SMB Storage Face-Off

With the release this week of its new StorageWorks All-in-One Storage System family of combination NAS-iSCSI SAN appliances, previously code-named Atlanta, HP joins top storage vendors, such as EMC and Network Appliance, that are reshaping the SMB storage landscape.

Network Appliance made its small-business debut a few months ago with its StoreVault S500 NAS-iSCSI appliance. EMC early this year made its first-ever foray into the small-business storage market with its EMC Insignia SMB line and AX150 storage array.

VARs say the new offerings are changing the way they sell to SMB customers and even opening doors to enterprise accounts. The products also are heating up the competition between between the tier-one and tier-two and tier-three players, VARs said. What's more, they also are helping VARs close more storage sales to small businesses hungry for new ways to manage their fast-growing data storage requirements.

Stefan Pryor, CEO of CommandGlobal, a solution provider in Dallas, cited the example of a local 25-person government contractor that needed to create a lab environment for testing data but found storage to be the bottleneck until it purchased a NetApp StoreVault.

"When they added virtualization to their environment, they all of a sudden had the ability to do lab testing," Pryor said. "But all of a sudden, they realized they didn't have the capacity to create 10 replications of a database. Their capacity needs had quadrupled in a few months to 4 Tbytes."

Kevin Urso, president of Connected Technology, a solution provider in Great River, N.Y., said a local school district with a total capacity of 1 Tbyte spread out across 13 servers was planning to replace those servers, but the district instead bought a NetApp StoreVault appliance. As a result, it consolidated administration, teacher and student data into a single device, eliminated the requirement for new servers and canceled the antivirus and backup software licenses for those servers.

Mario Brum, director of data management at GreenPages, Kittery, Maine, has started talking to customers about HP's All-in-One appliances and is finding customers more interested than ever in moving to networked storage.

"We want customers to see the cost benefits of centralized storage," Brum said. "There's still a large number of our clients that stick with direct-attach storage because of the culture of their organization and because they think Fibre Channel is too expensive and iSCSI is too new."

Pryor said that before his company signed on with NetApp, it had trouble meeting small business' price points. "Since signing with NetApp, we've pretty much dropped our other offerings to go with StoreVault," he said.

However, said Alan Morse, account executive and storage specialist at Premier Systems, Blue Bell, Pa., the new appliances are not limited to small businesses. "When I saw the new HP All-in-One, I took it to an enterprise food-service customer with stadium contracts," Morse said. "They have remote servers that need to be backed up and managed remotely. My contact is now talking to his department heads. It's a good deal for such companies." The new small-business emphasis also has helped vendors expand their channel base as well.

Forty-five of NetApp's approximately 285 U.S. midrange and enterprise partners already have signed up for the StoreVault small-business offering, and the company is set to add an additional 700 or so small-business partners in the United States via Tech Data, said Sajai Krishnan, general manager of NetApp's StoreVault business unit.

CommandGlobal and Connected both signed up with NetApp since the StoreVault introduction.

CommandGlobal has shifted its small-business storage focus from Quantum and Adaptec's Snap line to NetApp's StoreVault, Pryor said. "NetApp has been able to scale down enterprise technology to small-business appliances," he said. "So small businesses get access to enterprise technology without investing all their budget."

EMC, Hopkinton, Mass., already has signed up 1,100 solution providers for its Velocity SMB program, two-thirds of which are in the United States, said Larry Zulch, EMC vice president and general manager of EMC Insignia. "EMC is newer to the SMB space than some, but we can take advantage of the places where the others messed up," he said.

Creative Associates signed up with EMC after the vendor unveiled its Insignia small-business program, said Mitch Feather, vice president of the Madison, N.J.-based solution provider.

While HP has the classic love-hate relationship with the channel, he said, EMC Insignia has set itself apart because of its support for the small-business channel, Feather said. "There's EMC core and EMC Insignia," he said. "With EMC Insignia, you feel right away that you have a long-term relationship with the vendor. We've been with EMC Insignia a couple months, but we feel like we've been working with them for years."

HP, sensing the small-business market offensive from rivals, this week released two models in its All-in-One line.

The AiO400 comes with a raw Serial ATA (SATA) capacity of 1 Tbyte and a list price of $5,000.

The AiO600 starts at 1.5 Tbytes or 3.0 Tbytes of SATA storage or 876 Gbytes of SAS storage with a list price starting at $6,700, including redundant power supplies and fans.

The All-in-One units are aimed at easy configuration by solution providers, said Harry Baeverstad, NAS director for the StorageWorks division at HP.

For instance, to migrate an Exchange e-mail database from a direct-attached storage device to the All-in-One, the solution provider clicks on the Migration Tool which asks for the name of the Exchange server. Once the software discovers the server and the Exchange data, the installer clicks again, and the appliance automatically configures such things as RAID level and storage quota, and then migrates the data, Baeverstad said.

There are similar tools for SQL Server and Microsoft FileShare, he said. The All-in-Ones also include snapshot and virtual tape capabilities, and HP's Data Protector Express backup software, he said.

Bob Schultz, senior vice president and general manager of the StorageWorks division at HP, said the difference with the All-in-One is simplicity. "Today, if you take the typical NAS or SAN application, you need about 28 steps to do the set-up," Schultz said. "With the All-in-One, it's six to 10 mouse clicks." According to Baeverstad, the reason for HP and its tier-one peers to declare war on each other and on more established tier-two and tier-three vendors over small-business storage is simple: The SMB market is huge.

"It's a $90 billion spend opportunity in 2007," Baeverstad said. "Sixty-plus percent of the market for SMBs today is still direct-attach storage. Customers are looking to move to networked storage but haven't seen a compelling reason."

And that means opportunity for HP, EMC and NetApp, Schultz said. "[More than] 40 percent of the SMB market goes to tier-two and tier-three vendors," he said. "This says there's an opportunity for us to move into this marketplace and drive branded solutions."

The move by tier-one storage vendors into the small-business space already has started to impact the smaller vendors, VARs said.

Connected has been using Snap appliances from Adaptec for small businesses and has worked in the past with Dell's version of EMC's AX100 appliance, but the VAR is moving customer deals requiring 1 Tbyte or more of storage to NetApp's StoreVault line, Urso said.

"StoreVault does both NAS and iSCSI for Exchange and financial databases," he said. "And the iSCSI, RAID 4 and snapshot capabilities are attractive."

The tier-two and tier-three vendors, many of whom, unlike their larger competitors, have no direct sales arms, are not expected to give up this market without a fight. While it's true that tier-one vendors are pushing into small business, only time will tell if they can follow through, said Steve Rogers, director of technical marketing at Adaptec.

"Adaptec has always been SMB/SME-focused," Rogers said. "We are not new to this space. We have a lot of brand loyalty. And we have spent years building a strong channel. We have no channel conflict."

For smaller vendors like Adaptec, tier-one vendors dropping entry-level prices to $5,000 is not an issue, Rogers said. "Dell has been thrashing pricing for years, and hasn't affected us," he said.

And that $5,000 price can be misleading, he said. For instance, for $5,000, NetApp's StoreVault will give NAS capabilities. But for 2 Tbytes of capacity with NAS and iSCSI, the cost jumps to $11,000, compared with a similar Snap appliance with a $5,500 price tag.

And the $5,000 AX150 is an iSCSI appliance only, with no NAS capability, he said.

Rogers acknowledged that customer perceptions of Adaptec's Snap line has been affected by a retrenching of the line in the past year and by the fact that the line has not changed for some time. However, he said that will change as the company completely refreshes its line later this month.