Monday, April 28, 2008

Predicting the future is difficult

If analysts could accurately predict the future there would be no risk in investing upon their advice. Therefore, I have to wonder if analysts are predicting the future in their writings, or if they are not. If they accurately predict the future, they would be widely read and therefore the yield for return on investment based on their advice would be rather low. Following this logic the Contrarian who keeps his opinions to himself, may have the best return on investment.

Almost all storage industry analysts say that computer storage is going to grow, many of them get caught up in which type of storage will be the fastest growth or most widely adopted. But I don't know of any that say that businesses and individuals are going to stop saving files. Will the future of storage be a remote storage service solution or will it be really cheap and reliable spinning media or flash memory?

A friend of mine pointed me to this article today:

As you move along the storage technology continuum, you’re trading price for speed. Getting information stored on tape, which is cheap, can take hours or days while accessing something on flash, which costs a pretty penny, takes microseconds. Plus, solid-state drives using flash can’t possibly store all of the data people are creating. There’s also the question of how reliable it is.

Given this, most companies requiring huge storage arrays rely on expensive machines from the likes of EMC or HP. Or they make their own “storage cloud” using commodity disk drives and a proprietary layer of software. By allowing companies to allocate and provision the storage in a software layer, it virtualizes the storage array. It’s essentially the same model that underpins the storage services offered by Amazon S3 and Nirvanix.

Meanwhile, tier-one storage equipment vendors companies such as EMC, IBM and HP have recognized that cloud storage is the future of computing, and are attempting to ride that wave without cannibalizing their high-margin box business. For example, EMC is offering services for SMBs through its Mozy acquisition. IBM last year purchased XIV, which makes the software that can be used to virtualize storage. Large companies such as NetApp and 3Par are attempting virtualize storage as well.


This article suggests to me that vendors are taking different approaches to solving the growth and high cost of storage, however they do not want to get into a business that will hurt their current cash cow business of selling arrays which are expensive and not all that efficient. This would suggest to me that there is an opportunity for a new entrant with a lower cost model to come into the marketplace and create a new market niche for themselves. I am certain that the next few months will reveal that there are many opinions as to whether the broadly defined storage marketplace decides on Flash, Cloud storage or spinning media.

But eventually the market will decide, no matter what the analysts say.

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