IDC has recently been promoting the idea of file and object based storage as a segment. While market segmentation is more art than science, putting file and object based storage in the same segment obscures the true shape of the storage industry.
Why this matters
Done well market segmentation helps to reveal the underlying dynamics of marketplace activity. Who buys what? How do they acquire it? What are the margins? What are the problems they are addressing?
There are many ways to segment markets: price; technology; customer type; distribution; and more.
For example, segmenting by price bands can reflect channel realities. Products under $50,000 are rarely sold by direct sales because salesmen are too expensive. Therefore they go through the channel.
For Seagate and Western Digital, this means that their burgeoning storage system businesses can move much further up market. EMC and NetApp can’t retaliate because their expensive direct sales forces cannot compete in the under $50,000 price band – as NetApp discovered with its StoreVault failure.
That strategic reality is only seen by correlating the segments with the underlying sales economics. And that is why IDCs conflation of file and object storage is a disservice to the industry: it conceals rather than reveals key market forces.
The rise of object storage
Gartner recently estimated that the major cloud service providers have spent more than $50 billion on cloud infrastructure in the last eight years. While undoubtedly low – due to the prevalence of private cloud expenditures – this reveals the rise of an enormous storage market that has been outside the purview of established storage companies.
As StorageMojo noted over seven years ago in So Mr. Tucci, Where Are EMC’s Google Application Notes?:
I’ve been puzzled for years over why cheap, high volume storage hasn’t made it into the data center as so many other high volume consumer technologies have. In Google I think I have my answer: it has, using hardware so cheap that the people who build it can’t afford slick “application notes”, big user groups, fat contracts for the “independent” analysts and four color ads in all the IT publications. Not to mention that Google has no incentive to give their secrets away.
One of Google’s secrets? Object storage in the Google File System. Every other major cloud storage provider has followed their lead.
The StorageMojo take
Public and private cloud object storage is redefining enterprise storage – including file servers – and doing it outside the channel and pricing models – 60%+ gross margins – of the current leaders in block and file storage. Munging current file storage sales and vendors with object storage sales does almost everyone a disservice – except those vendors who want to be part of a discussion they’ve mostly ignored for the last 7 years.
Object storage is important and different from file storage in many important ways, just as file storage is important and different than block storage even though all three store files. Due to its pivotal role in the cloud upheaval, object storage is arguably the most important of all.
I’d like to hear from IDC on their segmentation rationale. It may be as simple as manpower – their analyst ranks have been decimated in the last 10 years – or maybe it’s an honest judgment call.
Courteous comments welcome, of course. I’ve just written a short white paper for DDN intended to introduce senior managers to object storage. If you are evangelizing object stores in your company you should find it useful.