StorageNetworks morphs into a software vendor

The first, and one of the last, storage service providers, officially became a software vendor last week when it announced a storage management product intended to bolster flagging revenue from the faltering storage outsourcing market.

StorageNetworks Inc. will market its STORos StorageManager software, which lets IT administrators manage, monitor, back up and restore direct- and network-attached storage, as well as Fibre Channel-based storage-area networks. STORos StorageManager is based on the software the company had used when it hosted customers’ storage services at its storage points-of-presence. Customers who outsourced data to StorageNetworks could also monitor and control the data stored at these facilities using the same software.

“On paper, StorageNetworks software is exactly the integrated storage management approach we need to see,” says Steve Duplessie, an analyst with the Enterprise Storage Group Inc. “It lets companies become internal utility providers – that’s a critical move in elevating IT’s corporate standing.”

StorageNetworks, like Creekpath Systems Inc., Storability Inc., ManagedStorage International Inc. and Scale Eight Inc. before it, is scrambling to recover from the downturn caused when their service provider and dot-com customers failed. These companies relied on outsourced storage because their businesses were growing so fast and so unpredictably that they were not able to build storage infrastructures quickly enough on their own and had to rely on someone else.

Analysts say that of any strategy, transitioning from an SSP to a software vendor is the most prudent and that StorageNetworks has the best chance to succeed.

“We have yet to see any former SSP make it as a software company, though having US$280 million in the bank gives StorageNetworks an advantage over all would-be competitors,” Duplessie says.

Analysts attribute the failure of SSPs such as StorageProvider, Centripetal and Global Storage to visions that were too broad or not enough venture capital to weather the downturn, while reorganizing into other fields.

“The SSP market only worked in small, targeted application areas like backup,” Duplessie says. “Having too broad a focus, to big a capital structure, [combined with] the unwillingness of enterprise customers to let the crown jewels go offsite, meant the demise of most of these companies,” Duplessie says.

Most surviving SSPs have taken the proprietary management software they used to manage their customer’s storage and converted it into stand-alone products that they can market to enterprise customers. This, according to analysts, will save them in the end.

Storability for instance, has Global Storage Manager, which it used to manage storage located at customer sites; CreekPath, Managed Storage and Scale Eight have each developed software that they will sell independently of their storage service offerings.

StorageNetwork’s StorageManager v5.0 adds features such as policy management and the ability to manage arrays that are direct attached to network servers, as well as Fibre Channel and network-attached arrays. In the second half of this year, StorageNetworks will also release an unspecified data management application. Further, the software manages arrays from EMC Corp., Hewlett-Packard Co., Hitachi Data Systems Corp. and Sun Microsystems Inc. among others and storage devices from Brocade Communications Systems Inc., McData Corp., Network Appliance Inc.

Peter Bell, chairman and CEO is hedging his bets on the new software his company is selling. He says that in a year, StorageNetworks hopes to derive 50 percent of its revenue from software. Presently the company’s software accounts for 10 percent of total revenue.

Analysts say that of all the SSPs, StorageNetworks and Storability have the most complete enterprise storage management visions. And that “Creekpath is an example of an SSP that long ago figured out that software was its future, and has been pretty successful attracting attention with smart products.”

The price of StorageNetwork’s StorageManager is based on the number of storage connections. It is available now.