Big Blue plugs the gap

Updated: Oct 31 2005, 05:30am hrs
What do you do if you are a front-runner in a hotly contested market segment where the leader's crown is up for grabs virtually every quarter If you're IBM, you team up with NetApp to cover the weak spots in your storage line-up and make a charge for the pole position which is currently held by HP. Therein hangs a tale.

Missing in action

NAS is big in India. The software industry, in particular, uses this technology extensively. Be it chip design or software services, these companies need their daily NAS. Big Blue was in a bit of a quandary here. While the company had its share of low-end Windows-based NAS gear, it didn't have anything to show in the high-end NAS market which is where most of the action is. That space is dominated by NetApp. In a masterstroke worthy of Machiavelli, IBM has teamed up with NetApp to OEM the latter's NAS gear.

"We still have Windows-based NAS at the low end. NetApp is the market leader at the high-end. It has its own issues with market coverage. We are an OEM for NetApp's NAS appliances and gateways with NetApp or IBM disks. The OS and gateway are NetApp's," says Shailesh Agarwal, Country Manager, IBM TotalStorage Solutions, IBM India.

With this move, IBM completes its product line to cover the whole spectrum from low-end tape to high-end SAN. "Acceptance is pretty good. Most of these IBM-NetApp products will be launched in the December-January timeframe," adds Agarwal. One product at the low end, the TotalStorage N3700 NAS solution targeted at companies with fewer than 1,000 employees, is already out. In two-three weeks IBM has already generated a couple of orders for that product.

Everybodys OEMs

Well, almost everybody does it. HP puts its stamp on equipment that's made by HDS, as does Sun. So OEMing, to coin a new term, isn't new to the storage mart. OEMing has the signal advantage that when the time comes to calculate market share, OEM'd products are attributed to the owner of the brand and not the company that makes the stuff. For IBM, though, it's an interesting change of tactics in storage. It has OEM'd equipment in other areas in the past, most notably with ThinkPad notebooks (long before the Think brand was sold to Lenovo). By doing so, IBM's finally on par with EMC and HP when it comes to having a complete product line.

In Q2 2005, the most recent quarter for which data's available, HP leads with 24.9 percent of the external storage market, while IBM was second with 20.7 percent. Interestingly, IBM's new comrade-in-arms was a close third with 20 percent. This alliance could be just what Big Blue needs to close the gap with HP.

Significantly, IBM's done a lot better in this quarter than in the previous two where it was the last of the top five vendors.

Getting a technological boost

The company's not relying purely on tie-ups, though. IBM's striving to maintain a technological edge in areas such as virtualisation (where it has partnered with Cisco) and in the ongoing transition to 4 Gbps SANs. Globally, the company has a thousand installations of its SVC (SAN Volume Controller)/SFS (SAN File System) products. In India that figure has crossed double digits. Most of the SVC deployments in India are on a separate box. The blade-on-a-switch approach only makes sense when a company needs a very high-end SAN switch with 80 to 100 ports. "We had one such deployment in India in Q3," reveals Agarwal.

Then there's ILM. IBM is pitching its SVC/SFS technology as infrastructure-based ILM that's application independent. One of IBM's customers has everything from low-end tape drives to the ESS 800. "He's moving data between the two. At the end of the month payroll data moves to the ESS. It's all scripted. For two days the data remains on the ESS box. It moves back after that," cites Agarwal. Banks, telcos, software development houses, and media houses (for news) are interested. That said, "It's not a mass product," comments Agarwal.

As growth in the storage market is primarily of SAN or SAN-ready storage (boxes that can be connected directly or hooked up to the SAN fabric; all of IBM's SAN storage is directly connectible to up to four servers), IBM offers SANs starting from 1 TB for Rs 2 lakh to 2.5 lakh. Last month the company did more than 200 SAN-related transactions. These entry-level SANs score with organisations that have three to four Intel servers and a 1 to 2 TB requirement. It's easier to change servers with external storage (SAN/SAN ready). Deals in the $5K to $15 K range account for 18 to 20 percent of IBM's storage business.

There's an ongoing transition to 4 Gbps. 2 Gbps debuted in 2002. IBM says that it's the first to launch a 4 Gbps SAN switch and storage box. The company's about to launch the first HBAs that support 4 Gbps.

IBM's alliance with NetApp and its focus on technology for virtualisation, application-independent ILM, entry-level SANs and 4 Gbps SAN technology will ensure that it has a good chance of maintaining its current momentum. Other than that, IBM's finally taking SMB storage seriously with its renewed NAS line-up and iSCSI offerings. iSCSI is starting to pick up in India with the preponderance of Gigabit LANs and servers that are powerful enough to run iSCSI in software without needing HBAs. If IBM gets its product line right, it can hit a home run here.