Many of the eleven million US small-to-medium-sized businesses (SMBs) are candidates to benefit from a new generation of robust, feature rich, and cost effective data protection systems (DPS). Collapsing hard disk drive prices, inexpensive thin servers, and new approaches to product architecture are facilitating a new wave of these intelligent backup, archival systems which can do much more than just backup.
Many of the eleven million US small-to-medium-sized businesses (SMBs) are candidates to benefit from a new generation of robust, feature rich, and cost effective data protection systems (DPS). Collapsing hard disk drive prices, inexpensive thin servers, and new approaches to product architecture are facilitating a new wave of these intelligent backup, archival systems which can do much more than just backup. Some integrate network security, monitoring, management, reporting, and diagnostic capabilities, or introduce new capabilities like continuous data protection and application continuity. Possibly ringing in a new investing trend for venture financed companies, the new DPS systems are designed specifically for use in SMB IT environments.
The latest intelligent DPS appliances, server software apps, and hosted SaaS services go far beyond their origins in merely backing up server data and archiving it offsite. These new data protection systems are designed to take advantage of advances in hard disk drives, implementing “disk to disk” backup systems, versus using tape drive backup technology as the storage media. These products deliver a host of new capabilities, are more reliable than tape, with improved recovery time objectives (RTO’s) and total cost of ownership (TCO).
Data protection systems are deployed by SMBs not just for the obvious reason - to protect data - but also to meet new regulatory, legal compliance, and discovery requirements. DPS equipment, software, and services can play a major role in implementing broader business continuity plans.
SMB data protection is already a sizable equipment market, but it’s shaping up to grow into a multi-Billion dollar software, services, and equipment market which will not only replace the majority of the tape backup market, but which will also cut into the data security, network operating system, network management, and enterprise application software markets.
Startups and strong demand combust
A new crop of venture-funded start-up firms are responsible for the majority of recent SMB DPS innovations. The table below provides just a sampling of the venture capital and private equity funded start-ups involved – along with a few large firms which exert a major influence on the DPS arena.
Some of the companies most active in developing and marketing DPS products and services include: Amerivault, Apple, Arsenal Digital (just acquired by IBM), Asigra, Commvault, EqualLogic (Dell), ExaGrid, Excel-Meridian Data, FalconStor Software, Iron Mountain Digital, Kace, Kaseya, Level Platforms, MaxSP, Nexsan Technologies, N-Able, Overland Storage, ProStor Systems, Simply Continuous, SonicWall (Lasso), Teneros, UniTrends, XOSoft, Xyratex, XiloCore, and Zenith InfoSystems.
Today, the majority of the 100+ venture-funded storage sector start-ups are primarily focused on developing new fiber channel networks, switches, software, server applications and direct- attach or network-attached devices, and underlying technologies. There are good reasons these start-ups tend to concentrate on developing product for large enterprises. But a good deal of the cutting-edge innovation is moving to the SMB side of the storage business.
SMB IT powerhouses Dell and HP have jumped in early, with both home-grown and acquired software, hardware, and services. Cisco Systems also has products from its LinkSys business unit, just as it is in the process of turning its focus onto SMB markets on a broader scale. IBM has entered the fray with SMB data protection product lines, and has been acquiring startups.
Although this market has participation from the giants already, it is due to it’s embryonic status, technical nature and room for growth, it is still very much still open to venture funded startup companies.
Server software solutions: some assembly may be required
Microsoft is the anchor tenant in the SMB DPS server software segment with their specialized “Windows Storage Server” 2003 R2 product, which has captured just over 50% market share. Most SMB’s run Windows Server, vs Linux. Microsoft is also involved in related BCS initiatives through their alliances with Dell, HP and other key OEM’s, and their many relationships with the thousands of diverse re-sellers and IT firms that collectively populate the SMB supply chain. Commvault is also a major player with their QiNetix framework and CiNetix software architecture.
Alongside Microsoft and HP, Dell is a powerhouse in the SMB DPS market, offering its broad PowerVault DP (“data protection”) line of servers among other DPS products. Earlier in 2007, Dell launched the DCX3-10 chassis-based SMB storage system. Dell has launched a major initiative to enter the storage business. Dell currently offers three standalone backup, and CDP data protection products based on Powervault servers. Dell’s storage/DPS strategy was bolstered through their recent acquisition of SMB/managed-services play Silverback Technologies, with their 150 VAR channel partners.
DPS appliances: intelligent, network-attached thin servers
There are still about 20 million SMB network tape drive backup systems in use, in the US alone. Tape systems and many of their accompanying backup applications are now losing market share to “DPS appliances”: smart, stand-along or modular appliances that set on the network and take care of data protection – and perhaps a lot more. But there is much more to the story, and the
transition, than that. Applications like MS Exchange and certain custom SQL apps are mission critical for many small- and medium-size businesses.
Some DPS products are “application aware”, implement features in support certain classes of applications exceedingly well. This form of intelligence can be designed into a DPS product whether it is server based, an appliance, or a service offering. Teneros, MaxSP, IdealStor, and UniTrends are four examples of startups that offer standalone DPS appliances with some level of application intelligence. They are a cost effective to park on a network with minimal integration overhead.
{mosimage}• The Teneros Application Continuity Appliances for Microsoft Exchange is a good example of a state-of-the-art DPS continuous data protection (CDP) appliance. It can perform an instant fail-over and begin serving email clients without disruption.
• The business continuity system from angel funded MaxSP. MaxSPs manages its own data centers, and provides appliances (pictured). This allows it to offer the unique “M Service”, in MaxSP’s BCA appliances are provisioned from the VAR’s office, with aggregated VPN backup feeds.
◦ Hewlett-Packard, IBM, Cisco Systems, Dell,
EMC, and Network Appliance have all entered the SMB data protection market with new modular chassis form factor DPS appliances. These are a bit more expensive, but more scalable than standalone appliances. Like the standalone appliances, most are based around “thin servers”, being designed around an embedded variant of the Linux operating system.
◦ At the low end of it’s SMB DPS product line, HP sells the StorageWorks disk-to-disk system, with capacity of 750GB to 1.5TB. HP rolled out the BladeSystem c3000 for SMBs (pictured here), featuring multi-level disk-to- disk data protection capabilities.
◦ IBM has recently introduced the BladeCenter System for SMBs (one standalone BladeCenter appliance is pictured in the second photo at the top of this article), which in addition to serving DPS needs, can also accomodate server and networking modules. The System Storage DS3000 Express series with removable disk cartridges starts at $4,100.
In December, IBM acquired Arsenal Digital and will make them part of it’s business continuity systems division. This makes IBM, not known as an SMB player, a very significant player in this space. Both IBM and HP have been very aggressively duking it out in ad campaigns which directly contrast their SMB DPS products.
◦ IdealStor (Gaithersburg, MD) offers a one-to-eight bay data protection appliance. The hard-drives are ejectable cartridges, so they can be rotated offsite like a tape backup.
◦ Venture-backed Unitrends (Columbia, SC) was an early innovator in this market with their “Rapid Recovery” appliance. Like MaxSP, they operate their own offsite data centers which work in concert with their appliance.
◦ Cisco Systems’ Linksys Division has announced the NSS4000 and NSS6000 modular SMB DPS systems, with capacity from 1 – 2TB. In August 2007, Cisco launched a major assault on SMB business initiatives; and appointed new leadership for the LinkSys business unit, along with a charter for rapid growth.
◦ EMC has built a product line of six SMB modular chassis and appliances around a series of acquisitions, and has a storage partnership in place with Microsoft. EMC has been very acquisitive.
◦ Dell offers a broad line of data protection equipment as part of it’s “DP” Powervault server line. Dell’s is on an acquisition spree, including through their recent acquisition of important SMB/managed-services play Silverback Technologies.
◦ Network Appliance’ StorVault division targets the S300 and S500 pre-integrated data protection appliances at the SMB customer. The S300 can be minimally configured at an under-$3,000 base-price. The StorVault products are developed in house, vs. by acquisition. Photo: NetApp staffers at the Technosium 2008 conference.
◦ ExaGrid recently launched their v3.0 disk-to-disk 20TB
storage chassis (upgradeable in 1TB increments). Their proprietary data de-duplication algorithms can deliver up to 90% compression.
Hosted software services – DPS ala Cloud Computing & Virtualization
Off-site, hosted data protection is from one perspective, DPS offered via the Salesforce.com “software as a service” hosted model (“Hosted Saas”). One way to think of these services is as a form of online backup service for businesses; but one which can be application-aware or have other advanced capabilities.
Simply Continuous (San Francisco / SOMA) is a Greylock- funded DPS start-up which is just coming out of stealth mode.
Their data center provides not only data protection, but an application continuity capability for SMBs called “AppLive”. SimplyContinuous is still in stealth mode, but is rumored to be architecting a service which leans heavily upon server virtualization suitable to providing advanced DPS services to larger-scale SMB enterprises (100-500 employees).
Arsenal Digital was acquired by IBM in December 2007; they are a leading service provider of DPS services to SMB’s. ISV Asigra’s software is the basis of another innovative SMB backup service being offered by Las Vegas super-VAR Xilocore. Excel-Meridian Data is another provider with this type of service.
Iron Mountain Digital, the paper-based records archival behemoth, is also currently the largest offsite DPS entity. Iron Mountain can either provide the entire backup remotely (for up to one server); or put an Appliance on premises in a multi-server SMB environment.
Examples of some other service provider DPS vendors include Commvault, Excel-Meridian Data, Kaseya, Level Platforms, and Overland Storage’s offsite backup service (they are a hybrid vendor, also being an appliance OEM).
Some of the issues that off premise DPS vendors face include communications link bandwidth as mentioned earlier; data security (usually handled through end to end encryption); business stability as perceived by the customer; and being competitive with recovery time objectives (RTO). But there is clearly a sizable niche for this type of service. Some services go hybrid to overcome these issues, putting appliances or servers on the customer premise.
Data from Compass Intelligence, consistent with numbers available from the 2004 US Census and public domain data from other leading analyst firms, indicate that there are 11 million SMB enterprises today in the US with fewer than 100 employees. However, 76% have just 1 to 5 employees. In contrast, there are less than 20,000 “large enterprises” in the US, with more than 500 employees. Per the diagram shown here, there are many ways to “cut”, or segment, the SMB market - by revenue, # employees, #servers, region, industry, etc.
There are approximately 200 million SMB’s worldwide; of which perhaps a fifth or less would be TAM candidates for DPS. Compass reports that this up to 100 employee US SMB business sector will spend $219 billion on information technology and communication products, services, people and solutions in 2008. But the SMB buyer is notoriously difficult for equipment, software, and service providers to reach. There are many different sales channels through which SMB’s acquire products and services, among other problems – not the least of which is the heavily dispersed, highly fragment VAR/ISV channel.
In a number of recent surveys, these firms identified establishing improved business continuity capabilities as one of their highest priority IT concern for 2008. With well over a billion personal computers in use around the world, and worldwide unit sales of personal computers exceeding 250 million units (a good portion of them to SMBs), there is a growing need to protect critical data.
Conclusions
Bell Consulting Group expects more data protection startups to emerge out of stealth mode in 2008, and the ongoing trend of DPS innovation and acquisitions to gain momentum. The worldwide market for equipment, software, and services is going to continue to evolve into a multi-billion dollar IT sector.
Despite the involvement of some of the largest tech companies, this product market is atypical as it is nowhere even close to being a mature market. Quite the opposite is true; it is actually an embryonic market, as the PC business was in 1982.
The data protection product and service space is still wide open for technological innovation, changes in buyer behavior, and unit volume growth. This market will grow and evolve slowly for the next several years, so the market window of opportunity is likely to remain open for innovative startup companies.