It’s been a little over a year since Brocade completed its $2.6 billion acquisition of Foundry Networks, and the Ethernet thing isn’t working so well so far.
Brocade reported $97.1 million in revenue from Ethernet switches last quarter, down 26% from the previous quarter. That caused Brocade’s overall revenue of $539.5 million to fall below its previous forecast, despite a 16% increase in revenue from its core Fibre Channel storage equipment business.
The Ethernet sales dip came in a quarter when competitors Cisco, Juniper, and Hewlett-Packard’s ProCurve platform increased revenue in network switches.
Brocade executives blamed lower sales to the federal government and poorer sales through its new Ethernet OEM deals with IBM and Dell for the downfall. They said they will put more sales people on the Ethernet side to help drive demand, rather than leaving it to the OEMs.
“We don’t need to do a research project on what happened and why,” Brocade CEO Mike Klayko said during the vendor’s earnings call. “We know what to do and we’ve taken immediate actions to get our Ethernet business back on track. … Experience is a valuable teacher, and we’ve learned a valuable lesson here.”
Several Wall Street analysts downgraded Brocade’s stock price today, both because of the results and lack of confidence in the vendor’s plan to improve.
“We are frustrated with Brocade’s results, not just government Ethernet switching, but also the clear market share losses in enterprise and persistent declines in service provider Ethernet switching, as well as what we consider a lack of definitive color with the company’s strategic direction toward a recovery going forward,” Aaron Rakers of Stifel Nicolaus wrote today in a note to clients explaining his downgrade of Brocade.
For storage customers, the big issue is whether a concentration on Ethernet will cause a lapse of concentration on the Fibre Channel side. Brocade took share on the FC side from Cisco last quarter, but it’s storage growth was likely a bit below the industry at large and its HBA revenue is negligible more than a year after it moved into that product area. Klayko said on the earnings call that a concentration on Ethernet sales will likely cause “greater normal seasonal declines in our SAN business over the next few quarters.”
Still, Klayko says having an Ethernet switching portfolio has helped the storage business by letting customers lay a foundation for the converged networks expected to emerge over the next five years or so. He also says it’s mandatory for a storage networking vendor to have both Ethernet and Fibre Channel “or you are just going to get put into a box as a point solution.”
Overall, Brocade’s revenue increased increasing 3.4% sequentially and 25% year-over-year, and it earned $51.1 million in profit for the quarter.
Klayko says he has no regrets about the decision to spend billions on Foundry.
“Would I make the same decision today?” Klayko said. “The answer is yes. The customers we talk to today do want to have an end-to-end solution. There is a tremendous amount of change going on in the data center right now as customers are trying to figure out how to handle this explosive growth not only in just data, but in networking traffic. And if you don’t have the entire product portfolio, I think you are disadvantaged. And so strategically, it is the right decision.”
Not all financial analysts are down on Brocade. According to a note issued today by Wedbush analyst Kaushik Roy: “It may not happen overnight but we believe that the management will be able to fix the sales issues and put Foundry/IP business back on track. While it is true that Brocade lost market share in the IP/Ethernet market in the past quarter, we believe that the market share gain story is yet to be played out.”
Iron Mountain’s $112 million acquisition of Mimosa Systems today is an admission by Iron Mountain that the concept of cloud archiving is not yet ripe. Iron Mountain bought Mimosa as an on-premise alternative to the cloud strategy it has been pursuing.
“We cannot wait for data to come to us in the cloud,” Iron Mountain Digital president Ramana Venkata told me this morning, predicting that it will be another few years yet before enterprise cloud data storage adoption picks up.
For cloud- and services-focused vendor Iron Mountain to cite slow enterprise cloud data storage adoption in its decision to buy Mimosa seems to signal an end to the wall-to-wall hype that dominated the industry discussion around the cloud last year.
Signals about this had begun to filter through in the form of two analyst reports released last month from Forrester Research and TheInfoPro that concluded enterprise data storage and IT pros are not as interested in the cloud as their vendors have been in recent months.
Taneja Group founder and consulting analyst Arun Taneja said Iron Mountain’s outlook could signal a shift to a more balanced view of cloud and on-premise data storage going forward, one that has a longer adoption timeframe than many predicted in 2009. “Whether this is a revelation on Iron Mountain’s part that the cloud isn’t happening fast enough, I’m don’t think so,” Taneja said. “It’s more like they don’t really care – it’s clear across the industry that customers are going to need both. No broad-based supplier like this can afford to ignore that.”
According to Enterprise Strategy Group analyst Brian Babineau, ESG’s reasearch alo indicates comapnies aren’t moving to the cloud as fast as some in the industry had originally anticipated. In 2010, a soon-to-be-published ESG survey found only 17% of respondents will investigate cloud this year, Babineau said. “I don’t think we’re abandoning the cloud story, of course,” he said. “But certain applications have to evolve into the cloud, and that evolution isn’t happening as fast as some people want to see it happen.”
Iron Mountain Inc. today said it intends to acquire data archiving software vendor Mimosa Systems for $112 million in cash, subject to closing adjustments.
Iron Mountain already partners with U.K.-based Mimecast for email archiving software as a service (SaaS). That partnership is still ongoing, according to Iron Mountain. That indicates an on-premise focus for Mimosa under the otherwise services-focused Iron Mountain. “Customers wanting to archive email can now choose either NearPoint for onsite archiving or Iron Mountain’s Total Email Management Suite, powered by Mimecast technology, for archiving email in the cloud,” Iron Mountain said in its release announcing the Mimosa acquisition.
Iron Mountain claims files can be easily transferred from Mimosa on-premise archives to its Stratify Legal Discovery Service “for larger litigation matters.” The announcement also emphasizes Mimosa’s integration with files and SharePoint as well as Microsoft Exchange email.
The Mimosa team, including CEO TM Ravi, will be retained by Iron Mountain. Ravi becomes Iron Mountain Digital’s new Chief Marketing Officer.
Stay tuned to SearchStorage.com/news for more on this story.
It’s no secret that the relationship between Hewlett-Packard and Cisco has deteriorated now that Cisco is selling its own server product, the Unified Computing System (UCS). Like IBM and Dell, HP has been lining up other Fibre Channel and Ethernet switch partners, including a $2.7 billion acquisition of 3COM.
So today’s news that HP is now selling QLogic 8 Gbps 5800V and 5802V stackable switches under the HP brand as the HP SN6000 certainly is no surprise. One Silicon Valley blog directly linked the announcement with Cisco’s decision to drop HP as a certified channel partner in April.
While the rift between Cisco and HP is real, the direct link between QLogic and Cisco here is probably exaggerated a bit. The SN6000 is a FC edge switch, and Cisco doesn’t even have an 8 Gbps FC edge switch. Cisco’s bread-and-butter in the FC space is the MDS9000 director, and QLogic doesn’t sell director switches. HP’s new QLogic switches are really an alternative to edge switches from Brocade, which HP continues to offer through its long-standing OEM deal.
But the OEM deal opens the door for QLogic – predominantly a FC HBA vendor – as a switch player. HP StorageWorks product manager Charles Vallhonrat says the QLogic switches have been qualified on all HP storage systems. The 20-port switches can be stacked without requiring dedicated ports for inter-switch links (ISLs), making it easier and less expensive to expand. Vallhonrat says he expects customers who want to start small and grow their SANs will prefer the QLogic switches.
“I think it will be driven by customers’ growth needs,” he said. “They don’t have to buy everything up front. We have Brocade customers who want to buy 40 ports or 80 ports to start, and we have a switch for that. If they want to grow as they go along, this [QLogic] is an ideal product for that.”
As for Cisco’s dumping HP as a partner, Vallhonrat said “from the storage level, we’re moving forward with Cisco as well as other partners.”
HP’s new FC switch follows its release of two low-end storage systems earlier this week – the next generation of its entry level MSA and LeftHand iSCSI platforms. But HP had bad news for storage when it reported earnings Wednesday. During an otherwise good quarter, storage sales declined 3% year-over-year and sequentially, including what CEO Mark Hurd called “very mediocre” sales of its midrange EVA systems.
Hurd says HP did well with its LeftHand and direct attached storage, but not its midrange and higher-end systems. But he insists storage is a priority.
“We have our top guys working on it,” Hurd said when asked what he’s doing to jump start the storage business. “We believe we now have a better lineup than we have had before and we believe we have a team that’s capable of helping us build the answer.”
That storage team is now led by Dave Donatelli, who jumped from EMC to HP last year. HP is expected to upgrade the EVA this year, and its XP enterprise storage platform is also due for a refresh. All of which means it’s worth keeping a close watch on HP in 2010.
NetApp appears to be the big winner in storage sales at the end of 2009 as spending picked up after a slow year. NetApp Wednesday reported $1.01 billion in revenue for last quarter. Its product revenue increased 17% over the last year, while larger rivals EMC and Hewlett-Packard had year-over-year declines in storage product revenues.
NetApp’s increases are more impressive when you consider its last quarter included January, which means one-third of the quarter came after companies flushed their 2009 budgets.
NetApp execs say low-end systems had the biggest increase, which likely reflects a surge in organizations turning to networked storage as a result of adding virtualized servers. NetApp also sold its largest mix of multiprotocol storage systems ever. In fact, for the first time it sold more systems with SAN and NAS protocols than NAS alone. Multiprotocol systems rose from 34% the previous quarter to 42% while NAS-only systems fell from 48% to 42% and SAN-only systems dropped from 19% to 15%.
NetApp CEO Tom Georgens says that’s likely a sign that organizations want more flexibility to run multiple applications on a system.
“As customers seek to build an infrastructure that can run multiple applications, typically those applications have the need for multiple access methods, both file and block,” he said. “As a result, as we see more of this virtualized shared infrastructure rollout, I see more and more customers that are interested in products that can run both at the same time. The other thing is, it gives them an option that if it’s NAS today, it could be SAN tomorrow or vice versa. … I think single-protocol products are going to become obsolete over time.”
Interestingly, there was no mention on NetApp’s earnings call of any impact from its scale-out NAS clustering capability. Last year at this time, NetApp frequently talked about how its integration of its GX clustered technology with its Ontap operating system was coming soon, and it finally began shipping a converged OS with Ontap 8 last August. Yet lack of a fully integrated scale-out NAS product hasn’t hurt it. Maybe the market for scale-out NAS is overrated – either NetApp customers don’t care about it or are willing to wait.
Georgens maintains automated tiering is definitely overrated, although it’s being hailed as another “must-have” offering within a year or so due to the rise of Flash solid state drives (SSDs) in enterprise storage. NetApp’s smaller competitor Compellent has been trumpeting its Data Progression software while EMC is pushing its burgeoning Fully Automated Storage Tiering (FAST) technology. Georgens downplayed tiering when asked about FAST. He also downplayed FAST.
“FAST is a collection of things, not a specific capability,” he said. “FAST on Symmetrix is different from what FAST is on a Clarion and different from what FAST is on Celerra and different from what FAST is on Atmos. FAST an umbrella name for a bunch of point technologies that are different on every platform. But whatever NetApp does, it’s going to be consistent across all SAN and NAS, high-end and low-end.
“Second of all, I think the entire concept of tiering is dying. The simple fact of the matter is, tiering is a way to manage migration of data between Fiber Channel-based system and SATA-based systems. With the advent of Flash, basically these systems are going to go to large amounts of Flash, and that will be dynamic with SATA behind them, and the whole concept of have tiered storage is going to go away.”
Toshiba today rolled out the first product to come from the hard drive business it acquired from Fujitsu last year: a 600 GB 2.5-inch SAS hard disk drive. Last week, Seagate launched a 600 GB 2.5-inch drive of its own, a 10,000 RPM offering with the option of Fibre Channel or SAS drive interfaces.
At 600 GB capacity, small form factor (2.5-inch) SAS moves into closer competition with Fibre Channel disk drives in the external storage market. Analysts say the transition to small form factor SAS is largely complete in internal storage, but the conversion of external storage from FC to SAS disks has been a long process.
It was only about 18 months ago, pointed out IDC analyst John Rydning, that the SAS-2 spec was ratified, boosting SAS throughput speeds to 6 Gbps (Fibre Channel is now at 8 Gbps). That fairly recent spec also supported cable lengths between drives of up to 10 meters, more suitable for external disk arrays than the previous limit of six meters.
Meanwhile, until these announcements from Seagate and Toshiba, aerial density on SAS drives, particularly in small form factors, also lagged behind the FC gear the enterprise is accustomed to, Rydning said. “These announcements bring 2.5-inch capacity parity with 3.5-inch Fibre Channel drives that are still primarily used [in external storage systems], creating a migration path for external storage players [to small form factor SAS drives],” he said.
This is a transition Rydning said he expects to continue over the next three years, provided external storage products using small form factor SAS drives work as expected out of the gate. Even then, however, the transition will also depend on the comfort level for storage pros charged with managing systems day to day. “People have built up a knowledge base and comfort level with Fibre Channel — there’s hesitancy to make sure SAS is as robust,” Rydning said.
This should be a busy year for Hewlett-Packard storage, with upgrades expected to each of its major SAN array platforms. HP started that process today by launching two new systems at the low-end of its storage portfolio – the Modular Smart Array (MSA) platform for SMBs, workgroups and branch offices, and its iSCSI product line.
The new MSA is now called the HP StorageWorks P2000 line and the LeftHand iSCSI series is the P4000 series. This is just a wild guess, but you can expect HP to name the EVA the P6000 and the XP enterprise series the P8000 when those platforms get refreshed.
The P2000 G3 MSA features 8 Gbps Fibre Channel and 6 Gbps SAS connectivity, and scales to 149 2.5-inch or 96 3.5-inch drives for maximum capacities of 57.6 TB SAS and 192 TB SATA. Like previous versions of the MSA, the P2000 also supports Gigabit Ethernet iSCSI.
The new systems also support drive spindown and a new remote snapshot capability that lets customers replicate snapshots and remote copies (clones) to a second P2000 G3 array for disaster recovery.
Existing MSA customers can upgrade to G3 controllers. The G3 is priced at $9,950 for a dual-controller FC 3.5-inch drive array, $10,350 for a dual-controller FC 2.5-inch drive array, and $12,350 for a dual-controller FC/iSCSI combination 3.5-inch drive array. Those prices do not include storage capacity.
With the P4000, HP is getting rid of the LeftHand brand that it carried over after acquiring the iSCSI vendor last year. The P4000 is targeted at storage for virtual servers. New features include RAID 5 and RAID 6 software, a P4000 Unified NAS Gateway that lets customers store block and file data on one system, and pay-as-you-go pricing that lets customers upgrade in 12 TB increments. Pricing for the P4000 G2 SAN starts at $30,000.
IDC storage analyst Natalya Yezhkova says although HP still has four distinct SAN platforms, it is trying to streamline the branding of its storage products. “HP is getting rid of all the brands it has had,” she said. “The P series creates a sense of continuity. It was a complicated situation that HP is trying to simplify. It might create some confusion among customers and channel partners at first, but just temporarily.”
Each year around the holidays, we put out a list of What to Buy a Geek for the Holidays, based on suggestions from enterprise data storage industry analysts and users about what gadgetry will make their Yuletide bright.
No sooner has your credit rating recovered from the holiday adventure, though, than another gift-giving occasion comes along that may require a whole new round of anxious searching.
Obviously, our What to Buy a Geek lists are also an appropriate resource for Valentine’s Day ideas.
- What to buy a geek for the holidays 2009
- What to buy a geek for the holidays 2008
- What to buy a geek for the holidays 2007
This blogger turned up some other great finds — my personal favorite is the 8-bit Dynamic Life T-Shirt. ThinkGeek, a geek-gift favorite, has a whole Valentine’s day section, as does NewEgg. Personally, I’m partial to the ThinkGeek mini business-card filing cabinet and the portable photo studio, though they are admittedly not among the most romantic items available. If your geek is a Rubik’s cube master or just enjoys a challenge to go along with their gift, why not give them the Magic IQ gift box?
Among the most coveted storage-specific geek items I’ve seen in the last year or so is Mozy’s “Back the F:/ Up” T-shirt. The good news is that it’s available…the bad news is that it’s not for sale. But rest assured, if you get your hands on one of these on behalf of your geek, it will be appreciated.
Not interested in helping Mozy out with its marketing for a t-shirt? Zazzle has some other storage-specific alternatives available for good old fashioned money. How about “Holographic Storage: Not just a passing phase“? Or “Holographic Storage: More than scratching the surface“? Or a pin your geek can use to identify themselves at the next IT conference: “I dream about storage space“. Then there’s this classy little “Vintage” number…
If none of that is unique enough, we also had an unusual pitch cross our Outlook inboxes here at Storage Soup in the last week, subject line: “For Techie with Love on Valentine’s Day.” The event: a Valentine’s Day auction of rare books taking place in Los Angeles and San Francisco.
Among the titles, per the Bonhams and Butterfields email:
An early edition of Planning and Coding of Problems for an Electronic Computing Instrument, Part II, Vol I, .a volume on “Mathematical and Logical aspects of an Electronic Computing machine” by Herman Goldstine and John Van Neuman (est. $500 – 700); an assortment of early internal IBM publications and offprints – “704 Training Manual,” with “704 Problems” (est. $800 – 1,200); a collection of mimeographed manuscripts and lecture notes from the 1950s, documenting the early years of computer instruction at the university and industrial level (est. $1,000 – 1,500) and an assortment of early manuscripts and printings relating to the development of Fortran and other forms of programming as well as a selection of printed broadsides and handouts issued by Remington Rand and covering the Univac and Ferractor systems (est. $300 – 500).
Because after all, nothing says romance more than “Mathematical and Logical Aspects of an Electronic Computing Machine.”
Dell today confirmed it has made an offer to acquire the assets of bankrupt scale-out NAS vendor Exanet and is waiting for approval from a court in Isreal, where Exanet is based.
The Israeli financial newspaperGlobes reported today that Dell has acquired Exanet for $12 million, but a Dell spokesperson said the deal is not yet done.
According to a statement Dell emailed to Storage Soup, “Dell has submitted an offer to purchase Exanet assets, primarily patents and other IP, with court approval through a Chapter 7 liquidation in Israel. The transaction has not yet been approved by the Israel court, so we won’t speculate on its completion or timing.”
In the meantime, speculation has already begun on the market impact of the deal, including whether it will alter Dell’s relationship with EMC. But Exanet is not as competitive to EMC as EqualLogic, the iSCSI SAN vendor that Dell acquired two years ago. In this case, Dell is looking to pick up the IP of a scale-out NAS company which targets the low end of the market. That’s much less likely to ruffle EMC feathers, though it is another step for Dell into creating its own storage outside of the EMC platforms that it co-markets.
In the meantime, in case you needed any further validation of the idea that clusterability is becoming a checklist item for NAS products, this would probably be it. As far as I’m aware, EMC doesn’t have scale-out NAS offerings along these lines (Atmos also does scale out, but it’s positioned differently). Who knows, maybe they’ll OEM Dell for a change.
It also appears to be just a matter of time until Dell adds Data Domain deduplication backup devices to the list of EMC products that it sells. There has been talk in the industry of this coming since EMC acquired Data Domain last summer.
Today, Stifel Nicolaus Equity Research Aaron Rakers wrote in a note to clients: “Although EMC and Dell are discontinuing their reseller relationship, our industry contacts/checks have suggested that the two companies could soon announce an expansion in their Dell/EMC OEM relationship to include EMC’s Data Domain deduplication appliances. Some conversations have suggested that Dell could be already selling the EMC Data Domain deduplication solutions.”