Just about every storage vendor out there today says it has a major focus on the small and midsize business market for 2008. But when you talk to them it becomes pretty clear that for the last few years a lot of them are focused on the small part of the SMB market while others have been more focused on the midmarket.
As defined by most vendors, small businesses are those folks that typically have 50 to 250 employees while the midmarket are companies with 250 to 1,000 users. Until recently, companies such as Iomega, Adaptec, Seagate, Buffalo Technologies, Western Digital, NetGear, D-Link and Linksys pretty much focused on small-business customers while Hewlett-Packard, IBM, NetApp, Dell and EMC focused on the midmarket as an extension of their enterprise efforts.
This doesn’t mean that there aren’t plenty of instances where, for example, Iomega or Buffalo didn’t have midmarket customers. It just means that their focus was either on small business rather than the midmarket. But now the big enterprise players are trying to expand their footprint in the overall market, so we’re starting to see things such as EMC moving to acquire Iomega and HP touting how it is making enterprise-class technologies available to SMB-class customers.
Conversely, companies such as Buffalo Technologies are now leveraging iSCSI technology to roll out what they describe as enterprise-class storage technologies for the SMB market. Granted the offerings from companies such as Buffalo typically don’t have the same level of built-in management functions as, for instance, some of the offerings from HP and EMC. But a lot of the companies moving upstream in this market are quick to point out that there is third-party storage management software available from Symantec. And when you put Symantec software together with their hardware offerings, it makes a compelling case for a lower-cost-of-ownership model that delivers 80 percent or more of the functionality most midmarket customers need.
How this war is going to play out is anybody’s guess, but the odds are good we’ll see more acquisitions in this space similar to the EMC deal for Iomega. Demand for raw storage capacity continues to escalate regardless of which direction the economy is heading in. But the enterprise-class vendors need to expand their market penetration deeper in the SMB segment while also recognizing that iSCSI products are making it more viable for companies that focused on small-business customers to move upstream.
All of the activity creates a recipe for a massive amount of consolidation in the storage space over the next two years that will ultimately be decided by which way midmarket customers start to lean for their next generation of storage solutions.
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