Storage lessons learned from the dot-com era

June 18, 2010 -- We're 10 years removed from the dot-com era and the storage landscape barely resembles that of a decade ago. At this week's BD Event here in Boston, Peter Bell, a General Partner at Highland Capital Partners, gave advice to storage startups and recounted some of the lessons learned from his time at the helm of StorageNetworks, the first–and–last of the true storage service providers (SSPs).

Bell was the co-founder, Chairman and CEO of StorageNetworks, were he guided the SSP from concept to a huge IPO in June of 2000, raising more than $700 million in funding along the way.

But, in 2003, the way-before-its-time SSP model (can you say cloud?) failed. StorageNetworks closed its doors and its competitors shifted to a software model or vanished into the ether (from the way-back machine, see: "The last–and first–SSP calls it quits").

In his current role, he represents Highland on the boards of Desktone, ExaGrid Systems, Gigamon, InXpo, Ocarina Networks, SCVNGR, Virtual Computer, VMTurbo, and is actively involved with a number of Highland's other investments.

Bell said the funding for storage startups just is not the same today.

"No startup is immune to what's going on in the market. The venture capital dollars going into software and networking startups in 2000 were about $35 billion. In 2009 they were $4 billion," he said. "The lessons learned from StorageNetworks are still relevant today. We raised $700 million in 21 months, but I don't think you can do that today."

Taking a startup public is a much longer process these days. Bell said it takes about 10 years, double the average length of time it took to go public during the dot-com boom. "It takes a lot longer and [a startup] needs to be bigger and raise more capital to reach an IPO."

Bell bets there are storage vendors out there that have filed S1s, but are waiting for the economic climate to improve before they take the plunge. There is an added bonus for the lucky few who reach an IPO. Bell said valuations are higher to the tune of about 25%.

Most startups, he said, look to acquisition as the most likely path to growth/exit strategy.

It's not all doom and gloom. Bell is still bullish on the storage market. "In 2008, it was virtually impossible for a tech startup. 2010 has been a little better, but it's still tough," he said. "But people are addicted to storage and it's legal. There aren't that many businesses out there like that."

Bell points to companies who have been acquired or are experiencing growth like Acopia, Compellent, Diligent, Data Domain, EqualLogic, Isilon, Onaro, and XIV, as recent "winners" in the storage market.

Storage startups looking for an angle should consider a few hot technologies as their foot in the door. Bell believes solid-state storage, automated tiering, open-source storage, video storage and, of course, cloud storage/virtualization, are the next big things.

Bell emphasized the importance of the management team and business model as the keys to raising venture capital.

"It's the company you keep. Pick your partners and executives very, very carefully. The business model is as important as your team, but it's often not given enough thought," said Bell. "Long, unpredictable sales cycles lead to very short CEO tenures."

Related articles:
F5 to buy Acopia for file virtualization
Compellent adds ZFS-based NAS
IBM acquires Diligent for de-duplication
NetApp bows out, EMC to acquire Data Domain
Dell to acquire EqualLogic for $1.4 billion
Isilon adds enterprise features to scale-out NAS
NetApp expands SAN strategy with Onaro acquisition
IBM buys XIV for fixed digital content

Brocade tries to One up Cisco in virtual data centers

June 10, 2010 -- Brocade answered many lingering questions in the past 24 hours about the integration of its Foundry platforms, its plans for converged network fabrics, its take on virtual machine (VM) mobility, and whether it had an answer for the Cisco-led Virtual Computing Environment (VCE) coalition's Vblock strategy.

The company has introduced Brocade One, an architecture that brings together its operating system and management tools. The bottom line: put more smarts in the network to manage VMs in virtualized data centers.

"Brocade One represents one, unified company with one OS and one set of management tools under one architecture," said Bob Braham, vice president of product marketing at Brocade.

As part of Brocade One, the company introduced Brocade Virtual Cluster Switching, a software technology that collapses the access and aggregation layers of the network to create a masterless and distributed control plane.

Brocade VCS continuously synchronizes state, status and configuration information between nodes to enable converged fabrics to be self-forming, auto-healing and self-configuring – think VM metadata, network and storage policies.

Braham says VCS can be used to create true converged data center fabrics that are inherently multi-pathing and resilient, effectively eliminating the need for Spanning Tree Protocol (STP).

Also new is the Brocade Virtual Access Layer, a logical layer between Brocade converged fabric and server virtualization hypervisors. The Virtual Access Layer makes sure a consistent interface and set of services for VMs connected to the network. Brocade VAL will support all major hypervisors through industry-standard technologies, including the Virtual Ethernet Port Aggregator (VEPA) and Virtual Ethernet Bridging (VEB) standards.

There was a lot of high-level speak about Brocade One, but there was one clear message – they plan to take on the Virtual Computing Environment (VCE) coalition's Vblock initiative directly. Brocade and its partners are prepping what the company calls Brocade Open Virtual Compute Blocks – tested and verified data center blueprints for VM deployments on converged fabrics.

The switching component of the Compute Blocks will be based on the Brocade 8000 Fibre Channel over Ethernet (FCoE) Switch and blade (for the Brocade DCX Backbone), the Brocade NetIron MLX Series and Brocade Converged Network Adapters (CNAs).

Braham says the Brocade-based stacks will be available by year's end.

Brocade's been busy. Here's a taste of InfoStor's recent related news coverage:

Brocade, EMC lay groundwork for private clouds
Brocade increases density, throughput of DCX Backbone
Brocade CNAs qualified by EMC, HDS, IBM, NetApp
EMC expands converged networking deals with Brocade, Cisco
Dell taps Brocade for FCoE, CEE gear
Weighing the pros and cons of unified computing

HP cuts 9,000 jobs in data center consolidation effort

June 1, 2010 -- HP is cutting 9,000 jobs and taking a charge of $1 billion as it begins refitting its data centers on the HP Converged Infrastructure Architecture.

Described by HP as an "initiative is designed to enhance the client experience and better position Enterprise Services for growth," the company announced plans to consolidate its Enterprise Services' commercial data centers, management platforms, networks, tools and applications to "create a more scalable, modernized and automated IT infrastructure that will better serve its clients' needs (see "HP strikes back with Converged Infrastructure Architecture")."

The unfortunate side effect will be the elimination of approximately 9,000 positions over the next few years.

Tom Iannotti, senior vice president and general manager for HP Enterprise Services, said "Over the past 20 months, we focused on integrating EDS and improving profitability. Now that the integration is largely complete, we have identified significant opportunities to grow and scale the business. These next-generation services will enable our clients to benefit from the combined technology and services leadership that only HP offers."

HP bought EDS for $13.9 billion in 2008 and rebranded it HP Enterprise Services in September of last year.

To fund the consolidation HP will take a charge of approximately $1 billion over a multiyear period that will be included in its GAAP financial results. HP expects that, once completed, the transformation will generate annualized gross savings of approximately $1 billion and net savings after reinvestment in a range between $500 million and $700 million.

HP's most recent earnings report was strong, as it posted net earnings of $2.2 billion for fiscal Q2 (up 28% from the prior year) with $4.5 billion in revenue in the Enterprise Storage and Server segment. However, software was down 1% from '09 and services only grew 2% to $8.7 billion. See Dave Simpson's blog: "Solid storage growth in HP's Q2 report."

HP will reportedly create a few thousand new positions in support of the consolidation effort.

There may be a silver lining for any storage pros facing unemployment. Sister site Enterprise Storage Forum reports that the job market for storage networking pros is on the grow. Brocade, CommVault, EMC, NetApp, Oracle and VMware all appear to be hiring (see "NetApp Leads Rebound in Storage Networking Jobs").