Taking a step back and looking at the new or updated storage systems coming out reinforces trends I see for storage hardware in the industry. By storage hardware, I’m referring to physical system components such as the controller cards, processors and data flow electronics.
The majority of the underlying hardware used in storage comes from standard components. Many of the available storage systems use Intel-based server designs. The value to the vendor from the sale of a storage system comes primarily from the embedded software running on that hardware and associated server software used in conjunction with that storage system.
The embedded software features and capabilities that differentiate one storage system from another are the most focused on product characteristics. For most storage vendors, the software-based features are categorized and put into suites of functionality that have additional charges over and above the basic system costs.
Storage systems that cannot continue to add unique value gravitate to a price based on the hardware costs with some added margins. Characterized as a “race to the bottom,” the undifferentiated systems are generally referred to as commodity storage.
The view that storage hardware is generally moving to commodity may be a natural evolution but is personally disappointing. The manufacture of the common platform for storage systems has moved to lowest cost regions of the world. The equitability of low wages is a different topic, but the commoditization does have a direct relationship with larger scale production and magnifies cost reduction value.
There is a parallel that comes to mind, which is the U.S. steel industry. The technology and production processes for the steel industry were developed and refined in the U.S. over time. But production has moved to lower-cost regions in the world based on price pressures. With the movement of a manufacturing industry, the investment to build production facilities is used to modernize the production.
The surface level similarity between the storage hardware system base and the steel industry has several factors: production moved to follow lowest cost manufacturing, underlying technology was not changing, and investments in the industry were to make manufacturing more efficient.
There still are custom hardware based storage systems in the industry, but they are a minority and the investments in new ideas and hardware technologies seem limited. The competitive price pressures and the continued investments required for innovation make it more challenging to sustain a company with novel technology.
(Randy Kerns is Senior Strategist at Evaluator Group, an IT analyst firm).