being used to carry SAN
traffic. Initially disk arrays (RAID) were used; then supplanted more
recently by Fiber Channel (FC) SANs. It is expected that FC will
continue to grow but be outstripped by InfiniBand in 2004, according
to IDC data used by JNI, an industry supplier in data from this
analyst presentation (June 13, 2002):
http://www.jni.com/News/Bear%20Stearns%2013th%20Annual%20Tech%20Conf%20061302.pdf
Fiber Channel operates at speeds of 133 megabits per second (Mbps) and
is upgradable to 1 gigabits per second (Gbps), while InfiniBand is
designed to operate at 10Gbps. Though 180 vendors are members of the
InfiniBand Trade Association, Intel has recently withdrawn support to
promote its PCI Express technology – and others are supporting
FC-over-IP or iSCSI.
What is clear is that FC is dominant for now. Gartner Group puts FC
component shipments at $1.46 billion in 2001, a growth of 13% -- while
RAID systems declined by 19%. In "Storage network infrastructure:
2002 forecast"
ZDNet (July 9, 2002)
http://www.asia.cnet.com/itmanager/specialreports/0,39006603,39072765,00.htm
MARKET LEADERS
---------------
At the component level, four vendors accounted for 78% of the FC
market in 2001, according to ZDNet. Key vendors were Emulex, Ologic,
Brocade and McData.
Moving into disk systems, leading suppliers are EMC Corp. and IBM,
though Dell Computer purchased an SAN supplier this year and Hitachi
Data Systems. H-P, Legato, Network Appliance, Storage Tech and Sun
Microsystems also supply systems.
RESEARCH RESOURCES
-------------------
The Storage Networking Industry Association (SNIA) has been active in
pushing open standards, including InfiniBand. Its website has a large
number of resources, including links to industry publications:
http://www.snia.org/home
The company that's done the most-detailed research over the longest
period of time is Strategic Research. It is worth going to their
website and using Google to do a site search for "SAN":
http://www.sresearch.com/
Michael Peterson has written a number of the analyses of datacenter
needs and SAN deployment, which are on the Strategic Research page
here:
http://www.sresearch.com/profiles_body.htm
Strategic Research Corp. has done a report called "Future of
Datacenter Infrastructure," (May, 2002) which appears to be ideal for
what you're seeking. It's $500, modest as far as good research goes.
There's an EXCELLENT synopsis of it, including some very interesting
user metrics
here:
http://www.sresearch.com/reports/fdi_2002.pdf
Other interesting Strategic Research white papers include:
"SAN: Quality of Connection" (October, 1999)
"The Future of System I/O in the Datacenter" (Jan. 10, 2000)
Aberdeen Group's Dan Tanner has also done a great deal of analysis of
SAN. The Aberdeen Group's website is another where doing a Google
good site search with the term "SAN" will turn up several briefs.
www.aberdeen.com
Aberdeen's most-complete analysis of the market is in "Worldwide
Storage Management 2001-2005" (February, 2002), $495, outlined here:
http://www.aberdeen.com/ab_company/hottopics/reporttocs/WWStorageReportTOC.pdf
And IDC has a detailed analysis of "Worldwide Disk Storage Systems
Forecast and Analysis, 2000-2005" (December, 2001), $4,500:
http://www.idc.com/getdoc.jhtml?containerId=26168
Finally, Analysys Research, Cambridge, UK, has a number of telecomm
and SAN-related reports.
Particularly interesting was "Storage Area Networks: New Revenues for
Optical Carriers?" (November, 2001), 650 pounds:
http://research.analysys.com/articles/SINGLECOLUMNARTICLE.asp?iLeftArticle=938&iRightArticle=&bRedirect=false
Google search strategy:
"storage area networks" + "market size"
If anything of this needs clarification, please let me know before
rating this answer.
Best regards,
Omnivorous-GA |
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