The looming SAN storm in the SMB market: part 1 of a roundtable discussion on the emerging SAN market for small to medium-sized businesses sponsored by Computer Associates, Dell, Emulex, Intel and Microsoft.

Marrone-Hurley: Thank you for coming. I'm a senior analyst with the Enterprise Storage Group--actually soon to change our name to Enterprise Strategy Group--and I will be the moderator for today's panel in which we'll discuss storage solutions for the SMB market.

What's interesting about this particular panel is that this wasn't really on the SNW agenda. This is actually something that the vendors represented here today sponsored because they felt it was really important that you folks that are covering this industry understand what they are doing in this market, and what products they are offering in order to target the storage needs of the SMB market. I'll be posing questions to the panel and, after we're done with that discussion, we'll open it up for Q & A for you folks.

First, let me introduce our panelists. Claude Lorenson is the technical product manager for storage technologies at Microsoft. Mike Wall is the general manager for the storage components division of the networking and storage group at Intel. Next is Mike Smith, the executive vice president of worldwide marketing at Emulex. Marc Padovani is a senior product marketing manager at Dell. And, from Computer Associates, is Anders Lofgren, the vice president of BrightStor product management products.

I'm going to just start this off and ask you guys to very quickly review what your product offerings are and how you are actually targeting the SMB market. Claude, why don't you start?

Lorenson: Good morning, everybody. Microsoft has traditionally been pretty successful at introducing solutions for the SMB market. So the interest for us in the smaller type of businesses and medium businesses for SANs is really to offer customers choices. When they want to move from, say, a direct attached storage environment to a networking infrastructure for their storage, we would like to make sure that they have solutions from Microsoft that are easy to deploy and easy to install for that marketplace. Our initiative is really making Windows Server an easier platform to deploy on a SAN, and also introducing new technologies for networking, like iSCSI, which some customers in our group will find attractive when they move from DAS to SAN. So that's really our focus.

We already have a lot of Windows Servers in the SMB business, and our goal is to make them easier and more compatible with storage networking as they go forward and as our customers move from DAS to SAN.

Marrone-Hurley: Mike Wall, how about Intel?

Wall: Well, Intel has been supplying, primarily, silicon building blocks for the industry for the last seven or eight years now. We sell a family of I/O processors, most of which are the engines that fuel RAID applications. As you know, we also have Pentium processors that a lot of the network attached storage platforms are based on. So, primarily, lots of silicon building blocks. We do have a RAID product family that we've been shipping for awhile. And one of our focus areas moving forward is to really get the whole ecosystem focused on standards so that we can fuel the improvement in cost performance that would be attractive to small and medium businesses. We'll talk about some of these standards today--such as Serial ATA and Serial-attached SCSI, SMI-S and PCI Express--and embedding those things into our silicon to make it more affordable for solution providers.

Marrone-Hurley: Mike Smith, how about what Emulex is doing for this marketplace?

Smith: Thanks, Nancy. Today, Emulex is a leading provider of technologies for the SAN market. Our principal products today are Fibre Channel host bus adapters, I/O controllers and a new product line for embedded storage switching. Historically, our target markets have been the higher end segments with a data center focus, but that's changing. We're seeing a lot of interest in recent quarters in developing products for the small and mid-sized business segment. And I think that's a reflection of a couple of things. First, SANs are now considered a proven technology. They're no longer experimental or high-end or the kind of technology that requires a real particular expertise. Second, many of the companies at the upper end of the SMB category--which is a very large category--are facing similar problems that the data centers faced eight, nine, ten years ago, when they started looking at SANs. For example, the notion of having lots of servers that have storage trapped within, that is difficult to reallocate or difficult to backup--some portion of these companies are looking for ways to solve that problem.

We believe Fibre Channel can be a great solution for some of these companies. By no means will it take over the SMB market. We expect Fibre Channel to coexist in that market with iSCSI and DAS and, to that end, we are developing products targeted specifically at this space. We've already announced SMB products earlier in the year, and we've got products on display in our booth on the floor.

Marrone-Hurley: Thank you. So, Marc, obviously this is not a market that's new to Dell; but what are you doing in the lines of targeting their storage environments?

Padovani: Dell has its strong leadership position in the SMB space. We have a leadership position in our server line, PowerEdge Servers. In the storage space, our PowerVault external storage arrays have a strong play, as well as our award-winning PowerVault NAS product line. What we've seen in our operations, and in how Dell drives business, is through standards. Standards are key for the small business. They're looking for a lot of ease of use, lower cost solutions and performance. Traditionally, SANs have not had the benefit of a strong standards play. But there's the work being done with SNIA on SMI-S. Another work that we think is important is standardizing RAID architectures. Driving standards will improve interoperability. Improved interoperability means that there are more choices for the small business customer, and having more choices means there's more competition in driving down cost. In the small business space entry SANS, you need to have mature technology, interoperability and standards, and really hit the cost points. Because if you don't hit the cost points, then the customer is going to rely on installing direct attached storage.

Marrone-Hurley: Anders, obviously CA has been playing in the storage market for quite some time. What about storage for the SMBs?

Lofgren: Obviously, for Computer Associates, the SMB market is an incredibly important space for us. What we're primarily known for is our BrightStor ARCserve backup product, and it's a product which we primarily sell through distribution channels. Although BrightStor ARCserve has been our key focus area for some time now--and we've been extremely successful with that product and we will continue to be extremely successful--I think there are some other products in the storage management space, such as storage resource management (SRM), SAN management, that do have some potential in those markets, given the right feature function set. Especially when you take a look at SRM products, there are some things that the SMB-type organizations are obviously struggling with, such as capacity utilization issues. The problem is that they're probably not aware of it. Many of the same problems you'll see in a data center you will see in that SMB space, except for the fact that they're not aware of it because they don't have the tools that actually identify these particular problems.

So there's some opportunity for things like SRM, for example, whereas I think the SAN management area is going to be a little less so because we're really dependent on the idea of bringing storage area networks down into that market. And although that is happening, and we do have some pricing challenges there that we need to get into with regard to hardware, we also need to address software pricing challenges. Because in the same way that the hardware piece of the pie is cost-sensitive, nobody's going to pay the same price for the software as well. So, to really attack the SMB space you need to be focusing on the price piece of it and how you package the products. In addition, it is my personal viewpoint that you can't be giving these customers 137 feature functions when they only need five. To give them 137 functions is actually a detriment because they only need those five and that's it. So it's a lot about packaging, and also a lot about partnership.

I'll just point out one thing. Obviously, we're very heavily partnered with Microsoft and we have, for example, a small business server edition. So it's about how we're packaging our technology to meet that particular need, to get to the price point that is desirable for SMBs.

Marrone-Hurley: It is interesting that you actually used the term "attack" the SMB market. Some of you already addressed this, but I think it's important that we're seeing this surge of everyone really focusing in on the SMBs at this point in time. And I actually had this question posed to me by the press: Why now? What's changed? What is it that is enabling us to go after this market? Were we just ignoring it in the past, or is it that there are new standards or that there are new technologies? What do you believe it is that's now enabling you, in your organization, to be able to go after this market and want to target this market? Would anyone like to comment?

[ILLUSTRATION OMITTED]

Lofgren: Shockingly, I've got an opinion on that. I think the focus has now been ratcheted up for several reasons. There has been focus on the midrange market for some time. Obviously CA's been in this market for quite some time and other players are also getting interested in it. But I think you have to look at the SMB market from two aspects. There's SMB as a customer, and there's SMB as technology. SMB as a customer, we're trying to go after. Then there's technology we are building for the SMB customer that, in effect, could be used by what we would call the higher end customer, the data center. And that is because of the introduction of new technologies. Things like when we start introducing less expensive disk drives, like SATA drives, for example. That gives us a lot of capabilities to introduce less expensive storage.

Now, one of the things that I truly believe is that in the longer term, we're going to move towards this new--well, not a new--storage cost paradigm, because storage hardware costs go down 34 to 35 percent per year every year now, and have from the beginning of time. But the idea is that now I can build some really inexpensive storage infrastructure using iSCSI, using ATA. I could be using Linux servers, for example. We're opening up this market that before perhaps couldn't "get" the storage area network technology, but in the future it might be able to. And if you take a look at Fibre Channel, prices are continuing to come down, so that's going to become a driver there. Disks in general continue to go down. And it really heightens the need for the management piece. Just because the hardware's less expensive doesn't mean that the management needs are any less critical. And you can't be selling software in that space in the same way you're selling it directly to the high-end end users. Again, you've got to have distribution channels, you've got to have the feature functions and you've got to have partnerships.

Padovani: We have been selling storage to the SMB space for quite a period of time--several years--and what we're talking about today is just the SAN component. And SANs have been Fibre Channel and very expensive to implement, requiring a technology and experience knowledge base to be able to deploy them. Because of the standards work that has been done with SNIA (and there's a lot of the partners up here on stage) we've really made solutions simpler. We've also found ways to draw the cost out of delivering those solutions. It's not because things are sort of "coming together," it's because we're getting to price points that we feel are going to be acceptable to the SMB market. It's an evolutionary process, and I think that's just where we're coming from and why we're able to address the SMB space. In the SMB space today, NAS solutions have been there--and for quite a while. There's obviously external storage, direct attached. But now, because of the costs, the standards, the interoperability, the choice, the consolidation of the management solutions coming together, that makes it a lot easier for people to deploy and implement SANs without having to worry about the technology that they're deploying--whether it's Fibre Channel or iSCSI.

Smith: I think Marc made some great points. The thing that I would add is--again going back to this definition of SMB--if you think of it in terms of the volume server space and look at the size of the volume server market, the sub-$25,000 server price band, it's 80 percent of the volume. So that, in and of itself, is going to be interesting to a lot of people in the industry. But the fact that the technology is stable, is proven, and the prices are coming down, it's now becoming appropriate. I think it's a good match. But the other thing that we're seeing is that people have waited long enough, and the notion of SANs in the SMB is not a new concept. I mean, the iSCSI standard is, what, three, four years old? This notion of centralizing storage and having shared storage in this volume market, low-priced market, is not new. It's just that it hasn't been available to these people. They've waited long enough ... they're ready to go. And they're bursting at the seams with some of the problems that I talked about earlier--this notion of reallocating storage and the backup problems. These kinds of technologies tend to be adopted by the companies and people that have the problems, and now that's just moving down that price pain curve.

Wall: Technology is enabling us all to get to the price points, with solutions that are making SANs available to small and medium businesses. The demand, we believe, has always been there. But if your entry price point into a networked storage solution is $100,000, a lot of small to medium businesses are not going to do that. To give you an example, when we formed this division seven years ago, I think the price of even a two-channel SCSI RAID card was over one thousand dollars. Fifteen hundred dollars just to run a direct attached storage RAID card--didn't include the disks or anything. And prices have come down in order of magnitude, a lot of that due to technology. Everyone sitting at this table has done things. We've integrated a lot of things into one piece of silicon that used to be on six or seven pieces of silicon. And that helps to drive down the price and it improves cost/performance. So that's one thing that's happening.

And I agree wholeheartedly with Marc; standards are the other thing. One of the things that Intel focuses on is helping to get these standards driven into the marketplace. And then all of that leads to price. And price is it. Price will just open the doors in the small and medium business market. And, to Anders's point, the ease of use with what we call a "good-enough" feature set. A small business with 50 or 75 people does not need an extremely rich, complex feature set--80% is probably good enough. So, good-enough feature sets--very easy to use because they don't have an IT team running around their shop floor--and acquisition price are the new things that are happening in the market that did not exist several years ago. And they're beginning to exist today. There are lots of new opportunities from lots of solution providers in the ecosystem that take advantage of these lower cost building blocks, and it's enabling this market to flourish. We expect this market will explode, from a growth perspective, the second half of this year, moving forward.

Lorenson: I was just going to add that, from Microsoft's point of view, the answer to the question "Why the SMB market?" is, we believe our customers want to get the same benefit from increasing their storage utilization and improving their scalability as their bigger brothers in the enterprise space. It's been proven that storage area networking reduces TCO. Our small and medium business customers want the same advantages, so we need to be ready to give them those advantages at a lower cost. And, for us, that means making new technologies for some of our platforms that would make it easier for them to deploy SANs. Windows Server 2003 is a much easier platform to deploy a SAN in than its previous version, and there's reason behind this: because we want to make SANs more available and easier to deploy in all these environments. I think the "why" for the SMB market is that the customer wants the same advantages of storage networking that the bigger brother gets. So we need to enable them to get these advantages.

Marrone-Hurley: Well, it sounds like everyone's in absolute agreement that price is an issue for the SMB market. We're able to start addressing those issues. But I want to come back to the technology issues. We're saying that certainly ease of use is important. But do SMBs have different technological requirements as it relates to storage, or is it really just about scale? And Claude, I know you've had some strong thoughts on this, so I'll start with you.

Lorenson: Yes, I have. If you look at the needs they have in terms of data protection and business continuity, it's actually the same as a data center-type application. Where it's a bit different in SMBs, is that very often they don't have the same skill set and they don't have the same budget. And often their timeline for faster ROI is even more severe than a bigger business. So, technology-wise, or offering-wise, it needs to be low-cost, simple to deploy, simple to manage and simple to troubleshoot. These, individually, are not necessary. The whole is necessary--all of them by themselves are not sufficient. It's the "whole" that is necessary to make a solution available to them. So I'm going to summarize by saying that their needs in terms of technology to make their business application survive are the same as a data center. But scalability, their ability to maintain, deploy and operate is different. So we need to change the mindset of how these products work together.

Wall: It's actually more demanding than an enterprise because they need almost an equivalent feature set, at a much lower price, much easier to use, with lower service.

Lorenson: And they don't have storage administrators.

Wall: Actually I think--and I don't know if we all agree on this or not--there's going to be a lot of disruption in the marketplace, with standards-based, modular, scalable SANs that will start penetrating significantly into the small and medium business. And it's definitely going to show a cost performance improvement in the large enterprises, and it's going to start to move in there.

Marrone-Hurley: So from a technological perspective, are Fibre Channel SANs really the right way to go, or should they be going iSCSI? Or do we just want to give them those choices? Any ideas, from a technological perspective?

Smith: The answer is ... "yes." [laughter] Mike and Claude made some interesting comments, and I may disagree in part with what they said. I think, in terms of data reliability, of course, everyone has the same needs; nobody wants to put their data at risk. But in terms of access to that data, either via performance or what we think of in terms of high availability, I think there are different needs. Certainly, a bank or an airline that's taking reservations has different needs for access to data than a dentist's office or a small business that can reboot occasionally to get around problems. So there are different needs in that sense that can drive to--what I think Marc said--in terms of reducing features to the minimum required to get the job done. That is, you save cost partly by technology--as Mike talked about--but you also save cost by reducing the feature set. And that's exactly what we're doing in Fibre Channel. Fibre Channel does not have to be expensive. Fibre Channel has been expensive because it's been targeted at data centers because that's where the market was. Now there's a market for SMB. Companies are coming out with products that are targeted at that market, priced right for that market, have the feature set and ease of use required for that market. And it's a proven, stable technology. I absolutely would advocate going to Fibre Channel today, if you want to do a small SAN in SMB. There's no better choice out there.

Padovani: The technology doesn't matter because it has to be abstracted for the small business customer. If you start talking about iSCSI or Fibre Channel, they'll glaze over. When we look at it, the bottom line for the SAN ... it's cost. The lack of interoperability drove costs up because suppliers had to do a lot of interoperability lab testing. It also meant that you couldn't have a lot of direct sales because if you brought all your products out there for the customer to just order online, then you wouldn't know how they were going to implement them. You were going to get a call. It drives up the cost of support, and it drives up the whole cost of the solution. Now that standards have been introduced to the market, there's more interoperability. People are also simplifying the management. And once that layer of management is very abstracted, to be very easy to use, the technology shouldn't matter for the customer. It's what are you looking for from a performance and an ability standpoint, and which is the simplest to implement in my environment? So I really don't think that it matters what technology the customer is going to use. That's going to be abstracted for them.

Lorenson: I agree one hundred percent. For us, it's to really provide a choice for the customer. And if our customer is more geared towards Fibre Channel, and they want to go Fibre Channel, we will enable that. Same thing for iSCSI. On that line, we're making sure that our storage technology that we're deploying to make a platform easier on a SAN, be it VDS or VSS or MPIO--which are important technologies in terms of failover and data protection issues--we are making sure they work with Fibre Channel and iSCSI so that the customer really has a complete choice and can go one way or the other.

Part 2 of this discussion will appear in the July issue of CTR.

RELATED ARTICLE: ROUNDTABLE PARTICIPANTS

Nancy Marrone-Hurley: senior analyst with the Enterprise Storage Group and roundtable moderator.

Anders Lofgren: vice president of BrightStor product management products at Computer Associates.

Claude Lorenson: technical product manager for storage technologies at Microsoft.

Mike Wall: general manager for the storage components division of the networking and storage group at Intel.

Marc Padovani: senior product marketing manager at Dell.

Mike Smith: executive vice president of worldwide marketing at Emulex.