StorageNetworks morphs into software vendor

The company that was the first -- and one of the last -- storage service providers (SSP) officially became a software vendor last week when it announced a storage management product intended to bolster flagging revenue from the faltering storage outsourcing market.

StorageNetworks Inc. will market its STORos StorageManager software, which lets IT administrators manage, monitor, back up and restore direct- and network-attached storage, as well as Fibre Channel-based storage-area networks. STORos StorageManager is based on software the company used when it hosted customers' storage services at its storage points-of-presence. Customers who outsourced data to StorageNetworks could also monitor and control the data stored at these facilities using the same software.

"On paper, StorageNetworks software is exactly the integrated storage management approach we need to see," said Steve Duplessie, an analyst at Enterprise Storage Group Inc. in Milford, Mass. "It lets companies become internal utility providers -- that's a critical move in elevating IT's corporate standing."

StorageNetworks, like CreekPath Systems Inc., Storability Inc., ManagedStorage International Inc. and Scale Eight Inc. before it, is scrambling to recover from the downturn that resulted when their service provider and dot-com customers failed. Those companies relied on outsourced storage because their businesses were growing so fast and so unpredictably that they weren't able to build storage infrastructures quickly enough on their own.

Analysts say that of any strategy, transitioning from an SSP to a software vendor is the most prudent and that StorageNetworks has the best chance of succeeding.

"We have yet to see any former SSP make it as a software company, though having $280 million in the bank gives StorageNetworks an advantage over all would-be competitors," Duplessie said.

Analysts attribute the failure of SSPs such as StorageProvider Inc. and Centripetal Inc. to having visions that were too broad or not having enough venture capital to weather the downturn while refocusing on other fields.

"The SSP market only worked in small, targeted application areas like backup," Duplessie says. "Having too broad a focus, too big a capital structure, [combined with] the unwillingness of enterprise customers to let the crown jewels go off-site, meant the demise of most of these companies," Duplessie said.

Most surviving SSPs have taken the proprietary management software they used to manage their customers' storage and converted it into stand-alone products that they can market to enterprise customers. According to analysts, this will save them in the end.

Storability, for instance, has Global Storage Manager, which it used to manage storage located at customer sites; CreekPath, Managed Storage and Scale Eight have each developed software that they will sell independently of their storage service offerings.

StorageNetworks' StorageManager v5.0 adds features such as policy management and the ability to manage arrays that are direct-attached to network servers, as well as Fibre Channel and network-attached arrays. In the second half of this year, StorageNetworks will also release an unspecified data management application. Further, the software manages arrays from EMC Corp., Hewlett-Packard Co., Hitachi Data Systems Corp. and Sun Microsystems Inc., among others, and storage devices from Brocade Communications Systems Inc., McData Corp. and Network Appliance Inc.

Peter Bell, StorageNetworks' chairman and CEO, is hedging his bets on the new software his company is selling. He said that StorageNetworks hopes to derive 50% of its revenue from software a year from now. Presently, the company's software accounts for 10% of total revenue.

Analysts say that of all the SSPs, StorageNetworks and Storability have the most complete enterprise storage management visions and that CreekPath, which realized long ago that software would carry it into the future, has managed to attract attention with its products.

The price of StorageNetworks' StorageManager, which is available now, is based on the number of storage connections.

This story, "StorageNetworks morphs into software vendor" was originally published by Network World.

Copyright © 2002 IDG Communications, Inc.

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