Flash Industry Chaos
by Woody Hutsell, http://www.appICU.com
I’ve been watching the flash storage industry evolve since essentially its beginnings. A lot has changed in not so many years. Lately, though, I’ve seen some developments that suggest parts of the flash storage industry are in a period of rapid change, even chaos. And at the same time I’ve seen some clarity settle on the industry space closest to home.
In the last month, I visited two of the biggest shows for the enterprise flash market: Flash Memory Summit and VMworld. One of the things I like about going to these shows is keeping up with old friends, former co-workers, partners, analysts, and customers. I am used to seeing my colleagues in the industry move between companies (as I have done), but this year has really redefined the industry. The segment of the industry with the highest level of change is PCI flash. Last year set a prelude for changes in the server-based flash world with a few smaller deals like Virident selling to WD/HGST and Toshiba buying OCZ’s assets. This year, the two biggest players have changed hands, with both the LSI to Avago to Seagate and the Fusion-io to SanDisk deals closing.
From the perspective of its likelihood to disrupt the balance of power in the industry, the SanDisk acquisition of Fusion-io stands to make the biggest waves, or lead to the most chaos. Why do I think the SanDisk acquisition may lead to chaos? First, if SanDisk manages to retain the people that made Fusion-io special, SanDisk will gain a powerful new asset, but that isn’t easy. Buying a company for its strong engineering and sales talent means you must keep those people around. But, I have already seen a number of the excellent people at Fusion-io move on to other companies. Second, SanDisk now has the products and people necessary to sell directly to enterprise end users, even if the deals close through OEMs. They acquired a sales team that many competitors (think STEC, OCZ, Violin) tried to build but could not and were nearly bankrupted trying. But, this moves SanDisk perilously close to competing with its OEMs, which will create a fine line for them to walk, or fall from.
Another industry segment where chaos may be brewing is in VMware storage. At VMworld I saw a number of interesting new software defined storage solutions from VMware, plus a plethora of hyperconverged storage solutions like Nutanix. This part of the market has soaked up a lot of venture capital and it is apparent to me that the majority of the companies in this space will not make it. This year’s VMworld reminded me of previous Oracle World shows where you saw the small companies whose names you barely recognized buying the huge booth to try and capture some sliver of market attention. Almost inevitably, these companies crater rather than prosper. I think a really large booth when you are a small company with little revenue is the first evidence that you are on the path to irrelevance.
Finally, instead of rapid change and even chaos, I see one area within the flash storage industry that is gaining clarity – the all-flash array space. This industry category has reached its seventh birthday, if you consider that all-flash products were introduced to this space in 2007 by Texas Memory Systems. The recent round of Gartner Market Share and Magic Quadrant studies have confirmed what those in the industry realize – currently this is a three horse race, with IBM, EMC, and Pure Storage leading the industry in revenue and all three in the leadership quadrant. But it is clear to me that the other storage OEMs are gaining steam. Expect revenue from HDS, HP, and NetApp to increase on pace with industry growth. There continues to be a variety of small companies/start-ups that have missed out on the first wave of industry consolidation and are growing at a much smaller rate than the industry. For these companies, there is still a future if they can be acquired or grow into a profitable niche. It now takes much more as a startup (or established company) to enter and succeed in the AFA market than it took a year ago. The gap from the leaders to the followers in the AFA space continues to grow, and as that gap grows it becomes more important for clients to evaluate the long-term prospects of their flash array providers.
For more information on IBM FlashSystem, I encourage you to visit: http://www-03.ibm.com/systems/storage/flash/