Watch it play out – again – in storage
This morning’s Wall Street Journal has an article about startups – I won’t link to it because subscription required – where they note that a number of real companies have bought from startups lately.


Now corporate tech managers are once again starting to buy equipment from small networking businesses with little-known names such as Riverbed, Aruba Networks Inc., Isilon Systems Inc. and BigBand Networks Inc. Many of these small firms make products that solve new corporate-technology problems, such as how to most efficiently store new corporate data like video, or how to best improve the transmission of information across networks that have been weighed down by multimedia applications.

While some of the big tech firms also offer similar technology to deal with such issues, tech managers are finding that the start-ups often have more cutting-edge products that are cheaper than the big suppliers’ offerings. “The old guard equipment guys are having to think about more than just equipment [and] they’re having to think about software and video,” says Joe Skorupa, a research analyst with Gartner Inc. “They aren’t used to thinking in those terms.”

Multi-media apps, eh?
That is just where Isilon has built its business, right where NetApp should have owned the market. As NetApp’s marketing VP Jay Kidd recently noted

I wish that we were big enough to invest in every single segment. About three years ago we really targeted the enterprise segment and wanted to build a business there, and we had presence in the technical segments. Did we leave some segments unattended? Yeah, we probably did. And Isilon has gone and found those segments and called our attention to them.

It’s a challenge to balance, because even though we’re growing 35% a year, we can’t invest in everything we’d like to. We’re doing more things right now — we’ve broadened the focus in the past year or so to be back on the technical side again.

Five years ago plenty of startups were going expensively broke going after “new media” markets, usually employing the costly strategies of “get big fast” and the like. Isilon stayed lean and focused. Now they, and not NetApp or EMC, have the brand and the references for media apps and scalable cluster storage.

Jay’s comment is right on: NetApp doesn’t have enough money to invest in everything, so they invested in the enterprise. Wall Street is loving that decision – and so is Isilon. The new niche markets are never big enough to attract the leaders. By the time they are, the little and nimble competitors are the incumbents.

From little acorns do mighty oaks grow
Or something like that. Not everyone can be as lucky as EMC was in the mid-90’s and confront a comatose IBM (IBM has yet to recover culturally from that upset). Frontal assaults on much larger entrenched competitors are great fun for the first couple of months. Isilon has been both lucky and smart.

The StorageMojo take
The secular trend to cooler data and a “keep everything” mentality is fundamentally reshaping the mass storage market. Many new niches are opening up to software focused storage companies. Isilon is one of the first. It won’t be the last.

Comments welcome, as always.