For those of us who’ve been in the storage business for a while, these are exceptionally interesting times.
All sorts of new technologies and ideas are coming to market these days, many by small startup companies, fueled by an apparent ocean of venture capital. We now have a rich supply of new storage options to vigorously debate and discuss.
But the demand side of the picture isn’t nearly as rosy. Selling at any scale in the enterprise storage biz is a difficult task, and there are many good solutions from proven vendors with established relationships.
While I admire the enthusiasm and passion of these many startups, my inevitable conclusion is that the market can’t support even a small fraction of what these newer companies are trying to do.
And I think there’s going to be a nasty shakeout very, very soon.
Why do we have the current bumper crop of storage-related startups? The root causes are fairly easy to grasp.
First, as the amount of data continues to grow exponentially, the inevitable conclusion is that there will be demand for more products that store, protect, manage, etc. as we move from a petabyte to an exabyte world. Storage is a very big industry, and the numbers historically have only gone one way: up.
Second, there’s a number of disruptive technologies in play: flash for performance acceleration, scale-out architectures, software-only storage stacks, etc. Throw in some new consumption models (e.g. cloud, storage-as-a-service, etc.) and the indicators for potential disruption appears to be good.
Third, there's always the default assumption that the established players will be slow to move, creating exploitable gaps in the market. Sometimes this is true, sometimes it is not.
From a venture capitalist’s perspective, all of this spells potential opportunity, so the checkbooks open up, and -- as a result -- we’ve got a surplus of small, aggressive startups.
It’s Getting A Bit Crazy Out There
It seems that every week or so, yet another small storage player comes out of stealth to join the growing crowd that’s already done the same recently.
I used to try and keep up with all the different players (and I do better than most), but — at some point — I start to ask myself some basic questions.
How many different all-flash array startups does the industry really need? Or how many hybrid array startups are needed?
How many server-side caching startups do we need? How many software-only storage startups will the market support? How many small companies offering yet another take on either commodity storage or converged infrastructure can be supported?
The answer: not so many.
Is It About Building A Business, Or Getting Acquired?
Venture capitalists care primarily about a profitable exit: whether that’s an IPO, an acquisition or perhaps an IPO followed by an acquisition. But there are only so many buyers in the market, and their aggregated demand isn’t what it used to be.
Note: Steve Duplessie has an excellent take on what's wrong with the current tech VC model -- a good read.
Most of the bigger players have figured out what they want to do with all-flash arrays, hybrid arrays, server-side caching, software-only storage stacks, converged infrastructure, etc. Sure, there will be the occasional acquisition here and there — but nothing like we saw several years ago when it seems that every large IT vendor was in the market, buying up storage companies left and right.
Those days are gone.
A Personal Note
We have an extended community of people who work in this business, and there’s been a recent rash of established folks who’ve recently jumped ship and moved to a startup — lured by the typical starry-eyed sales pitch.
I won’t make a list of names, but if you follow this crowd you’ve probably noticed the same thing.
Even though we sometimes compete vigorously, I do wish them well. For some, things may work out OK in the end. For most of them, I fear it won’t be too long before they’ll be looking for yet another gig.
Live and learn.
The Customer Is In Control
For those enterprise storage IT pros who are closely following all of this, I think they have a key role to play in the industry in times like these.
To the extent that these key influencers can communicate to everyone what new approaches seem interesting and useful in *their* situations, it sends clear signals to every vendor — large and small — about what’s important and what’s not.
Where is the win?
Most enterprise IT buyers I’ve met would prefer to get their functionality from an established vendor, and have it integrated alongside all the other stuff they’ve already got.
The larger vendors should be listening — so it’s a good time to speak up.
And — if they don’t listen and respond — there are certainly other options.
It’s All Good — Or Is It?
On one side, it’s easy to philosophically paint this as all good: strong demand for better solutions leads to several dozens of new companies being created, each challenging the established market leaders in their own way.
Customers get new choices, larger vendors have an opportunity to build their portfolios through M&A, and so on.
While the few winners will be celebrated, the many runner-ups will be marginalized and forgotten quickly. Lofty aspirations will be discarded by the wayside, and the people involved will inevitably move on to the next thing.
And, for the handful of customers who took a chance and invested in one of their products, they’ll inevitably have to move along as well.
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