SSD supplier STEC’s stock price has taken a dive since the vendor reported last Tuesday that EMC will carry over its 2009 inventory of Flash drives into 2010. Shares have fallen almost $9.00 to $13.18 at today’s close. According to a report from MarketWatch:
Much of the carryover involves STEC’s Zeus IOPS SSD products. EMC makes up about 90% of STEC’s business for the Zeus IOPS drives, and had placed an order for $120 million of the drives for the second half of this year.
STEC officials said that about $55 million of that order has been delivered, and the rest would be shipped before the end of year.
A flurry of class action lawsuits have been filed accusing STEC executives of misleading investors before making their revelation last Tuesday. This all leads me to wonder if the industry has been wrong about SSD adoption overall.
All EMC would say in a statement released through a spokesperson was “EMC is pleased with its SSD demand and growth. In Q4, EMC will introduce unique FAST (fully automated storage tiering) capabilities, which are expected to increase SSD growth and demand even further.”
Does this inventory carryover send a signal about wider SSD adoption in the market, given how dominant STEC’s share is (and EMC dominates its business)? I asked a couple of analysts for their opinions.
“Well, what I have been hearing is that EMC is giving SSD away for free to try to spur adoption, but so far it doesn’t seem to be working — it’s too costly, and too wasteful without some type of FAST capability,” Forrester Research analyst Andrew Reichman responded in an email. “SSD as a performance add-on is not popular in this economy… It’s interesting to see that STEC can’t make a go of this business even though they have a number of the major storage vendors signed up as partners. That says to me that it’s not competition, but the whole category being slow so far.”
Added Taneja Group analyst Jeff Boles, in another email, “while we’re in the midst of an unusual market that likely over-penalizes STEC for perceived risk, while over-endorsing other companies for perceived value, I remain cautious about the speed of SSD adoption.”
But, he added, the newness of SSD could be creating a vicious cycle of perceived risk.
“What the market needs is a good round of commoditization, brought on by integration of some of this intelligence into the storage system itself,” Boles wrote. “At that point, obsolescence will start to look a bit more unusual, and the roadmap for future devices a little more predictable. After all, if your XYZ array had solid state intelligence in it, and you were buying highly commoditized drives that only changed with the density and performance of the flash memory itself, then there seems to be less risk that your flash investment could be rapidly outdated by the next rev of a drive controller.”
As always, the peanut gallery is invited to weigh in.
HP made some storage updates today as part of a larger announcement aimed at SMBs looking to cut costs, including new Hyper-V bundles.
Storage-related updates include:
- New application-integrated snapshot option for LeftHand iSCSI SANs. LeftHand already had application-integrated snapshots that supported VSS for snapping the LeftHand SAN, but not with the ability to run inside and quiesce an application. This update fills that gap; competitors like Dell EqualLogic and NetApp already offer this capability.
- New NAS interface for D2D data deduplication products. SMBs no longer need to license virtual tape drives to use HP’s low-end data deduplication product.
- New DAT 320 tape drive. SMBs still using tape, on the other hand, have the option of doubling the capacity on DAT tape drives to 320GB. HP claims the new drives also offer up to a 75% performance increase with a 50% lower power draw. Tape, especially for SMBs, is frequently declared dead, but there are still pockets of tape use in this market, particularly in remote and branch offices.
- Six new HP Virtualization Smart Bundles for Microsoft Hyper-V. Full specs on the bundles, which range from an entry-level tower server form factor to rackmount servers with networked storage, are available at HP’s website. These bundles are similar to the ones HP previously rolled out this year for VMware environments.
LeftHand product marketing manager Chris McCall says the Hyper-V bundles are not a counter strike against the new joint venture between VMware, Cisco and EMC. He says HP is supporting both hypervisors, even though VMware is deeply aligned wiht HP HP competitors Cisco and EMC. “We’ve done bundles for VMware already because we’ve targeted market size — we did VMware first because they’re the market leader,” he said. “If Microsoft was, we would’ve done Hyper-V first. There’s nothing to read into there.”
QuorumLabs joined the storage world this week with a business continuity-in-a-box appliance for SMBs.
QuorumLabs claims its onQ boxes can help a company recover from any outage with one click, hence its tagline “One-Click Recovery.” It offers four models of the appliance in 1U or 2U configurations ranging from 2 TB to 8 TB of raw storage, beginning at $20,000. (Monthly subscription pricing is also an option).
The appliance takes full and incremental backups, creates virtual clones of systems it protects and does what QuorumLabs calls “file-chunk” deduplication – it only sends parts of files that don’t already exist on any protected server.
The vendor recommends having another system at a second site for DR, but is lining up managed service providers with data centers that customers can use to synchronize their data. The appliance does incremental backups and replicates them to the remote site.
QuorumLabs CEO Robert Habibi says customers can use onQ with their existing backup software, but it doesn’t require an additional backup application.
“We’re not selling ourselves as backup, what we provide is business continuity,” Habibi said.
The tricky part for the QuorumLabs gang could be selling themselves to a market that doesn’t know the company. QuorumLabs is a spinoff of Themis Computer, which sells servers to defense contractors. And while nearly every storage startup is headed by people who are known in the storage industry, QuorumLabs’ executives come from outside the storage world.
“They’re addressing the right market and the price is competitive, but they may have a bit of a challenge with market recognition,” IDC analyst Robert Amatruda said. “They have to gain more awareness in the SMB market.”
ZL Technologies Inc. sent out a notice today that its lawsuit against analyst firm Gartner has been dismissed.
In a statement, CEO Kon Leong said:
ZL believes that Gartner’s overwhelming influence on large corporations’ purchasing decisions, and its inaccurate ratings, including its bias in favor of large vendors, combine to pose major competitive hurdles that hurt smaller innovative vendors across all technology sectors. The harm falls not only on new and innovative companies like ZL, but on the enterprise customers who receive faulty purchasing advice, and as a result overspend on inferior technology.
While we are disappointed that the court has dismissed our lawsuit as filed, we are pleased that it has given us leave to amend our complaint, over Gartner opposition. We believe the market should take note that the defense on which Gartner prevailed was its argument that its reports contain “pure opinions,” namely, opinions which are not based on objective facts. In ZL’s view, that is directly contrary to the statements Gartner makes to its customers when selling its allegedly sound research. ZL intends to amend its complaint and refile within 30 days.
Whatever happens from here legally speaking, the lawsuit itself raises interesting points about analysts, purchasing decisions and ethics. Whether Gartner is protected by the First Amendment as speech or not won’t protect it from criticism such as StorageMojo blogger Robin Harris’s recent post, “Gartner’s Magic Hydrant.”
The Magic Quadrant has the analytical rigor of a beauty contest. Implicit and explicit assumptions about customers, markets, technologies, use cases and suppliers obscures more than it reveals. The MQ seeks to rank vendors not only by what their products do, but by what Gartner presumes an enterprise customer should want. They presume too much.
Customers aren’t idiots; they can see that a company isn’t very big. What they don’t know is how well their products work.
Gartner needs to start earning that $1.3 billion, not just collecting it. If the FTC can require lowly bloggers to report vendor freebies and payments, perhaps the day isn’t far off when mighty IT consulting shops will have to do likewise. Kudos to ZLT for noting the emperor’s scanty attire.
Few in the blogosphere or storage Twitterland have stepped forward to vigorously defend the Magic Quadrant, while those who base buying decisions on the Magic Quadrant also come in for criticism.
A sampling of that debate from Harris’s blog–
From a commenter calling himself “Thomas”
Between paying Gartner to think for them and vendors to do the infrastructure, it’s no wonder business execs want to adopt technologies that get rid of no-content vendor pass-throughs that walk the halls calling themselves “IT staff.” Filling out purchase orders and plugging in ethernet cables do not provide competitive advantages and if you cant get a competitive advantage from your IT, then why not outsource it?
From a commenter with the handle “jh”
Gartner is a tool to be used by knowledgeable professionals to help them understand the market, narrow focus and choose product. Nobody buys right off a list. Although you and others may not like the 2 x 2 chart, it provides a good shorthand of the overall market in ways that are easier to talk about than a stack of thousands of pages of product information. If a IT pro or a CIO is just looking for a defensible position, they could spend a lot more money getting a lot less value by hiring some of the consulting organizations I have dealt with…
When I informally polled my Twitter followers about this when the lawsuit was first announced, I also got some varying replies.
Navel-gazing like this about the role of industry analysts in the storage business has popped up before, but to little noticeable effect on how anybody — vendors, users, and analysts — seem to operate. I’m not sure this time will be any different, but the lawsuit may have raised the profile of the debate a bit.
There’s been some head-scratching around the storage industry after EMC CEO Joe Tucci and CFO David Goulden said on EMC’s earnings call last week that EMC would discontinue its reseller relationship with Dell. The execs said Dell and EMC would continue to focus on their OEM relationship, but didn’t go into detail about what it all really means.
The subject came up again today at the 451 Client Conference in Boston, where an EMC employee who requested anonymity clarified: OEM means anything Dell sells under the Dell brand. That means Clariion and some Celerra, for which Dell handles some of the manufacturing. The reseller relationship was based on opportunities turned up by Dell that were referred to EMC — this involves Clariion and Celerra, but also Symmetrix in some cases.
On the earnings call, Goulden said Dell Clariion revenues decreased 15% sequentially, though overall Clariion revenues were up 1%. Dell still accounted for 25% of overall Clariion revenues, and within that, 15% was attributable to the OEM business.
So, the first thing this change in relationship means is the potential loss of about 10% of EMC’s Clariion revenues, although those customers may still buy Clariions through EMC or its other channel partners. Tucci said EMC and Dell would try to “pick up the slack” with OEM sales as the reseller relationship is de-emphasized.
It also means, ostensibly, that Dell will no longer be referring Symmetrix sales when suitable opportunities arise.
Dell’s margins are higher and it makes more money from the OEM deals — where it also handles support -– than from the reseller deals. But by giving up Symmetrix reseller deals, will Dell leave an open door for its customers to go to Hewlett-Packard or IBM? Or will Dell find another partner? If so, who? And just how close would that partnership be?
Dell’s acquisition of iSCSI vendor EqualLogic – which makes systems that sometimes compete with Clariion – worked out well, and Michael Dell said in June he was looking to acquire companies. 3PAR, which makes disk arrays that compete with Symmetrix, was mentioned by storage industry watchers as a potential acquisition target for Dell, although the $3.9 billion buy of Perot Systems in September put the kibosh on most of that speculation. 3PAR’s market cap is currently at a little over half a billion, so it wouldn’t be quite as much to swallow as Perot.
In light of all this, what should we make of Dell’s surprisingly aggressive response to EMC’s announcement of a new joint venture with Cisco and VMware this week? What about the fact that Dell’s Clariion sales declined though EMC’s grew? Is the on-again/off-again Dell/EMC coziness back off again?
EMC and Cisco today officially confirmed their long-awaited private cloud venture, called Acadia.
In a joint press release, the vendors referred to Acadia as “a joint venture focused on accelerating customer build-outs of private cloud infrastructures through an end-to-end enablement of service providers and large enterprise customers.” Cisco and EMC are Acadia’s lead investors, with VMware and Intel involved as limited partners. Acadia will begin customer operations in the first quarter of next year, the vendors say.
Acadia is an offshoot of an alliance between EMC, Cisco and VMware called the Virtual Computing Environment (VCE), also officially disclosed today after months of speculation. The vendors today also today launched product bundles called Vblock Infrastructure Packages.
Vblock packages include Cisco’s Unified Computing System (UCS), Nexus 1000v and MDS Fibre Channel switches, EMC Symmetrix V-Max or Clariion storage systems and VMware vSphere software. Vblock 1 is a midsized configuration for 800 to 3,000 virtual machines, and Vblock 2 is a high-end configuration that scales from 3,000 to 6,000 virtual machines. Vblock 0 is an entry level configuration supporting 300 to 800 virtual machines.
The vendors describe Vblock Infrastructure Packages as a “better approach to streamlining and optimizing IT strategies around private clouds.”
The VCE alliance also includes joint sales, support and professional services teams. Professional services include Cloud-based Business Advisory Service, Private Cloud Strategic Impact Advisory Service, Private Cloud Architecture Impact Advisory Service, Virtual Desktop Advisory Service, Cloud Computing Strategy Service, and Vblock Design and Implementation Service.
During a webcast to discuss Acadia and VCE today, CEOs Joe Tucci of EMC and John Chamber said the joint venture would consist of about 130 employees but they have yet to hire its CEO.
Rumors began swirling around the time of VMWorld in September that EMC and Cisco would be creating a joint venture to sell infrastructure to support VMware. Last week, two stories appeared on the news wires indicating an announcement may be imminent.
A story from the Dow Jones Newswire that appeared on the Wall Street Journal’s website said the partners are set to launch the venture this week with a product dubbed V-Block. According to this report, the new joint venture will have its own CEO.
Meanwhile, according to a Reuters report that also appeared Friday,
One part of the partnership calls for the two companies to form a joint venture that will sell vBlock as a hosted service. Customers can pay for that service based on the amount of computing power and storage that they need, accessing it via the Internet.
That joint venture will assemble computer systems for customers, integrating all necessary hardware and software to make the systems work.
According to reports and previous rumors, the joint venture would involve Cisco’s Unified Computing System and EMC storage. VMware, Cisco and EMC have had a longstanding alliance, dubbed VCE. What would make this different is that it would be a separate company with its own sales force, meaning the companies wouldn’t have to pay multiple commissions to multiple sales people for the same sale. It’s unclear what this joint venture would mean for customers that the existing partnership doesn’t offer today outside of one throat to choke for support.
FalconStor Software is preparing its cloud strategy around a new file system it developed in collaboration with the Chinese Academy of Sciences.
Executives on the vendor’s earnings call Wednesday evening described HyperFS as a storage virtualization/SAN-based clustered file system that will be used to scale the storage layer of FalconStor’s cloud architecture. FalconStor CEO ReiJane Huai said HyperFS will be ready to launch next year.
FalconStor executives said they have signed an OEM deal with a large rich media content provider to sell a system built on HyperFS.
“That’s the opening shot,” VP of business development Bernie Wu added. “We are definitely going to be expanding our business with that file system. It’s massively scalable, good for cloud computing.”