When there is great growth in an industry, you would expect the demand would to spur competition and we would expect the customer to have more choices and more vendors to procure from. I guess this works only upto a certain scale. Beyond which the opposite, consolidation of vendors, happens. That is what I see happening in the Storage Industry now. The demand for Storage is on the rise. Every company is showing wonderful results. Demands for newer technologies is also on the rise. In such a scenario, we are seeing lot of consolidation happening. So market growth leads to shrinking vendor base? I am sure there is some management theory explaining this phenomena. As to when consolidation happens in an industry etc.
These thoughts came to me when I look at the recent happenings in the Storage space. We saw Data Domain being bought by EMC last year. This year there two very major acquisitions. One was HP fighting off Dell in order to acquire 3Par Technologies. HP wanted an array like that of 3Par in their portfolio and went for it aggressively against Dell. It was a $2b + acquisition. 3Par has some nice technology and were quite well known for techniques like Thin Provisioning, Micro RAID, Wide Striping etc. There were getting noticed in the market and had a decent customer base. Everyone feels that this acquisition will help HP immensely in the Storage market.
The second acquisition which has a lot of people talking is that of EMC planning to acquire the Scale Out NAS vendor, Islion. This will also be a $2b + deal. From the comments I see, like HP with 3Par, this is also a buy to fill in a gap in EMC’s portfolio. The general opinion is that the current NAS product of EMC, Celerra, doesn’t scale up well and hence the need to buy a scale out NAS product. EMC was lacking a scale out NAS while the competition had their products. HP has both PolyServe and IBRIX. (Polyserve, btw, had lot of people from the erstwhile Sequent Computers and is based at Beaverton, Portland, Oregon. Some of whom I know), IBM has its Scale Out NAS (SONAS), NetApp has its own scale out product. So this product ensures EMC is also playing in this space.
The other interesting acquisition was IBM acquiring Storwize, a company involved in Primary Data Compression. Storwize had a compression appliance for NAS. This appliance would compress data before it was stored on disk. IBM after acquiring Storwize released a product called IBM Storwize v7000 Storage Array. The funny part was that this array had no Storwize technology in it!! It seems that IBM wants to brand its arrays as Storwize arrays and so only the name was used.
Other interesting acquisitions happened in the Database area. EMC acquired the company Greenplum, which is “massively parallel processing database platform” and IBM acquired the database company Netezza. Both these database companies were involved in building databases for high performance business analytics.
Most of these acquisitions happened keeping cloud in mind. Also on the back the mind of all traditional Storage companies is Oracle. Oracle now has Sun, Sun StorageTek, Virtual Iron and Exadata. And of course, they have their database. They do pose a serious threat in the Storage space. There was. for a brief, while a talk on whether they would acquire someone like NetApp to grow in the Storage space. You never know what will happen!!!
As I said in the beginning, while the Storage market is expanding, the vendor base is getting consolidated. Innovative startups and small companies with good track record are being gobbled up by the big players. So you eventually will end up with only the big guys in the fray.