That’s about to change.

The same way the next generation user doesn’t give a rat’s behind about your “you can only use laptop ABC with software XYZ’ on it” mandate, the next generation of IT people are not going to care one bit about “we’re an (IBM,Oracle, EMC, Pick Your Poison) shop.”

The next generation is fearless.

They don’t care about “folders” and “structure.”  They don’t care about “inboxes” or “outboxes” – which were designed to AUTOMATE some function that used to be manual and physical – back in 1975.  We used to TYPE a DOCUMENT then make a MIMEOGRAPH of it and put it in the FOLDER which was stored inside the FILE CABINET.  Now we do the electronic version of the same things.  How very “Mad Men” (stolen analogy from John McKnight, super genius).  What’s next, slapping the admin’s butt (electronically, of course)? Scotch and cigarettes at 9:30AM?

When’s the last time your 17 year old did any of that?

Guess who your next CIO is?  The kid who was born in the cloud.  The kid who gets his information from a Twitter stream, blog roll, or web page.  Not a newspaper or a TV.  The kid who pushes and pulls value socially.  Not mono-directionally. Old school IT vendors still try to control the “message” and selectively hear the responses.  Old school IT still tries to control what you get, when, how, and where. How very Mayberryesque.

I’ll talk more about the Social Enterprise later – as it is a massively disruptive, completely fascinating movement (and you all know how I enjoy those!).

We WILL NOT consume IT apps/services/value the way that we have for the last 50 years any longer.  So why do we continue to attempt to deliver them the same way?

IT isn’t going to need a meteor to make us extinct.  We’re doing just fine on our own.  We’re going to implode at this rate.  And it won’t take decades.  It will take a few years.

Things change.  Adapt or perish.  Peyton Manning will not play forever.  People might actually vote for Newt Gingrich. Newt might actually be the antichrist.  The Soviet Union might fall. Greece has the financial controls of my 8 year old daughter.

Stuff happens.  Whether you like it or not, stuff happens.

The bigger truth: it’s time for our CIOs to realize that they can lead the new wave, or get run over by it.

Why?  Because it really is social networking 1.0.  People are there because they want to be.  They weren’t bribed, cajoled, or threatened.  The NE VMUG is the only VMUG (I think) that has NOTHING to do with the mothership – VMware or the national VMUG (which is controlled by the mothership). It’s truly independent.  It’s a family affair (the Maine Harney family, to be specific).  Built by users, for users. Not built by a corporation with designs first and foremost on controlling everything you see or hear, with the intent of lining their own pockets.

I loved it.

I love it so much that I intend on doing everything I can to make sure it continues to improve (better and better user content, less and and less vendor bullshit), and most importantly, continues to remain independent.  I love VMware, but they should leave this alone.  This works.  This is by the people, for the people.  I hope others will take up the cause as well, and offer suggestions on content they would like to see, or even better, to deliver and teach their peers how to progress to higher levels.  When that happens, everyone wins.  Users win.  Vendors win.  VMware wins.

I met users from London.

I met users from other parts of the US – and when I asked (two different people) why they came here, they both said “because our VMUGs suck.”  People know the difference between value and bullshit–it insults their intelligence when it’s all contrived bullshit.

VMworld is awesome, by the way.  It’s the regional VMUGs that seem to suck.  They have become “commercialized,” it appears.

1,200 people had registered when they closed it down.  On Wednesday, the day before the show – Dawn Harney had over 300 additional requests to join.  When does that ever happen?

By 9am, there were over 1,000 people already there.

The venue leaves a bit to be desired, as cool as it is.  It’s chopped up and hard to really support the right number of larger rooms for all the breakouts – and you had to go outside to the other side of the stadium (it was freaking cold!), but otherwise, it was a superb event.

Sponsors love it because A: they are charged effectively nothing to be there, and B: because there are 1,000+ legitimate, valid, not made up/fictitious actual IT end-users who buy things. If this was a normal industry event, we would have already been told that over 400,000 IT buyers were in attendance, with the buying power of China.  Lying liars.

So bravo to the Harneys for keeping it real.

They failed because they built a value proposition aimed at a person in an organization that the organization itself sees limited value in.

Read that again.

The specifics of Autovirt are that they automated a shitty, never-ending, manual labor intensive, error prone task called Data Migration – or moving stuff from one system to another. Data Migration is the no glory, all problem tactical task of IT.  The best case you can hope for is that nothing goes wrong.  No one in management gives out bonuses for nothing going wrong.  

Data migration projects in big enterprise shops can take 6-9 months to plan and execute (and something always goes wrong).  That is painful.  Show me a way to reduce that risk and cycle time (say down to 24 hours) and people will PAY for that.  Customers will pay for that – and Vendors will pay for it (Vendors can’t recognize revenue of the new stuff you bought until they get the old stuff out and the new stuff functioning many times).  That’s a problem worth going after.

AutoVirt instead elected to attack the Windows market – small pieces of the enterprise and bigger pieces of the SMB.  The value prop is the same – they will take a shitty task that some poor slob has to do from 24 hours down to 3.

What’s the problem here?  The problem is that no one up in management that spends money gives a shit if their Windows admin saves themselves 8 hours.  Where is the benefit to the company?  Sure, there is a benefit to the Windows Admin – but isn’t that why we pay him to begin with?  (I’m not making a value statement here, just telling you the way it is.)

Thus, AutoVirt was doomed from the start.  The only way they could succeed is if their customer, the Windows Admin, was willing to pay for their stuff out of their own pocket – because lord knows the company itself couldn’t care less.

Hence, AutoVirt misdirected their value proposition to the wrong target(s).  They should have focused on markets that care (Enterprises with BIG stuff to move that takes 9 months), or built a value proposition that drove value to the COMPANY, not to the Windows Admin. Those are the pieces they could never put together.

What’s tragic is that I believe there is legitimate value to the ultimate company that implements such stuff.  But the buyer (Admin) was never armed with a story to sell to the business – and that is AutoVirt’s failing.  The stuff worked great, it absolutely saved time, it created consistencies and eliminated risk – but the only thing the Windows guy was able to articulate to finance was “cool, I can get 8 hours back to do other stuff no one cares about either.”  Tough sell.

The messaging was all wrong.  They never took the time to figure out how to do it right.  Thus, $25M clams have gone bad.

So the bigger truth, kids, is that you can’t stop at solving a problem – even a legitimate one.  You have to KNOW who really matters in the decision-making process – and make sure that you aren’t stopping at the first guy who sees a benefit – you have to direct your value prop as high up the food chain as you can – because that’s where the money is.

In 2009, people were 3X more likely to cancel an IT project, or cut headcount to contain costs then they were to use cloud services.

By 2011, folks were just as likely to consider implementing a cloud solution to contain costs as they were to kill a project or fire people.

2012 data tells us that we’ve crossed the chasm – people are now MORE likely to use cloud techniques as a cost containment/reduction strategy then they are to shoot a project or get rid of people.

This, my friends, is a tipping point.  (How many more book themes will I steal in this blog, I wonder?)

Cost reduction/containment is by far the most important catalyst to a long term, thriving market opportunity.  Always.  Strategic value (i.e., making money on your decision versus saving money by your decision) is always secondary. Always.

Thus, we can now assume that cloud has moved mainstream – and will only accelerate.  As soon as a market accepts you as a valid cost containment/reduction strategy, you are invited backstage, where the deals happen.

So, what’s that mean?  Markets become interesting when the status quo is upset.  The status quo likes things, well, to stay the same.  The same being “you give me money, I spend it.  You bitch about it, then you give me more money.”  Something that derails that flow tends to upset those on the receiving end.

So as more and more people adopt cloud-based strategies (initially) to cut costs, who among the status quo will be negatively affected? Want to know how to figure it out in your own shop?  See which sales guys start coming around way more often than normal.  See how many times they call you “Buddy!” lately.  Those are the ones at risk.  Those are the ones who will react in violent opposition (overt or covert) to your move to the cloud.

Those are the ones who will adapt (quickly) or perish (slowly and painfully).

Game on!

Simply put, big data applies to any data set that breaks the boundaries and conventional capabilities of IT.  That’s it.  What kinds of things break the boundaries of IT?  Big capacity does. Big transaction counts do.  Big analytical requirements do.  Big response time requirements do.  Big bandwidth needs do.

Big Data is NOT just analytics.  It’s NOT just about storage.  It’s NOT just about anything – it’s about everything.  It’s about tossing out the old way of doing things because those ways simply won’t work in the world of BIG.

Think of it this way, take whatever it is that you are concerned with as a metric and ask yourself, “How will I be able to perform this function if I had to do it at a scale of 100X what it is today?”  Whatever you come up with that breaks is Big Data, baby.

Why is Big Data way cooler than its buzz alter ego, Cloud?  Because Cloud is a new marginally disruptive consumption model.  Big Data is a massively disruptive force that will change every single thing in your current IT methods.  Everything.  It will literally disrupt the way you store, process, find, analyze, protect, secure,support, and deliver services and value to the organization you serve.

Big Data is not “transformational” (my 2011 IT word of the year) – it’s CONFRONTATIONAL.

Other than that, it’s no big deal.

Both WD and Seagate have decreased their drive warranties as of late – which is entirely due to the fact that they can’t make enough drives (or components) to support revenue demand – so why bother making them for (gasp!) free warranty support? I have zero issue with this – what I take issue with is the fact that they are flagrantly distorting the truth by saying it has nothing to do with the Thailand floods that have crippled their supply chains. Just tell me the truth – we have to support revenue first because we are publicly traded companies and if we don’t, our stockholders (who own our company) will be slaughtered and ultimately fire our asses. Is that so hard?

Both HP and EMC have apparently begun raising prices on enterprise drives, which is interesting because their costs have not gone up. They buy so many drives that they are contractually guaranteed to supply at a fixed cost – for a while more anyway. Bill Belichick would call this “playing situational football” – take advantage of the situation you are in.

Speaking of drives, have you seen the cost of low-end drives doubling?? Hate to say I told you so…(I don’t hate to say it, in fact, I enjoy it immensely).

I’d like to wish a happy holiday to my good friend Jacob Herbst. Hang in there my friend.

Do you think Oracle getting pummeled three days before Christmas is karma?

I still believe the most interesting times for the IT business are in front of us. I think we’ll see more disruption to the status quo and more new money made in the next 5 years than in the previous 50 potentially. At least on the disruption front. I could be rationalizing my chosen career, but I see big storms brewing. God, I love a big, messy, market.

In every revolution – a chunk of the giants representing the victors of the status quo fall. Most of the time there is at least one “who could not fail” that does just that. (Soviet Union, Digital, MF, Lehman). Who will it be? While it’s hard to imagine an EMC, IBM, HP, Oracle, Cisco, etc., falling – statistically, one of that genre will do just that.

How come we get all riled up when talking about IT vendors’ “integrated stacks” as trying to “lock us in” so we are beholden to them and make our subsequent buying decisions based on what they tell us? Yet, we blindly accept an entirely closed system, totally locked in, and, in fact, approach it with joy and awe when it comes to Apple? You know when I buy a new computer, phone, tablet, (TV soon)? When Apple tells me to. Kind of funny. I bitch about Oracle, but don’t think twice about Apple.

I’m worried about 2012. The U.S. has no political leaders interested in doing the right thing for the country or the world, for that matter. We are economic train wrecks who act like 9 year olds and spend (print) well beyond our means. China is the bank of the U.S. We refuse to make the logical, difficult, but inevitable decision to cut spending to a level that we can actually afford.

If you, the normal person, reach debt levels you can’t sustain, well, the people you owe money to shut you down. In the U.S. government, we just print more. It’s the equivalent of saying “I can’t be out of money, I still have checks.”

More than the U.S. stupidity, Europe will be the problem. They have the same 9 year olds running their economies, only they all hate their neighbors and refuse to be told what to do by anyone. My fear is that one or more of these bankrupt countries will inevitably fail, which will cause the rest of Europe to stop spending stupidly. That will result in the #1 buyer of IT products, governments, no longer buying IT products. That will mean 20%+ of IT manufacturers’ business will shut down hard, and then it’s just a matter of time before the same thing happens in the world’s biggest market – the U.S. The U.S. government has been the #1 buyer of IT stuff for a long time. Take that away and watch the panic.

I hate to be a bummer, but it appears the only way we avoid a big meltdown in 2012 is:

• A: hope that no one notices all of our countries have the fiscal discipline of a 4 year old in a candy store with a thousand dollars of credit.
• B: Governments continue to (print) spend money they don’t have on stuff like IT gear in order to “stimulate the economy,” and hope no one (China) decides to foreclose since we can’t service the interest on our debts, let alone ever hope to get out of those debts.

As soon as NetApp starts demanding krugerrands as payment, watch out.

Having said that, Asia remains a comparatively vibrant growth sector, along with the BRIC countries. If Europe hits the panic button, expect all the vendors to double down on those markets.

Ponder that over a couple thousand eggnogs, why don’t you?

As bad as things are, or might be, we need to remember that they can always be worse. It’s easy to forget the simple joys of life sometimes. I thank god I get to do what I do, for as long as I’m allowed to do it. What a world we live in where a dope like me can get paid to wrestle intellectually with tech and market dynamics – and then talk about it!

So I’m grateful to all of you. You read me, you sometimes listen to me, you argue with me, and you entertain me. What’s better than that?

I’m grateful that my wife still tolerates me. I’m grateful that my kids are healthy – and they still live in a place where they themselves remain their greatest barriers to success – not anything else.

I’m grateful that the world is a much, much, smaller place than it was even a few years ago. It’s a far more interesting world with all of you in it – connected.

I’m grateful that at this pace, by the time I die, cell service in the U.S. might be as good as it is in east shithead, China.

I’m grateful that I was never good enough to play any college sports, and thus was able to avoid being molested.

I’m grateful for the unsung heroes of IT – those who have real jobs, mostly unthanked impossible jobs, who show up every day and put up with all sorts of b.s. from inside and out – and still find a way to make things work that never should.

Happy holidays to all. See you next year!

Since 1940, Telcos have enjoyed massive success.

The cloud is about to either radically change that, or radically change the telco.

When the cable guys came out with IP phone services to your house at 1/5th the cost of your standard land line, the Telcos fought it (of course). Now all of your phone service is IP, whether you know it or not, or whether you still use your Telco for it or not.

The Telco survived because it adapted to a new reality (And because humans are lazy).

Since the dawn of the Cloud Era (you know, way back in 2008ish), I’ve been trying to figure out how the monolith organizations such as Telcos were going to play in this transformative era. At first they did what they always do — “Oh, a shiny new business opportunity, we’ll do it too!” — they put up infrastructure as a service (Telcos are the equivalent of the “channel” historically for infrastructure vendors – and got “stuffed” with gear in the exact same way.  Now they are trying to find a means – any means – to get someone to use that capacity). Then they started offering some kind of services themselves – backup has been a popular one, though since Telcos don’t speak that language, they tend to languish or focus (rightfully) on consumers.

But what is a Telco? A telco is a communications infrastructure provider – who happens to have the most important thing required in this transformation – a direct customer billing relationship.

Now that all Telcos – and all enterprises – have adopted IP-based telephony, the stage has been set for the next wave — which will be complete cloud-based unified communications (including video) services.

Telcos will have to adapt to providing these services in order to retain their value over the next 10 years, or they will be relegated to being bandwidth brokers alone.

Enterprises will want to outsource ALL of their complex UC/Video needs the exact same way they outsourced their complex CRM needs. As a matter of fact, this is exactly the kind of value added next generation service SalesForce should be providing – since the whole point of “unified” now means “integrated” and SalesForce is the integration platform of choice for most businesses.

SalesForce won the CRM war not because it taught the market to want CRM – it won because the market wanted CRM but no one delivered it in the way buyers wanted to consume it – until SalesForce. Make it simple and give it to me as a service. That’s how people want to consume complex infrastructural/core stuff. Unified communications and video are the exact same thing.

So, there is no SalesForce for UC – yet. This is why Telcos have to get their shit together here, lest they miss out on a massive global movement yet again.

The arms dealers will be interesting to watch evolve. It’s still way early, but Microsoft has a play – and they sure have a cloud initiative. IBM has the cloud, but not a play yet. Dell and HP aren’t doing anything that I can see. People like Polycom will be interesting to watch. Cisco made a big bet here long ago – and is doing quite well (although until they or a partner deliver it as a cloud service, they will have the same problems as Siebel did early on with CRM – way too complex and expensive for a normal company to deal with)

The existing arms supplier to the Telcos for IP Telephony version 1.0 is Broadsoft, but Telcos are mumbling that they don’t have the chops to be there for version 2.0. Thus far, while there are a few contenders, the one I’d bet on is Thinking Phone Networks in Cambridge, MA. Little, but they seem to have all the right parts, people (CEO is a continuous home run hitter), and are built for the cloud. They have very large, very global players cruising in and out of the peoples’ republic of Cambridge as of late, and I know of at least one multinational global conglomerate OEM deal about to happen. I don’t know enough about the others (yet) to be able to tell who has a legit chance or not. This is a new space for me, but one I do find fascinating.

My point isn’t to call the winner, my point is to call the next market in this space. Just like the big banks said “no one will ever buy stock online” or the Telcos said “no one will ever use an internet phone system” (How are Nortel and Avaya doing these days?), both have evolved WAY beyond from what could be – to what should be. We don’t want to own and manage PBXs anymore then we want to run our own power plants. It’s a natural cloud-based service.

My data of record is in the cloud on salesforce – connected/integrated seamlessly with my communications – and none of it sits on my site. I rent what I need when I need it.

It’s the reason I now run Apple everywhere in my life. It just works. And that’s how all this stuff is supposed to be.

There are now 87 different wines in China, which is good. Most of them are awful, which is bad.

Terrifying: looking up while driving in Beijing. Simply “Exorcist”-like terrifying. “Silence of the Lambs” kind of terrifying. Zanax inducing.

Gross: people like to “hawk up a loogie” (clear their throat, and spit a pile of phlegm) pretty much anywhere. Dinner time? No worries. Breakfast? Sure. They also continue to smoke, anywhere and everywhere.

Brilliant: there have to be more PhDs per square foot here than anywhere else in the world.

Bizarre: The Chinese have absolutely no issue answering their phone, and engaging in loud, animated dialog, no matter where they are – say, as in the middle of a presentation in a small conference room. With me.

Similar: to the Israelis, the Chinese seem completely fine yelling at each other, over each other, and around each other in a meeting. It seems like it could come to blows at any minute, but then everyone is fine.

There are WAY too many Chinese. Traffic in Beijing is insane.

I still, after many years studying this market, have no real idea how it operates. The good news is the Chinese are the world’s bank, as they have the money. The bad news is they don’t seem willing to spend it as “normal” buyers. I can’t figure out how anyone makes money selling to this market.

When Europe inevitably collapses due to debt – or the US does – those entities will stop spending (by force, not by design, because god knows we don’t want to stop spending money we don’t have – we can print more! My ex-sister in law once said “I can’t be out of money, I still have checks.” She must now be a prime minister somewhere.) Since our collective governments are the largest buyers of IT stuff, and that will terminate, expect major IT vendors to double down on active markets such as China. Their power – already tremendous, will only increase. Those with the dough control the flow.

Surprisingly the entrepreneurial nature of the Chinese continues to blossom. It’s not your grandfather’s ministry anymore, son.

This is probably the only country on earth that continues to control information flow. No Twitter. No Facebook. No porn (I’m told). They continue to be able to alter reality to fit the “social best interest.” It’s stunning really. Countries have toppled in the last 18 months because of the social mechanisms available to the masses – but not here. Not that anyone would want to topple China, they are all doing just fine, thank you.

Apparently these folks will eat just about anything. I have photos of scorpions on the menu, duck tongues, and maybe the grossest thing I’ve ever seen – the sea cucumber. Oh, did i mention the bullfrog? Damn. I get that you have a billion plus people, but yikes.

The people in general are very pleasant. They smoke in elevators next to newborns and cancer patients, but they do so with a smile.

They are stunningly well spoken. I know two words of Mandarin. The average farmer seems to know more English than I do. There is a reason they own the world.

It is fascinating to read the English version of the “news” in China. It’s Pravda circa 1972.

They literally control the weather. I couldn’t see 8 feet out my window this morning. No unrest if you can’t see.

Perhaps the greatest thing ever in China is the fact that while the country is approximately 9,000 miles wide, they have ONE time zone. Screw you. One! In India I think they change time zones every 15 miles. But China has one. Too confusing otherwise.

There are gas masks in every hotel room. No lie. Gas masks.

It’s too bad it’s a billion miles away from me, because it truly is one of the most awesome places on earth.

Petfood.com or Furniture.com didn’t fail because the Internet didn’t work. They failed because they had stupid business models. There are plenty of stupid business models wrapped around cloud. There also are some that are beginning to stand out as viable.

People crap all over Amazon‘s services–but let me be the one to tell you–their model works. They are light years ahead of most of the world in providing IaaS services that (importantly) people actually want. They provide them in ways people want them. Are they perfect for everything? Of course not, but where they fit the use case, they are in a class by themselves–and as such, continue to kick ass with no imminent threat to their model. The first guy to solve a real problem owns that market 99% of the time.

So why doesn’t everyone only use Amazon? Because they don’t solve ALL problems. They are awesome at renting transient compute resources, but they sort of stink at storage (economically at least). That may change, as they are proving to be super smart, in my opinion–but until then look who else is reaping the rewards.

Box, Dropbox, and Nirvanix are hot and heavy in the middle of a financial love affair. Why? Because they are storing stuff more effectively and economically than Amazon. Dropbox is cheap and dirty (and it works!) but folks aren’t putting BIG important data out there (or are they? they are certainly putting small important data out there). Box’s claim is that they are a “business class” version of Dropbox–and judging by their most recent valuation, they seem to be right. Box has built “TRUST” into their brand. Nirvanix has become the absolute darling of the media/entertainment archive world–and now they are moving to standard archives. USC just plopped an 8PB single order on them. 8PB! Wasn’t that more capacity than existed in the entire world just a decade ago?

Why do people use these services? Because A: doing it yourself SUCKS, and B: the cost of letting someone else deal with it is at the inflection point–it’s becoming inarguable when you know that A: it sucks to do yourself and B: it’s now cheaper to do it elsewhere.

To reach a broad market, you have to have both. A better way, and a cheaper way. Until it’s cheaper, people will fight to keep control even when it sucks. Once you hit both metrics, you can watch the market erupt. That seems to be where we are.

So why hasn’t Verizon or Comcast taken off yet when it comes to IaaS? Because it’s not what they do. They won’t be able to play here until the customer comes calling on them–which they will eventually. What those guys have is (enviably) access to the customer, and perhaps more importantly, a billing relationship. What they don’t have is a natural business disposition based on relatively complex topics like IaaS for a “business.” They all want it, but emerging markets require specialization and speed–not exactly what you think of when you talk about AT&T.

So while Cisco, EMC, NTAP, etc., have done a good job stuffing their gear into the big Telco/would-be IaaS providers, they have to wait for demand to occur from the ultimate end-user before that gear gets consumed. They will start to help their customer market services, to enable that consumption–but that’s tough to get going. Comcast does a trillion dollars selling video on demand, so getting them to learn a new language, no matter how great it can be for them, is brutally difficult and slow.

Ironically, it’s HP, Dell, and IBM that have the real ability to change the game on a grand scale in this space. Dell was early with a spillover cloud, but I haven’t heard all that much about it lately. HP is just gearing up now, but has the right things in place (imagine being able to sell cloud CONSUMPTION as a business model when you have that many customers globally!) and IBM (perhaps the most committed to cloud) is still moving pieces around–but have shown they see both the cloud consumption opportunity AND their own brand value. Like other behemoths, they aren’t specializing however, and as such need to orchestrate bigger, more elaborate moves–which will slow them down. (Possible exception is IBM, who did do a deal with Nirvanix so, at least in the storage space, has a place to go).

So the moral today? Specialize on a problem (that is real, and getting worse vs. better organically) and focus on driving the economics to a tipping point. Clear as a cloud.

Success, as great as it is, creates incremental impediments to success v.2.

It’s hard as hell to develop a product/solution that solves a legitimate problem in an expanding market. It takes skill, clarity, and a heck of a lot of luck. Once a young company does it, however, they almost always screw up their second product. It’s fascinating really. It happens ALL the time–even with some of the greatest companies on the planet.

Why? First, because they have been successful, they often take shortcuts the second time they didn’t take the first time. They make ASSUMPTIONS on round two, often lethal assumptions. They assume that because they have a customer that is happy, that customer will buy anything they try to sell them. They assume that because they have a relationship with Chuck the IT minion, they have a relationship with the entire IT department. They think they are more important in the customer’s world than they really are. They believe that because they sold a hunk of metal that has flashing lights to one guy, the CIO believes they are a critical vendor. I have news for you–you aren’t. Just because a storage weenie bought your gizmo, does not mean the network guy will have any idea who you are, care, or give you the time of day. Because the backup guy bought your software, you have yet to make the CIO’s “must have” vendor list. Stop assuming you matter more than you do.

They also believe that because they successfully sold product 1 to some guy way down on the totem pole, that guy will somehow become the most important, relevant person in the IT department universally, and as such be able to command other groups to buy your new shiny toy. They won’t. What you should think is “anyone who bought my product is probably going to get fired.” If that’s your mindset, you probably won’t have delusions of grandeur.

They also believe that because they were right on product 1, they can cheat on product 2. They don’t do their homework (market research), they don’t test their assumptions. They just build it. Fist they were tremendously successful selling a new network switch. Then, because of that success, they spend 18 months and 9 Million dollars developing the greatest solar navel lint collection device the world has ever seen. Then they bum out because for some unknown reason the world doesn’t seem as excited about it as they did.

Product 2 is harder than product 1, I’m sorry to tell you. Product 2 is developed while the world has EXPECTATIONS about you. No one expects you to do anything right on product 1–as the odds are against you and no one knows who you are anyway. By the time product 2 comes around, you’ve already succeeded to some degree. If anything, you should spend MORE time up front making sure you are building something that someone wants, that solves a legitimate problem, that LEVERAGES the relationships you have built with channels/customers on product 1, etc. Assuming you have your act together here and not doing it is an almost guarantee of a product fail. I estimate that as much as 80% of all second products are tremendous disappointments. It may even be higher.

By the time you’ve hit two in a row, you know what it takes. It doesn’t mean you won’t get cocky and screw up your third or fourth, but if you do–you’ll know exactly why. You assumed. When you assume, you make an “ass out of u and me,” to steal a line from Felix Unger.

Coke is a big company, with tons of money, and tremendous marketing resources. One might think that prior to risking life and limb on a product launch, they might have done a little research. If they did, it sucked. If they didn’t, they sucked.

As I write this we are in the midst of deja vu all over again: Netflix is reeling from consecutive faux pas causing wonderful customers to flee their service – offering recently dead competitor Blockbuster a much needed chance to regain some share. Bank of America is about to rescind a brand new “feature” of its ATM card service–the $5 monthly fee for the privilege of using their ATM cards.

Sometimes I think there may be an inverse correlation between the size of a company and its higher brain function.

These are all prime examples of A: arrogance, B: stupidity, and C: not knowing your customer or market. They are not mutually exclusive.

In each of these very public cases, the downsides could, and I suggest would, have been avoided if the company simply contracted with a really good market research firm (like, say, ESG!). By really good, I mean one that doesn’t go into a research project with a predetermined desired outcome–which, like it or not, exists when a company does it on its own. It happens even when a company tries to be impartial–it’s human nature. In tech, I bet 90% of contracted market research is done after the fact–so a company can find supporting evidence that the decisions they have already made were/are correct. For the record, I used to be that guy. I’m a convert.

It’s easy to get an answer you want. It’s hard to get the correct answer. It’s science–mixed with some art. You have to know what questions to ask, and how to ask them (good researchers ask the same question 87 different ways without the respondent knowing they are doing it–thus good researchers can find and trap false positives). I suspect there were a lot of false positives in the flawed market research done by the Bank, Netflix, and Coke (assuming they bothered doing it at all). Those are giant, professional consumer brands with marketing budgets bigger than the forward looking projections of your company in 20 years–and yet they screwed it up. What’s the chance that you are going to get it right without help? Zip.

Good companies do this research BEFORE they make huge bets. Arrogant/stupid companies don’t do it at all. Inexperienced companies do it too late, normally.

“Because I know” is the most popular line in a startup. Why are we building this? Why those features? Why that market? Because they know. So they build it, then they wonder why no one bought their fur covered servers (in both Leopard pattern and Bengal tiger). Being stoned may provide creative insight, but being right requires proof.

The second biggest reason that people don’t perform this function (after “because I know”) is that they are terrified they will be proven wrong. This is a leadership issue. Clearly it would be far better to be proven wrong than to run out and launch something the market doesn’t want. Sure you might have wasted time and money–but I sure would rather know and put an end to it now than waste more! I, however, seem to be in the minority in that position.

Whoever the leadership is in your company is responsible to ask “WHY?” as many times as possible until the answer has legitimate merit. “Because I know” is not legitimate. “We did X, Y, and Z to test the thesis and the results support it” at least sounds better. If you are small you need to question yourself. If you raise money then your VC/board should be pushing you on this. If no one is, then you are destined to be stunned at your lack of success. Sometimes you can be wrong and wildly successful (post-it notes), but the odds aren’t with you.

Do your homework, preferably before it’s due. Wish my kids listened to that advice.

Quietly, over the last decade, we’ve gone from a disk drive industry of dozens to two primary enterprise players: Western Digital and Seagate.

Both do most final assembly in Thailand. Both are fed by component manufacturers based in Thailand. You may not have noticed, but Thailand is under water with the worst flooding in history.

Many of the component suppliers facilities are gone. Those that are not are severely damaged.

Both Seagate and Western Digital plants have been damaged or completely destroyed.

What will it mean?

1. No one is saying it publicly, but we estimate that the disk drive industry will be operating at no more than 50% capacity for at least the next 2-3 quarters. Translated, if there is real demand for 100 drives, the best the industry could do is deliver 50.
2. The factories aren’t easily relocated or rebuilt. Even if factories for the assemblers are available, the components may not be available.

What does that mean to you?

1. The drives that will be built will be the high end drives sold into storage and server vendors–these have the most margin for the drive manufacturers. High vs. low end drives share 95% of the same parts, so if you can only supply LESS than the market demands, you are going to build the highest margin products. Simple economics.
2. The low end drives–sold into PCs, as standalone drives for backups, low end servers, etc.–will be very scarce and will be marked up. Again, supply and demand.
3. All drive prices will increase. How much is hard to tell, but if you are the only one with the “stuff” and the world needs that stuff, you can charge what you want. Those with purchase contracts may be protected, but that is a pretty rare few. The rest of the world is going to either be in trouble or have to look to alternate offerings. It figures that systems manufacturers that purchase the bulk of enterprise drives will get the lion’s share of the allotment–which could leave out retail operators.
4. If it has a drive in it, you should assume it will get more expensive. So if you are thinking about a new PC for the kids, best buy it now–or wait. Same for low end servers.
5. This could be a boondoggle for flash technologies. If disk prices rise, flash will look more attractive and assuming disk shortages (even at higher prices), expect companies to push flash offerings in PCs and servers. It could very well provide a spark to the new “performant storage” companies as well–especially those developing economically viable flash-based systems (with compression/deduplication, for example). Flash–based tablets (iPads, etc.) will replace PCs in many applications since folks may not be able to get ones without flash.
6. I worry about SMB IT operators–the biggest buyers are most likely already negotiating allotments and pricing from their core vendors, but little guys won’t get that opportunity. If you know you are going to be adding capacity in the next year, you might be best served to buy it now. The storage industry could experience a short term gold rush. For a change, those with large drive inventories could look very attractive.
7. This will probably slow down your primary vendors roadmap development a year from now.
8. Expect more aggressive virtualization (server and storage) rollouts once this hits the market, because that’s one way to get more out of what you have.
9. If cloud infrastructure providers have capacity, they may find the SMB running to them if supply tightens up as we expect.

I’m not going to compare features of multiple solutions for sport.  I’m only going to do it if I need a solution.  I’m only going to need a solution if I have a problem–one I’m willing to pay money to solve.

In a dynamic, fresh, new market where your whiz bang technology is so far out in front of all the rest–the dumbest  thing you can do (and yet the thing I see most consistently) is to spend time and money marketing it.

No one cares about your technology.  They care about solving a problem.  If they don’t know they have a problem, they won’t look for a solution.  You can have the fastest shoe sole scraper ever, but Johnny IT guy doesn’t care.  Johnny is trying to keep the data center from spontaneously combusting.

The only time people buy solutions to problems they don’t have is on infomercials.  Sham wow!  I mean, it is so hard to make consistent sliders, what did we ever do without the Big City Slider Station?  If you want to sell a solution in search of a problem, try an infomercial.  That crowd seems ready-made for you.

Stop marketing your awesomeness.  Educate me as to why I have a problem.

If you–and the other people in your community who benefit from me having the knowledge that I have a problem–could all get together and spend your time teaching the world about that problem, then you would find a ready market capable of caring about your solution. Until then you are spinning your wheels.  Marketing against a competitor is a dual waste when the target market cares nothing about either of you.  Join forces to educate that market as to why they should care about the problem–only then do you have a chance to compete for the solution.

VMware marketed their solution for 10 years before EMC bought them.  For 8 of those years, no one cared.  No one had the problem except QA and support folk.  They marketed wicked cool virtualization stuff, which no one cared about.  Once the problem took hold (I can’t fit any more stinking servers in my data center), the market sought a solution.  Virtualization was the solution that A: made sense, and B: was already running in the corner of the shop.  Intersecting a long term secular trend (problem getting worse, not better) with a solution that is being sought by the market = absolutely ridiculous valuation potential.

Data Domain is known for dedupe–but that was a solution that had no problem either.  (To be fair, they were really marketing “Tape Sucks,” which was smart, because in many cases that actually was a problem).  The problem was that people were running out of backup window time.  By marketing Tape Sucks, they were (sort of) telling the market that if you had a backup window problem caused by slow tape drives, we can solve it because we use disk.  Dedupe made disk affordable.  If all they marketed was dedupe, they would most likely still be a shitty little company.  Maybe they would have the best dedupe technology in the world, but no one would care.

Teach the world that it has a problem and the world will seek a solution.  Only then will your “mine is bigger than his” marketing have any impact.  Until then, take your marketing budget, send me half, and put the rest on the roulette table.  Your odds of a positive outcome are way better.

For ten years or so, the couple has enjoyed many a happy day together, and each is better for the experience.

Dell learned the storage business and EMC sold storage to far off foreign lands (the SMB)–neither would have been able to do it themselves–certainly not in any reasonable timeframe.  Both made a TON of money in the relationship.  It’s about as win/win as it gets.

I give both companies credit for having the foresight and internal candor to realize that while no marriage is ever perfect, this one deserved the chance.  Neither should have any regrets.

As far as any short term animosity or business implications (the press is looking for a scandalous affair), I’m sorry to tell you there are none.

This was an orderly breakup.  As soon as Dell bought Compellent (after they bought EqualLogic), the marriage become one of convenience.  Both Dell and EMC ran around for the last year trying to take whatever they could out of the children they spawned together (their customers)–Dell trying to get customers to leave CLARiiON for Compellent and EMC trying to make sure they stayed pure.

All is fair in love and storage.

So a new decade is upon us, the players older and wiser–and note: both are doing exceptionally well–their numbers are great.  Neither is showing any negative effects universally, so forget the tales of woe you hear from those who just live to stir the pot.

All is well with mom and dad.

In short, IBM went out and acquired Platform Computing and then boom, two days later they announce they are getting into bed with Nirvanix to provide IGS with storage services.

Why should anyone care?  Because no matter what you hear, this “cloud” thing is absolutely NOT taking off–yet.  It’s a lot of bluster and pomp, but not a ton of real world use.  It will, in my opinion, but it has a long way to go to catch the hype cycle.

Where cloud kicks butt is SaaS.  We all use Salesforce, etc.  Where it has lacked is in large scale deployments of private/hybrid clouds for real businesses.  I’m seeing dribs and drabs, but no gushers yet.  A LOT of testing going on in labs.

If you listened to the industry you’d think only an idiot would NOT have everything they consider IT value already in the cloud.  That’s simply not true.

The world needs a behemoth, such as IBM, to show everyone that it’s all going to be ok.  That’s why this little deal (probably not little to Nirvanix!) matters.  If IBM decides to take the lead on pushing this agenda to the mainstream IT world–things will start to move.

The fact that they picked the one guy who seems to be doing a lot of legit business (Nirvanix provides long term/archival type storage in the cloud–and seems to do it well judging by its numbers and quality of customers) is an acknowledgement that A: not everyone can do this no matter what they say and B: IBM thinks that NOT offering this type of service puts them at a disadvantage.

IBM may be slow to the race a lot of the time, but when they enter, they can move mountains.  They see the market, albeit nascent, and feel they need to be there as a leader versus a follower.  Nirvanix gets them in the game fast.  The fact that IBM partnered instead of doing it themselves tells you it requires more than brand marketing to make this stuff work for real businesses.

It will be very interesting to watch this deal unfold.

Steve Jobs dying is similar to Elvis dying.  When Elvis died, fans ran out and bought everything Elvis.  If Elvis were a public company, he would have had his biggest quarter ever right after his death.

Apple stock will likely trade down on foolish emotion due to Jobs’ death.  While that is happening, the global horde of Apple fans will run to Apple stores and buy new machines, phones, upgrades, etc.  People who have yet to jump on the Apple bandwagon will do so in much higher amounts than the norm.  It all adds up to Apple having its biggest quarter ever, quite possibly.  Second, the Apple masses will probably buy stock just to pay homage to the man.  There are so many fans that even at one share a piece, it could move the needle.

I don’t play stocks, as I don’t trust anyone involved in them, but do with it as you will.

Long term? Who knows.  Jobs was a genius, there is no denying.  He arguably had a larger, more meaningful effect on popular culture than anyone in modern history.  He took shit that didn’t work ever, made it work (mostly), and then made it both beautiful, and cool.

He is a prototypical American entrepreneurial role model–who failed, retooled, and kicked ass nine ways from Sunday.

He was a role model who cared about what mattered–to him above all.  He didn’t wear ties.  He didn’t care what he looked like.  He cared what he did.  You have to respect a guy like that.

RIP

SSDs have existing since time began, but it seems like we need to categorize a whole new sector.  Sorry, old SSD guys.

Traditional storage architectures have always been talked about in terms of block vs. file, tier-1 vs. tier-2, and modular vs. monolithic. Those characterizations seem less relevant to me now.

I still like the terms scale-out and scale-up.  Those have meaning in the modern world.  But those meanings are structural descriptors, not use cases. It seems that we also need to classify storage by its use cases as well as  its attributes moving forward.

“Performant storage,” “classic storage,” “copied storage,” and “archival storage” might be better descriptors.

Performant Storage is storage used for high performance applications.  This is a way to categorize the new (gold?) rush of vendors using lots of solid state chips to serve data to systems, either all by their lonesome or in combination with spinning disk (automatically self-optimizing). Bottom line, this genre serves data out of flash (or RAM, but a solid state device).  It doesn’t always have to house/store that data in that solid state device, but it should always serve it out of there in order to be as fast as is conceivable.

There are vendors that sit in the server (Examples: Fusion I/O, LSI, Virident, Marvell, etc.) and those that spend their time outside of the server in a network (Examples: Violin, Pure, Solidfire, Nimbus, WhipTail, Nimble, NexGen, Avere,Viking, XIO, Texas Memory, etc.). There will be other caching types who sit in front of classic stuff (Cache IQ, GridIron), and so on.  At this point, I’m not delineating the “how”–mostly the “why.”

Classic Storage is just that: the spinning disk we know and love. Some is faster than others, some scales out, up, and down. Yadda yadda yadda. There is a LOT of classic storage getting face lifts with SSDs these days, but i’m not sure that can be the answer long term. Having said that, this is the lot with all the money and all the customers,  so by default they are the ones in the best position to re-invent. If I need to list these guys out, you are reading the wrong blog.

I spoke about Copied Storage in a previous blog.  In short, I may not ever need Performant Storage after the fact–but I probably need copies of that data to sit in some other storage architecture that houses that copy and serves it throughout the rest of my environment (test/dev, warehouses, backup, etc.)  This “tier” is more about management than anything else. So far, the only guys I’ve seen dedicated to this space are Actifio.  I suspect there will be more.  This is a big, interesting (read $$) space.

Archival Storage sort of exists as long term retention storage. It probably needs to continue to be a hybrid of cheap spinning disk (maybe even with some solid state, at least to write to) and (gasp!) giant piles of tape. Finding the right record(s) is the key to this slice. The cloud fits nicely here. This is Nirvanix or Nasuni in the cloud, Seven Ten, all the big guys with their archival offerings (EMC, NTAP, HDS, IBM, HP, etc., etc.), Bridgehead, and a million software players.

Seems to me that you can’t just use ONE thing for all use cases.  Can you?  Should you?

Why? Because in IT we LOVE to treat the symptom of our ills, never the cause.

We buy infrastructure to support business applications, right? Wrong.  We buy infrastructure to support data.  Data supports applications.  Applications don’t care about infrastructure, they care about data.  Users don’t care about infrastructure either, they care about data.  No one, other than us of course, cares about infrastructure.  Sad, but true.

We buy infrastructure to support data.  Storage doesn’t support applications. It houses and delivers data to those applications.  Servers do execute applications, but only once that application has been fed the data it requires.

Networks let us share the results of an application done chewing on its data–or act as a transport to get the requisite data from where it is, to where it is needed.

Virtual infrastructure is cool–but it’s not the real issue.  It’s treating the symptom and not the cause of our IT issues.

If we had no data to worry about, we’d have no infrastructure issues to deal with.  Virtual or physical, it wouldn’t matter.

The cause of all of our ills is data.  Lots and lots of data.  Lots and lots of the EXACT SAME data.

Get rid of the data, get rid of the headache.  How? Virtualize it.

In simple terms, virtualization allows one physical thing to appear to be many logical things.  This is true whether we’re talking about a server or a data set.  The fundamental value proposition of virtualization is that ONE is easier to deal with than MANY.  It’s as simple as that.

The concept of data virtualization is not new.  Snapshots have been around for a long, long time.  A snapshot is a virtual representation of a physical data set that can be used as if it were “real”–but takes up only a tiny fraction of the infrastructure, management, and footprint a real data set requires.

Data Domain made a zillion Canadian Loonies (note: neither the US Dollar nor the Euro seem stable enough for me to use any longer) by virtualizing ONE specific data set in your organization–the backup data set.  Why? Because backup is 98% identical copies of the exact same data–over and over and over.  Data Domain figured out that if they virtualized that data set, there was a double win.  Win One was that you didn’t have to change any of your processes. You could keep doing backup the exact same way, fooling your backup system into thinking you made no changes.  (Instead of treating the cause of the disease [stop backing up the same stuff over and over], they allowed you to treat the symptom–backup takes too long.)  Win Two was that your backup window became manageable–and you didn’t need to keep buying tapes!  Hooray!

The bottom line is that there are two types of data in our organizations: PRODUCTION data and COPIES of PRODUCTION data.

We take copies of production data, then take copies of those copies, and we use them in all of our other business functions within IT.  We use them for protection (backup, DR).  We use them for Business Intelligence (data warehousing, analytics).  We use them for Business Sustaining (test/dev).  We use them for Business Execution (CRM, Marketing).  Blah, blah, blah.

Each one of those business functions has its OWN SILO of infrastructure (virtual or real) with its OWN storage housing its own copies of the exact same data!!! Each has its own processes, specialists, and outrageously redundant expenses.  All in support of a different “application” using the exact same data.  Smells wrong, doesn’t it?

I’m not saying that you shouldn’t perform these business functions. On the contrary, I’m saying you should enable yourself to do even MORE of these types of intelligent business functions.  What I am suggesting is that you might consider the implications of treating your COPIED production data silos a bit more intelligently.

I’m not going to give you the answers here–as you are smarter than I am–but I want you to think about how you could gain efficiencies across the board if you used the concept of a “single system of record” for your copied data (I got that from Julie Lockner, database queen, and I love it).  I’m not even talking about your production world–leave that alone.  Just imagine what could happen if there were one single “master” repository for production copied data–that fed everything else–virtually.

You could have one way of snapping data, instead of 87.  You could have one way of protecting data.  One way of accessing data.  One single data “silo” for infrastructure, and so on.  The possibilities are endless.

Get yourselves out of the mode of treating the symptom and start thinking about how you would treat the cause–data.

Only in IT do we repeatedly treat the symptom, and I think it’s because the symptom is easy to see, and usually easier to “hide” (because fixing the symptom doesn’t really fix anything, it only helps us hide the problem).

True story.  Last year, my 9 year old had a cough–for months.  He couldn’t stop.  We took him everywhere, to every specialist.  No one could figure it out.  At each step, they gave him stuff to try to get him to stop coughing.  Medicines to relax his throat, to coat his throat, to control reflux, etc.  They ALL treated the cough.  Finally, we brought him to a local island witch doctor (she prefers to be called a holistic healer).  Nancy, the witch doctor, did all these weird “eastern” medicine things, pulling at him, poking him, etc.  Then, she took some potions in bottles (newt eyeballs I think) and had him hold them one at a time in his hand and try to hold his arm up while she pushed.  After a few times, she literally said, ” He has an adrenal gland issue, probably stress-related, that is causing his immune system to not be able to combat this.”  She gave us some potion (looked like sugar to me) and told us to give it to him once that night, once the next morning.  Then, wait 24 hours.

I swear to god, he was cured.  I’m talking 7 weeks of non-stop coughing. I’m talking about having to pull him out of school because he was distracting the other kids.  Gone.

I’m fine with you thinking it’s a coincidence.  I don’t care.  (I’m a believer in all that goofy stuff now, by the way.  No offense, but western medicine is what, 50 years old? There are a lot of Chinese that have been somehow surviving for thousands of years doing this stuff.) The bottom line is she looked for the cause and didn’t bother treating the symptom.  And he stopped driving me nuts.  Yay.

“From: Steve Duplessie

Subject: September 11, 2001

To: “webmaster@enterprisestoragegroup.com”

Date: Tuesday, September 11, 2001, 6:44 PM

Friends, family, and colleagues – I hope this message finds you well.

I won’t try to explain the unexplainable events that occured today, and hope that you are all well and your families ok.  It is a pathetic, cowardly deed done by demented people who feel this is their quest.  Why? I don’t think normal people can ever understand.  I am appalled and angry, as are most of you.

Instead of harping on the negatives, however, I thought I’d share a miraculous positive with you.

Yesterday, Sept. 10, 2001, a friend and ESG client by the name of Jacob Herbst was in our Milford office.  Jacob is the founder and CEO of an Israeli company named FilesX, or Files Xpress. As Jacob left around 3pm yesterday he was heading to Boston.  Before he got to his car, Tony Prigmore from our office reminded me that I should introduce Jacob to a potential employee named Mike Beaudet.  I stuck my head out of the window and asked him to come back up.  I gave Jacob Mike’s phone numbers and he went on his way.

Jacob met Mike for breakfast this morning at 6:30. They had a great meeting, and as such Jacob missed his flight to Los Angeles – Flight 11.  Flight 11 crashed into the first tower just before 9AM.

I don’t really know why i’m writing right now, perhaps to try to make some sense of this.  As most of you know, I’m an emotional guy.  I’m really pissed off.  I’m also very grateful that there are going to be stories like Jacob’s told over the next few weeks.  I’m not sure what to tell my kids.

What I can tell you is how I’ll personally react–it will be business as usual.  I have a hectic travel schedule this fall, and my wife is beside herself with all the travel that is about to happen.  As i told her, I think that it is important that we (by we I mean all civilized people of the world) not succumb to this flagrant act of dementia by letting them win – i.e. letting them change the way that we live as free people.  I may be crazy, but to me life in hiding isn’t life at all.

So, while this whole things sucks about as bad as anything I can remember, it won’t keep us down.  It is a tragedy that should never have happened, and I truly hope that the US spends every effort possible to hunt down not only the actual perpetrators, but those that aid and abet terrorists wherever they hide, and crush them.  Preferably publicly.  This is not a time where individual rights supersede the rights of a nation to protect its people.

So, I pray that you all receive this, and I give my heartfelt condolences for any losses you have suffered.  The computer business seems pretty insignificant all of the sudden.

Cheers.

Steve Duplessie

Senior Analyst

Enterprise Storage Group

211 West Street, Suite 2

Milford, MA 01757

(508)-482-0188

(508)-482-0128 Fax”

I was right back then.  F&* those who feel compelled to screw with the lives of good people just trying to get through life happily, just because they are miserable.  And bless our dumb ass IT business for not missing a beat.  We should never forget what happened–but we should also not lose sight of just how resilient we are, both as a people and an industry.  The world didn’t end. Life didn’t end. Geeks are more popular than ever.

Have a great weekend.

Mazel Tov Jacob!

Why? HDS sells HUGE stuff to HUGE shops.  Some of the biggest on the planet.  But they really only sell block.  BlueArc, running at about $100M in revenue, sells HUGE NAS stuff to big shops who need big things–and need them fast.  They are not a bulk provider any more than HDS is–if you have an app that needs outrageous (fill in the blank – performance, throughput, uptime, etc.) and it’s “at scale”–then you need one of these guys.

Thus, the marriage is logical.  With HDS’ global girth, and EXISTING huge customer base, this should be a no brainer.  Big block shops need file access too.

Why now?  Because BlueArc (smartly, If I don’t say so myself) used the current smoking hot storage climate to file an S1 (to go public) which by default opened up the kimono–and thus the bidding.  IBM could have used them, as could Dell (as could HP really), but HDS is the right suitor.  Sooner or later having nothing in the file world would kill them.  Plus, they have had a 5 year relationship so they know what they are getting.

Didn’t HDS effectively already own them? No.  A while ago that was true–HDS represented a huge portion of BA’s revenue–but last year it was sub 25% or so.  That’s why now makes sense.  No need to buy something you already effectively own.  That wasn’t the case–and the gap was getting bigger, not smaller.

So, it’s the end of another era.  BA started (by the esteemed Geoff Barrall) about 11 years ago–along with ESG.  And I shall miss them as they were, but will enjoy watching them have a legit shot to do SOMETHING bigger.  Who knows if it works or not, but the bet is sound and I like the chances much more then BA trying to slug it out alone.  The NAS world is going to change–just as the block world is going to change–so you are either going to have a dance partner or look dumb playing with yourself (so to speak).

Congrats to all involved.

I’m speaking at the IIIS event in Sydney on August 2-3 and would love to meet my Aussie pals.  I intend to master the accent within a few days, then annoy the shit out of my American cohorts with it for a solid month after I return.

I would like to meet both Elle McPherson and Nicole Kidman if possible.

And Crocodile Dundee, but he’s not as important to me as the ladies.

Yesterday, VMware announced some new licensing information.  To be completely honest, I have no idea what those announcements were.  I do know that they were met with loathing, frothing vitriol.  People were all bummed out to say the least.

Mark Bowker, ESG’s resident virtualization god and all around mellow guy, is going to explain what they did calmly and rationally (how boring!) shortly, so I’m not even going to attempt it.  Instead, I have other thoughts.

1. All software companies are hated for the way they license.  Really, which companies are loved for their licensing EXCEPT those who give their stuff away free?
2. As a general rule, we hate successful companies because they are, well, successful.  They tend to be that way because they make money from us–via their licensing policies.  If they gave us free stuff, we probably would love them.
3. This outcry is not unique to VMware.  Microsoft, Oracle, CA, etc. all face the exact same contempt.  Maybe because VMware was “free” not too long ago and now makes billions, we’ve developed an over the top hatred for them.
4. This has been going on since time began.  I still remember people HATING Veritas for its confusing licensing scheme in 1994.  Hated it.  Bought a zillion dollars worth of its stuff, but boy did they hate doing it!

Now, it is conceivable that VMware has become evil, but I doubt it.  It is probably doing whatever it is doing for some entirely logical reason–and my guess is we will find this to be the case in short order once the lunacy dies down.  Or, we may find VMware screwed up, but it doesn’t matter.  If it did, it will either correct it or open the doors to customers going away–and while I’m not that smart, I know that VMware is–so I suspect that won’t happen.

I love to make Larry Ellison/God jokes, but truth be told, I’m enormously envious and jealous of the awesome power he has amassed by selling a product for huge amounts of money that no one is happy paying and yet everyone still buys.  That’s power.  Let’s face it, if you could go elsewhere, you would.  But you can’t, so suck it up and deal.

You can buy/borrow/steal other hypervisors.  But you won’t.  Unless VMware goes too far, which I’m pretty sure it hasn’t. It is going to make money.  Deal with it.  You will bitch and moan, but then you’ll send VMware a check.  Life will continue.

Yesterday, Netflix sent me a notice that it was changing its licensing policy–again.  Six months ago, Netflix told me I should stop getting my three physical disks a month plan for $15 and change it to one physical disk plus unlimited online access for $12.  I said, “super!”  I still needed physical access because Netflix has yet to put some “new” disks online … like the Exorcist, or Jaws, or any of the Star Wars episodes my nine year old watches incessantly.  Now, Netflix has decided that if I want to keep getting any physical disks, I need to pay double.  Evil, yes.  Moral? No.  Am I going to dump Netflix? No frigging way.  I’m going to pay. Bastards.

I’ll remain jealous.

The premise: it is only a matter of time before disk (as we know it currently) will stop being a significant part of the data center.  Instead, solid state/flash type technologies will replace it.

What time?  I think within 5-8 years.

Why? Because the servers are solid state.  The networks are solid state.  The only thing that ISN’T solid state is storage.  The only REASON that continues is because of the cost.

Previously we wrote a paper on the economics of change–where we (rightly, in my opinion) stated that it takes a step function in cost reduction to move a market to a new way of doing things.

Few argue (although there are some, which I always am thankful for) that mechanical disks are BETTER than solid state technology.  People did argue that vacuum tubes were better than solid state stuff too.  How did that work out for you?  People run mechanical disks even though they are slower, inherently less reliable (more on this argument in the paper), and generally a nightmare to manage (due to the sheer number of them) simply because the cost of the alternative is just too high.

Thus, the contention is that IF the cost were on par or at least close, people would choose solid state devices to store their stuff on versus disk drives–at least for primary capacity.  (Eventually EVERYTHING will be solid state, but just as tape maintains a role, disk will most likely maintain a role for a long time–perhaps for archive systems, etc.–although if cost truly becomes a non-issue, then one can draw the conclusion that all we need is solid state and tape.).

Yes, there is a big IF–but since that IF is economic–I can assure you that issue will be solved.  Then it just becomes about WHEN.

So, if it is inevitable that the end game = solid state storage in the data center (everywhere), and that end point occurs at X, what are the likely disruptive opportunities that will avail themselves to our IT industry along the way?

Dick Egan of EMC fame told me and others, in 1986ish, that he felt that by 1990-1992 we would no longer use spinning disks. He was off by a few decades, but he was right.  Moore’s law doesn’t apply to disk drives.  It does continue to apply to solid state technologies (like processors, memory, etc.).  Couple the natural market forces with new acceleration technologies such as dedupe/compression and one can see how in relatively short order, the economic argument will be flushed down the toilet.

I’ll focus the next bit on what the likely progression will be in getting from point A to point Z shortly.

IRRELEVANT SIDE NOTES:

• The NHL playoffs were one of the best sporting events I’ve seen in a long time.  Of course I dig the fact that the Bruins won it after 87 years, but it was awesome to watch it all regardless.  I shall be visiting the cup this Sunday in Edgartown, MA.  Why it is going to be there, I have no idea.
• I’m very excited to go see the reunion show of one of Boston’s legendary local bands, the Del Fuegos tonight, where I shall regale in tales of my much misguided youth.  Back in the day I was in a great punky type band that played with them a lot.  I wanted to be a rock star, but thankfully for you I became a geek/business voyeur instead.  Chicks don’t dig me anymore, but at least I can afford stupid things now.
• I smell another big recession coming on in Tech.  I hope I’m wrong, but the hair is standing up on the back of my neck.  China is slowing spending, Europe is a mess, and the U.S. government has to stop spending like drunken sailors while using credit cards to pay of its other credit cards.  It all feels like we could be heading for a problem.

Cheers

Mark Peters and I collaborated on a recent ESG report on this subject after a rather enjoyable debate, over wine, which began in the vein of “which technology will have the most impact in the storage business in the next 5 years”? (To view the report, you have to login. To login, you have to have a pulse–we don’t require paid subscriptions so stop being lazy, damn it.)

The report states the case far more eloquently than I will here (Mark is an Oxford graduate, after all. Oxford the fancy school in Harry Potterville, not in Tennessee–no offense.), but here is the basic premise: breakout markets that create step functions in value tend to solve problems based on economics looking for a technological solution rather than the inverse.

For example, as I’ve told you before, goes the story of Data Domain.  We all know the end: billions and billions of dollars made by many (not me). The means is where we differ. During the height of the Data Domain buzz, even insiders thought that success (which justified the buzz in their minds) was predicated on the DD “technology”–in this case, dedupe.  They were wrong.  Follow the trail.

1. The problem did not exist until the VOLUME of data that needed to be protected grew beyond the scope of acceptable risk (i.e. 24 hours).
2. Once the problem did exist (i.e., companies could no longer back up their data within a 24 hour window), a solution that was different was required.  Thus, the “opportunity.”
3. The “solution” to the problem was simple: use disk.  Disk solved the problem of time to backup.
4. Disk cost way more than tape.  Thus, the second ancillary problem was ECONOMIC. Only people who directly faced the problem AND could assign a high value to the solution (disk) were willing to pay for it.  While disk may have been “better” than tape, it would not have ever had a global growth opportunity.  People would make due.
5. Data Domain’s dedupe technology solved the ECONOMIC problem at hand.  Prior to this time, Data Domain would argue that people SHOULD use their stuff because it was better–but until it was a legitimate PROBLEM, it would have been impossible  to ever garner significant “buzz” or success.  You can’t hit a home run in this industry by being the best mercenary. You have to have market forces PULL you to great heights.
6. The natural market force, or long term secular trend, was that data growth was not going to abate–therefore, MORE people were going to face this new, previously unforeseen PROBLEM (it was a nice to have, versus a need to have prior).  By eliminating the economic consideration, all Data Domain had to do was let everyone know they were ready for them when the problem showed up at the customers doorstep.
7. By being there first (in the perception of the buying market), Data Domain extracted 90% of the value generated in that space.  Party time.

It’s far too easy to correlate success with technology and people tend to miss the bigger issue: the economics. Tech for tech’s sake is why half the brilliant Israeli startups in this space over the last ten years get bought for $146M versus Data Domain going public at a billion, then getting sold for $2.5B.  Understanding the economics can be the difference.

So, the storage business is a macrocosm of the backup business that Data Domain flipped on its head by altering the economic realities of a perfectly happy, boring, multi-billion dollar annual business with lots of successful imcumbents that would have LOVED for nothing to ever change. Remind you of anything?  The overall primary storage business is ripe for the EXACT same phenomenon. We pay way too much for way too old storage architectures, there are lots of giant incumbents with little interest in disrupting the status quo, so nothing will change (i.e., even if someone has way better technology, it’s a nice to have, not a need to have).  I see things breaking shortly–by the same cause–the sheer volume of data and overall growth is going to cause systemic failure.

What’s the industry’s answer thus far?  SSD.  Flash.  Bandaids.  SSD is the same as industry trying to solve the backup problem by building a 50% faster tape drive.  Bandaids.

Thus, whether it’s big data, or rich media, or files, or whatever that is the cause of the continuing onslaught of data growth, sooner or later, it’s going to break all of our traditional methodologies of dealing with it.

When that happens, industry will respond with EXPENSIVE options (a.k.a., SSD or Flash). Those who desperately need that, will suck it up and pay for it but the BIG MONEY is going to be made by the first one (of substance) to alter the fundamental economics of storage. That will happen in much the same way again: with dedupe, with compression, with new deletion techniques, etc.  It will happen when someone is smart enough to optimize the storage is such a way that it can lower the effective cost by 10X.  Then the fireworks will begin again.

For what it’s worth (since I can anticipate some of the commentary), I am not against Flash or SSD or even tape for that matter.  I firmly believe that everything has a place (except 15k Fibre Channel drives, I don’t know what place they can have long term). What I’m against is the “all I have is a hammer, therefore everything I see is a nail” mentality.  That’s why we ended up with a thing called “nearline” in tape.  It was all the rage for a while, but it was taking something and applying it to a problem it was never intended to solve (FYI – that problem was economic). It was a bandaid.

Someone is going to disrupt our little 15-20-30 billion dollar business in a big way and the shit is going to hit the fan when it does.  I, for one, can’t wait.

Companies think that if they send out a press release, it somehow will make them feel better.  It must make them feel good knowing that they have said something so profound and interesting, that perhaps 18 people will read it.  I don’t understand it.

99% of all press releases are an unmitigated waste of time.  Even that 1% of newsworthy press releases tends to ruin itself by hiding the important, relevant component of the release inside piles of useless babble.

I’d like to see this press release some day.

The company is a consumer and small biz backup service, a la Mozy or Iron Mountain.  Mozy and Iron Mountain can’t make enough money in those businesses to merit staying in them–at least as they have been.

Carbonite is on track to do $40-50M, and lose money.  They had a very public outage a while ago, which isn’t helping.

They have a lot of customers who pay $59 a year for backup.  The key is that those customers pay $59/year for life, and never actually need to use the service.

The fundamental problems, as I see them, are this:

1. While automated backup is cool and easy (in theory), recovery of a failed system sucks and is painful.  Systems (laptops) fail.  It’s great if I only delete a file accidentally, as I can recover that, but if the system craps out, it’s a nightmare.
2. We keep way more data on the average laptop today than we could have dreamed of doing 10 years ago, when this business began.  Thus, the very reason large enterprises don’t do backup fully to the cloud (because they CAN’T RECOVER), is the same principal that now exists all the way down to the laptop.
3. It’s so cheap to buy a 1TB disk at Wal-Mart and back up locally, why not just do that?  I run MACs so I use Time Machine. It came with my O.S.  I bought a $59 disk that backs up everything on my machine(s), every hour, every time I’m connected.  I buy it ONCE.  If I need to restore, it happens instantly–I don’t wait a week to download that TB over the network.  If the disk craps out, I buy another one.  If my machine craps out, I plug the disk in and I’m good in minutes.  This trend will accelerate–storage on my desktop will become cheaper and cheaper, thus unless I truly value the offsite, slower backup service, there is no value to me.  I would argue I can make TWO copies, on TWO disks and keep one somewhere else, and it is still much cheaper and much faster.

So, since I’m always right, how can a company make money in this space?  Many do–but not who you think.  Those that do are the VARs/MSPs that sell to the mid-market businesses who are willing to PAY for the security and disaster recovery abilities they value.  They also tend to be REGIONAL such that they can put disks in a car and get them to the company if need be.  There are THOUSANDS of these, most of them make money.  They don’t charge $59/year.  They charge much more. They don’t back up consumers. The second guy who makes money in this equation are the arms dealers–those who sell the infrastructure to those VARs/MSPs and those who sell the backup “engine.”  We all know the manufacturers–and more are doing interesting things to further this cause, such as what Intel is doing with its hybrid cloud infrastructure offerings.  Guys like Asigra have become the “engine”–they seem to be the runaway leader of this space, and I know for a fact they MAKE money.

Anyhow, I’m pretty sure IBM makes money in this space–but not on the consumer–on the business market. EMC bought Mozy not because it felt it needed that consumer money as much as it needed to understand that consumer market/mindset.  Once it did, it realized it didn’t want to be in that business directly.  Iron Mountain DID make money on that business, but not enough to justify the ongoing investment required–and they have about the best brand on the planet when it comes to “protection” and “trust.”

Thus, it seems that the only way a consumer business can ever succeed in this space is if the people who build storage (Seagate, WD, etc.) stop lowering the cost (which seems highly unlikely, no?), users stop adding more data requiring more capacity (which seems even more unlikely), and consumer bandwidth becomes 1,000X “fatter” at no cost.

OR–we need to take a page out of Google’s book, and figure out a way to monetize the business sideways.  I don’t see how you could do it with advertising per se, but if there is some way to monetize the consumer BESIDES the $59/year, then there might be some opportunity.  I can’t figure out what that might be, but maybe they can.  If they have, it isn’t in the S-1.  The S-1 says they are going to try to do phones and iPads.  Whoopdie doo.

What am I missing?

I’ve loved the possibilities of what could be ever since HP bought H3C(3Com/Huawei) in terms of presenting a legitimate, large-scale, global threat to Cisco.  I spoke about it here in a blog way back when.

I use the term “possibilities” because it is just that–not a fait accompli by any means.  No one is going to make Cisco perish in any short time frame, HP included.  But what intrigues me about the whole deal is that HP is at least big enough to pose a legitimate threat–something Cisco has not had to deal with.  Sure Juniper and Extreme are great competitors–but only in a “slice” of the Cisco market.  HP, on the other hand, COULD cause damage up and down the line.

As I talked about earlier, the issues many of us saw then–and see occurring now–are around margin.  HP can sell stuff much cheaper than Cisco–it has a company built on celebration when it hits 20%.  Cisco lives on huge 70% margins.  All things being equal, if HP sells their competitive Cisco type gear at 50% of Cisco’s price, HP still makes north of 40% gross margins–twice its corporate average.  Party time.  Cisco either loses share (which is occurring), or loses margin by dropping price to compete.  Either way, it’s bad.

So, Cisco’s response to date has been “customers are more interested in performance than in price” (I’m paraphrasing).  Which is a great argument if you are winning the performance game, and not the price game.

This week, Dave Donatelli, who runs HP’s ESSN (Enterprise) group and who bought H3C stood up at Interop and made a few startling claims (at least to me).  He basically told the world that HP’s competitive offering to Cisco’s bread and butter Catalyst 6509 was now 2.5X faster, has 75% lower latency, and STILL costs a fraction of the price.  Further, he said HP’s campus line cards are now 6X faster than what Cisco offers in the 4500–still at a lower cost.

Now, we haven’t proven any of these claims yet, but I’m pretty comfortable that Dave isn’t standing up in public making such outlandish claims unless they really have something.  Maybe it’s 6X faster going downhill on a Tuesday (read: special configuration), but regardless, it seems HP has SOME performance advantage they are putting out there.  If that is indeed the case, the argument that customers only care about performance vs. price needs a mid-life kicker.  Slower and more expensive is tough even for a monster brand like Cisco.

I suspect that Cisco will react–they always do.  But what this tells me is that HP isn’t going to let up.  They aren’t going to just go away, and they are going to impact dramatic change in this market sooner or later.  I am not willing to say they will come out on top but I am willing to say that they will affect big change–they will make Cisco do things differently, and ultimately, users will benefit.

You’ll probably get a smarter take from Jon Oltsik’s blog here.

The networking giant has been awakened.

Cool.

I’m no expert in this area so this is just what I took out of a few heated conversations.  The hatred seems to come in two categories.

First, people hate CONFUSING licensing.  This appears to mainly be the fault of the behemoths who buy up tons of little guys and then have a hodgepodge of software, each with a myriad of licensing options and/or requirements.  This, I understand.

People hated Symantec/Veritas for this reason, but I don’t hear much about that anymore, so I’m guessing they simplified things.  I do remember back in the day when it was just Veritas, users hated the complicated licensing mess Veritas handed them.  And back then, Veritas only had a handful of different products.  I can only imagine the nightmare that happens when you are as large and diversified as Symantec (or CA, or Microsoft, or any other mega-huge software company).  I also remember taking the better part of a day trying to figure out exactly what we needed to buy when little 10 person ESG dropped Notes for Exchange.  I’m still not sure we did it right.

The CONFUSION hatred is obvious–as is the solution: stop thinking that just because YOU (people who work for the vendor and deal with it all day every day) understand your ridiculous licensing requirements, those of us who don’t spend every waking moment of our lives thinking about that do. We don’t.

No one in the outside world wants to be a licensing expert on your software.  Cut it out.  We have real jobs.  Dealing with licensing b.s. distracts us from those jobs.

The second camp invokes even more hatred and vitriol: the F* You licensing Policy.  Let’s use a totally random example, say, Oracle.

Oracle licenses by the amount of cores in your cluster.  More cores, more dough.  This ALMOST was reasonable when all machines were effectively single stacks, but today it’s a downright crime.

Have a 64 core machine?  Using 32 cores to run Oracle and the other cores to run web servers?  Tough crap.  Pay for 64.  Either turn them off, or pay for them, whether you use them or not.  You end up with the most expensive 32 core machine on the planet.

Running virtualization so you can use all that extra horsepower that you gained by consolidating your servers into a far more efficient package? Good for you, except now you have to go explain to the CFO that while you saved a ton of dough via consolidation and virtualization, it’s going to Larry the Benevolent, not to your business.

Revolutions occur for much less.  If this isn’t the modern day tech equivalent of “let them eat cake,” I don’t know what is.

It’s rude and insensitive, and it provides ZERO value back to the buyer.  I mean no one likes to pay a billion bucks for licensing, but at LEAST you get to run the app.  This is paying a billion extra bucks, for NOTHING.

Every empire gets toppled eventually.  Those who are hated by their people topple faster. Then people smash your picture with their shoes.  Then they hang you.

There are companies designing (redesigning) servers just because of this problem.  Why do I have to have folks spend time and money redesigning perfectly good servers just because one company won’t play nice with the rest of us?  Because they can.  And that sucks.

Now I’m pissed and I don’t even run Oracle!  I’m going to go punch someone in the throat.

So why do I have the audacity to question what to many is a fait accompli already? Because I’ve seen this play before, Mrs. Lincoln.

Now, to be fair, the concerns I am about to raise (which are entirely correct, mind you) may have already been considered and addressed by Fusion-io, but if it has, no one told me about it.  Thus, even if i’m wrong, I’m right.  I love that.

What Fusion-io does is build an expensive, albeit way cool, memory board that can be addressed as a disk and stuffs it onto the PCIe bus of your physical computer.  Its value-add is that it can stuff 100X the memory into the same physical footprint.  It is a density play.  I am totally cool with that.

Issue #1: It’s memory. It’s components.  How can a little company, as great as it is doing, compete with bazillion dollar component manufacturers long term? Answer: it can’t.  Toshiba or Samsung or someone is going to ultimately do this and do it a ton cheaper than Fusion-io can.  In 199 ish, I joined the hottest third party memory company in IT (to start a storage business) called Clearpoint. Clearpoint went from nothing to $54M (with zero VC money) on the back of MicroVax-II memory boards (16MB for a mere $9,000 or so).  The company expanded into many other lines, shot up to $80M, I think.  Wall Street came running to us.  Two years later, the company was toast. Why? Because Clearpoint thought the competition was the OEM–Digital or IBM etc.–but it wasn’t. The competition was from the people who built memory chips.  They changed the game with SIMMS, which became commoditized so fast Clearpoint didn’t know what hit it.  $9000 boards at 95% gross profit sold for $900 and 5% gross profit 18 months later.

In the same timeframe, there was a little company in the MA area called ECC (or EEC–I can’t remember).  It built a memory subsystem that installed in the backplane that could be virtualized to become a resident SSD.  Sound familiar?

Issue #2: In order for Fusion to win (in its current manifestation), it needs every physical machine to install its stuff. Once a customer does, in order to get proper utilization of that expensive asset (it cost as much as the server or more many times), the workload the customer runs is RESTRICTED to that physical server. Sure, the workload can be running on a virtual machine, but it HAS to run on that physical server. If you move that workload to another physical machine, you are, as my grandmother used to say, shit out of luck–unless that second machine also has a Fusion board installed.

Let’s say that second server does have the Fusion board installed–the workload you cared about will still go wicked fast, so all is well, right? Wrong, because now your Fusion board in the first server is sitting there generating heat and sucking power just looking pretty, making the cost/utilization metric of the box the most atrocious in the data center. That isn’t’ going to win you any IT awards.

I’m 110% OK with the fact that we have certain application that absolutely, positively have to go a million kph (for my global pals) and have absolutely no issue with you solving that problem with a Fusion-io or equivalent type solution. Go nuts. What I am suggesting is that therein lies the issue for Fusion–it can never be mainstreamed into the world of IT unless A: it makes it so cheap that people don’t care about putting one in every machine they ever buy and, quite frankly, it is simply not in a position to do that. B: if it does A, no one else decides to crush it and take that job for themselves.  I find both unlikely.

The real issue in this is that in order for to be successful, Fusion-io is advocating solutions that are directly contrary to the natural forces of the market. It needs you to think DAS while the world is thinking networked storage. It needs you to think physical boxes while the world is disaggregating everything both inside and outside the physical world. That is just such a 1992 attitude.

What Will Happen:

Or perhaps, what should happen, and therefore will eventually happen? Simple: first, no one is going to leave Fusion-io alone. Do you know what NTAP‘s PAM is? It’s Fusion-io (I don’t think it’s really from Fusion-io, but it acts and behaves the same way). This is not an area that big dogs are not paying attention to. Do you know what FAST is from EMC?  It’s IO director software that figures out in real-time how to place data between hyper fast flash memory and mega slow/cheap SATA disks–such that  ALL of the IO to the box is totally and automatically optimized. Terabytess. Petabytes, not gigabytes.  Do you think for a minute that EMC isn’t considering extending that capability OUTSIDE its boxes? A networked cache above the backend perhaps? There is lots of activity going on. A server card (a.k.a., intelligent HBA) that might have some flash/cache capabilities on it? What if FAST ran throughout the whole data center, coordinating the placement of data in the optimum spot for EVERYTHING?

I’m getting ahead of myself here, but the point is this: to do wicked cool stuff with data, you have to have the ability to control, move, place, etc. everything from anywhere. You can’t have ANY physical restrictions. So unless Fusion-io has plans to be able to leverage (via a network) their assets for ANY server from ANY server I can’t see how this can be a life altering play.  When I can utilize the ENTIRE collection of expensive, wicked fast memory that exists at the server (or storage, or network) no matter where is physically resides, then I really have something.

The Bigger Truth:

I really am not trying to shit on a company that has buzz times 100, has hit $100M in revenue real fast, and solves a real problem. I’m just trying to be a realist. It has the swagger and arrogance of a young Data Domain, but it doesn’t have what Frank Slootman called the “long term secular trend” to ride here–it has a short term set of problems that by default WILL GO AWAY soon.  Data Domain’s trend was that data growth alone would continue to force more and more people to extend outside their backup windows. Nothing was going to stop that from happening.  So he intersected that trend perfectly and solved the ECONOMIC problem of using disks (which solved the technical problem of the backup window) as a backup target by making dedupe a way of life.  Billions in value later, the play still works.  Data Domain was the rock star of the valley the same way Fusion is at this time, but it can’t end the same way unless there is a whole lot that it is doing regarding what I just stated that I don’t know about–which is in and of itself another issue.  The people at Data Domain were cocky, but they were also smart: they talked to me/ESG and other smart people out there.  They didn’t think they knew it all, just the important stuff. They were right. I know firsthand that they sought and received value from those external strategy engagements. I know it made them money and accelerated success and I know that it helped them avoid mistakes they may have made.  I also know they will be the first to admit it.  (Do you see how I linked myself to their success? That was smooth.)  Fusion doesn’t talk to anyone as far as I can tell, which means they know it all.  That’s stupid.  Pick your favorite best run company, and I guarantee you that one of the reasons it is as good as it is is that it KNOWS it doesn’t know everything–and it does its best to comb the land for information and help. Companies that never look outside their own four walls at this stage are simply displaying ignorance, which is one of my most important success KPIs.  I’m not smart, but I’ve got data.

Maybe it’s personal, but I swear I don’t think so!

Take the last two digits of the year your were born (in my case, 64).  Add to that number the oldest age you will be by the end of 2011 (in my case, 47).  The answer will end in 111.  If you are a kid, it will end in 11.

So, the challenge is to have some smart engineer that can also speak basic English (i.e., “dumb it down”) explain why this phenomenon occurs, such that I can explain it to my wife and kids.

Hurry up.

I never thought that a behemoth of such brand as Iron Mountain would have been one of the casualties, but this week it (sort of) announced that it is getting out of the low-value capacity game.

There is lots of stuff going on at the Mountain currently, so no one is talking–thus this is my own personal, yet highly educated guess as to what’s happening: Iron Mountain can’t make any money selling capacity. There, I said it. Iron Mountain is going to stop being in any business that can’t make a pile of money. Those bastards!

If you read between the (invisible) lines, you see that while it exits the no-frills capacity game, it is staying firmly in the higher value add (a.k.a., we make money) cloud services around archiving, eDiscovery, etc. Why? You guessed it, because it makes money on that.  Just like it makes money on storing your physical stuff.

Iron Mountain isn’t a startup, isn’t going to get some uber-Facebook valuation IPO gain, and isn’t going to ever, ever be sexy. It is, however, going to spend its time where it makes money.

I’m fine with that. I’m also biased, though I don’t feel that is affecting my judgement here:  I’m pals with CEO Bob Brennan.

I’m also fantastic at saying “I told you so.”  If Iron Mountain can’t make money leveraging its brand as a secure, trusted place to keep your dumb capacity, then the only way someone can make money is to do so by operating leverage. You aren’t going to build a better brand than Iron Mountain, most likely.

You either have to add value to that dumb capacity so you can charge more money and thus make more money, or you have to have some operating advantage.

Nirvanix believes it has some operating advantage–i.e., it can store, replicate, manage, and deliver your data in its cloud cheaper, faster, and better than anyone else can (or than you can on your own).  If it does, it can make money as soon as it crosses whatever elasticity point exists in the business (i.e., once we get 10 PB, our cost per TB stored is decreased 90% … ). Then it gets economies of scale and can make money as long as it keeps customers happy.  It’s a great model.

Amazon has a great model.  You pay what they want you to pay, which is so cheap that you couldn’t possibly do it yourself–unless you absolutely, positively care about accessing your data (securely)–in YOUR timeframe. As long as you don’t care, Amazon’s scale makes it almost impossible for it to lose money–it’s really just a matter of how much it can make.  It’s a great business.

Both Amazon and Nirvanix either have operating leverage that Iron Mountain  doesn’t have or the return on that leverage isn’t great enough compared to other areas of investment for the company.

Unlike Amazon and Nirvanix, Iron Mountain is still valued on its ability to return on its assets–perhaps the lowest tech means of valuing a company, but it is both its blessing and its curse. Iron Mountain gets a higher return on its debt/assets in its traditional businesses and its high-value add digital businesses than they can ever hope to get on selling capacity.  It’s as simple as that.

This whole deal did get me thinking, however, about “what if” scenarios.  Nirvanix brilliantly (and almost immediately) offered up a lifeline to Iron Mountain capacity users saying it would migrate them (or help) for free and give those customers unlimited storage capacity for 30 days–no charge.  Genius.  Nirvanix has tools to help customers do that.  Depending on how much stuff you have, it could take a little while or forever.

Why I get to now say “I told you so” is because of the cloud “gateway” players that I’ve been bullish on. If you are a Nasuni customer, you have CONTROL of your file data within the confines of your building (The data doesn’t have to stay in your building, the control does!).  You decide where it goes (to what cloud) when, securely. And then, if you want to move it–YOU decide where and when to do so.  The same principal is true on the block side with the likes of Cirtas, Twinstrata, and others. These “gateways” are a means for IT shops to retain CONTROL.  Franky, you are nuts to play in the cloud without them.

If you learn nothing else, learn this: if Iron Mountain can get out of the capacity business, ANYONE can. It didn’t fail–itmade a simple business decision to leave a lesser profitable field for a more profitable one.  Do you think AT&T can’t/won’t make that decision?  It can, and it may. The point is that you shouldn’t ever lose CONTROL of your data.  It’s yours.  It matters. You cannot control whether your service provider remains in the business you signed up for or moves into a completely new game–or drops dead.  All you can do is maintain CONTROL of your assets–namely, your data.  There is no difference between Iron Mountain deciding it can make more money elsewhere and leaving the business or you losing access to your data because Amazon has an outage: neither is in your control.  All you can do is make sure YOU are the one calling the shots if and when something happens.

Perhaps I’m naive, but didn’t it seem like the reason you could get potential buyers to attend an event was that there was something in it for them? Something other than free booze and tee-shirts, that is. Didn’t it seem like people used to go to industry events because they could learn something that would help them in their job? That could help their company?

The VMUG and VMworld events are examples of things done right: users go because they NEED to learn things, and vendors go because that’s where the users go. That is the circle of event life as it should be: vendors aren’t pushing their story as “content” for users–users seek out vendors they want to talk to.  That sure seems like a more civilized way to do things.

I say all of this because ESG is days away from holding our first ever event (www.esg-ahead.com).  I was naive in thinking that creating an event specifically for IT pros by IT pros with a day jammed with education for IT pros on IT (virtualization, specifically)  issues, would somehow keep consultants, headhunters, vendor sales reps, etc. from attempting to crash the party.  How wrong I have been.

Make no mistake, I like consultants, headhunters, and god knows I like sales guys – but for the love of god, this is not for you! Even the sponsors of our event don’t get to pitch–which they are fine with, because they understand that the entire point of all of this is to HELP the poor IT folk get more advanced in their virtualization efforts.  If the user gets smarter and does more–it creates opportunities those vendors wouldn’t get otherwise. A “stuck” or “stalled” IT department does NO ONE any good–not the industry, nor themselves.

Our objective is to help them get unstuck.  Our sponsors are smart enough to realize that this is also their objective.  Thus, they don’t mind not being able to stand on stage and give an overt infomercial.  They realize that if the intent is pure and they are a positive member of this tight agenda in this tight community of like-minded people, they will have the opportunity they seek–eventually.

I don’t see how a head hunter or a consultant looking for leads helps anyone at this event (or most other events) advance their virtualization efforts. There are plenty of vendor networking events–and they are great. So go to those!  Leave the poor bastards trying to learn something alone!

So, my friends, even if I had an empty chair (which, thankfully, I don’t), I wouldn’t let you in.  It doesn’t mean I don’t love and respect you–it just means that for the same reason it is inappropriate for me to demand to be allowed into a Girl Scout Troop meeting (without my  kid involved), this is the wrong event for you. All we would accomplish is to make those who belong there uncomfortable with our presence.

And for you vendor sales folk, well, I’m afraid you are just shit out of luck.

We are trying to create a safe-haven for IT folk to share, learn, and advance–not a battle ground to be accosted and pestered. Call me naive, but that is our quest. Will we succeed? I don’t know, but we sure as hell are going to give it our best shot.

Once the huge offers of dough start rolling in, I may change my tone–but for now, leave us to our mission!

While there is great significance in the direct cause/effect of these tidal shifts–namely, the fact that in each industrial revolution some “nobody” company rises above the greatest powers on earth to lay claim to all the spoils generated in the primary phase of that revolution–that is only the very tip of the iceberg.

Yes, VMware is the nobody in this era. Yes, they have laid claim to $25B in brand new value created. Yes, they are the “face” of the era in the same way that IBM was the face of the mainframe, Microsoft the face of the distributed, and, arguably, Google is the face of the Internet era.  The face is what we pay attention to because it’s what we see.

Forget the face.  The real impact of all revolutions happens where you aren’t looking.  The real impact can be found when you figure out that you no longer do things the same way.

As humans, we are creatures of habit. We’ll do the same thing day after day until it doesn’t work anymore. It doesn’t matter if what we do is inferior, harder, more expensive, or less strategic than what we “should” be doing; people never do what they “should” do, they do what they “know.” What they know is part of the past. What they don’t know is part of the future. The future is scary. Revolutions are scary.

Here’s my silly example:  for a thousand years all the way up to the early 1900s, the human transportation system consisted of horses, carts, and paths. The rich rode in carts pulled by horses, the middle class sat on the horses themselves, and the poor walked. That system looked like it would stand forever. Suddenly,  Henry Ford comes around and changes everything–enter the automotive era.

The “car” itself, the product, was the output of the “face” of the revolution, which was Ford.  Note: The car’s success had nothing to do with it being “better” or “more strategic” than the horse: it had everything to do with economics.  More on that later.

The car itself didn’t do shit to change the world. The economics Ford mastered to make the car available to the masses was far more important than any of the technology. But even that didn’t spur the wholesale societal changes that occur in a revolution. All the things that happened “around” the car is what changed everything.

People who could and did buy cars shared the dirt path with horses. Horses were more reliable. We didn’t have people who knew how to fix cars, how to drive cars, how to support cars. We did have veterinarians. We couldn’t drive cars very fast because the roads were non-existent. We couldn’t drive cars very far because we ran out of fuel.  You can stuff some hay in a horse’s mouth and ride all day.

The revolution really happened once we enabled the use of new technology to reach some of its potential. We built actual roads, then highways. We put gas stations along the roads. We trained people to repair and optimize our automobiles.

We built an ecosystem.

The first mainframe was a big calculator. It had one job: it replaced a human, then a lot of humans. The mainframe was the face of the era, but it didn’t truly force a revolution in business until applications enhanced (or replaced humans) many functions. The distributed era put computing (economic) power on our desktops, but I would argue, again, the applications–and the NETWORK–were the necessary ecosystem enablers for that era to become revolutionary. The Internet was a cool way for Stanford people to use Yale MIPS, but it didn’t do diddly for you and me. Only when the Internet connected everything to everything could we even begin to imagine the power of what “could be.” Nothing we do day in/day out is the same since the Internet infected our world in earnest. Nothing. From research to porn to communications, nothing is the same.

Today, the server is a horse. We can fit so many in each stall of our data center, we feed them expensive hay (power), and we have a lot of people that know how to take care of them.  Virtualization is the car. We know it’s cool, but we haven’t built all the roads, gas stations, or a flock of technicians who know how to fix and optimize them yet. Like the car, the reason for its initial entry into our worlds was not about technology, but about economics.

Soon the hypervisor will be BIOS. It will just be there and no one will pay attention to it.  Most of us will move on with the revolution and get caught up in it. Some of us will desperately cling to the way it was, only to be replaced by a line of code eventually. There are still landline phones. There are still Vaxes. There are still retail stores (I’m told). There are still horses.

There was way more money spent on building roads than there was on building cars, FYI.  Cars created the opportunity for entire new industries, technologies, skills, and, most importantly, functions. Cars changed everything. Virtualization in the data center (and beyond) will do the same.

Final example: Backup is like shoveling horseshit out of the stall every morning. No one likes it, but you gotta do it. In the virtualization world, there are no stalls–but there is still shit.  You just can’t deal with it the same way, so stop trying.

Virtualization changes everything. Time to re-evaluate all that you know, because you could still ride a horse to work if you chose to–you would just be a jackass for doing so.

For all you “cloudites” out there, the single MOST important thing that is going on over the next year is Intel’s Hybrid Cloud.  It is pure, unadulterated, genius.  Intel has found a way to reach the SMB (really the S) in every far reaching nook and cranny on the planet–via MSPs selling cloud services.  They seem to have packaged up a server, installed a bunch of VMs (that sure don’t appear to be VMware, which is interesting in and of itself), and are RENTING it to MSPs, who in turn are RENTING virtual machines and services (aka software) to businesses.  You click on Windows Small Biz Server, or Windows Server, and pay a few dollars (very few, I’m told) a month to rent them.  You can pick a firewall, back up to the cloud (this I find stunningly interesting–who are they using????),  DR to the cloud (again, who?), and remote management and VOIP services.  I’m sure there will be a pile of others–sort of like the “App Store” from Apple.  Intel will take a chunk, vendor will get huge volumes.

The biggest reason this is so brilliant is that Intel not only figured out the top impediment to the “S”MB space is cost (thus, they are effectively financing the whole deal), but that by doing said financing they can build an enormous annuity stream–and ultimately sell “servers” to an entirely new segment of the market where they had limited exposure previously.  Microsoft “rents” software to that same market–where previously, they got little to no revenue.  Whoever the other software providers are will get huge installation volumes, and depending on the biz deal they cut, possibly huge dough.  I continue to poke around but Intel is being very tight lipped.  I’m told we’ll hear things later this spring.  This is one important industry thing to keep your eyes on.  Intel can change the world IT landscape in short order.

I wonder if MS did a deal to give away Hyper-V to Intel to use.  Would be smart if they did.  I doubt VMware would do so, as they have no need and would cannibalize the spectacular margins they are currently commanding.  Could be Xen as well.  Who knows.  The DR and Backup ones are enormously intriguing.  Since it’s a pure MSP/Cloud play all around (or so it seems), it leads me to believe Asigra should be in the pole position on backup–which would give the already market-leading MSP provider outrageous new volume into the lower end of the market.  I can’t figure out in the Intel story what they mean by “DR”, so I really can’t guess who is in play here.  Fascinating stuff.

Speaking of cloud stuff, how long do you think it will take IBM global services to come out with some IaaS cloud offerings?  Why on earth don’t they offer storage and compute already?  If they do, they aren’t telling anyone, and Amazon is kicking butt everywhere.  Guys like Dell, IBM, and HP have trusted brands and customer bases they can absolutely leverage, so why is this taking so long?  Dell is well down the path, I know for a fact, but I’m surprised I haven’t seen more from HP or IBM.  Has to be a matter of time.  Too much money and risk to sit around waiting.  Once a customer makes a move to a “spill over” cloud provider, it’s not likely they will switch any time soon.

Mark Peters and I are talking about a paper discussing the economic upheaval that technologies like dedupe/compression will provide to parts of the data lifecycle that haven’t yet been affected (clearly the end of the wire has been a nice play, with Data Domain taking 90% of the market).  When you can create an order of magnitude better economic story, markets happen.  First guy to satisfy the market need (note: NOT THE GUY WITH THE BEST STUFF!) takes 80-90% of the value created from that market.  Happens all the time.  So, I’m frankly stunned that the old school infrastructure/storage dudes are waiting all this time to get their act together when it comes to doing this for Tier-0, -1, and -2 storage.  If you make an SSD 10X less expensive, people will probably buy more.  If you make primary storage 10X less expensive, people will probably buy more.  And so on.   No one moves as fast as my brain tells them they should, but sooner or later one of the major players is going to figure all this out and the world will change.

Big Data is going to have to be “refined” as a term.  To most, it means analytics.  Not to me.  Big Data is just that–big heaping piles of COPIED data (non transactional, non changing–copies of data).  You perform functions upon said big data.  You house said big data on “Big Data Infrastructure” or Big Data Storage, etc.  You do Big Data Analytics, or Big Data Backup/Recovery, or Big Data Warehousing.  The term won’t work if it means everything–because then it means nothing.  Be specific.

I still love the concept of Big Data Cloud Services.  Why should I house all that crap in house?

Amazon is really cheap to store stuff on.  It’s pretty damned expensive to actually “use” the stuff you store there, however.

There are still a few seats left for ESG’s Ahead of the Curve Summit Series on Virtualization for IT pros on April 14th in Waltham, MA.  Vendors, please stop trying to crash, I love you but this is an end-user only gig.  You wouldn’t understand it anyhow!  www.esg-ahead.com

Ciao

At the upper echelons of any big company sits the political power.  While you would presume those in charge are “business” first and political second, I’m here to tell you that isn’t the case 99% of the time.  You don’t survive at the top of a big company unless you are a politician.  You forget what having a real mission/job is like, because you are too busy working your own agenda–or worse, fighting off someone else’s covert attacks.  One mission, my ass.

You think I’m wrong? Think about these little nuggets:

• I estimate 80% or more of Sr. executives at the biggest companies in our space have their OWN personal PR firms.  Yes, not the PR firm of the company, their OWN personal PR firms.  Who besides a politician needs a PR firm?
• How many stories are planted in the Wall St. Journal from “unnamed industry sources?” You know who those are? Personal PR firms.  Look at who has an agenda and you can find out where it started. Want to cause a controversy? Leak it to the Journal.
• Boards of Directors are industry icons, only there to direct the company management towards protecting and enhancing shareholder value, right? Ha! Boards might be the most dysfunctional of all!  My guess is that 90% of all major decisions (hiring/firing CEOs, disclosing/covering up bad stuff, etc.) are made based on “cliques” as much as they are based on logic.  Sometimes I’m floored at the stories I hear–like we are back in 8th grade holding grudges and waiting for the right time to give someone a wedgie.

I’m stunned that big companies can succeed despite becoming political animals.  Clearly not everyone in those companies has become a politician (or truly nothing would ever get done), but it’s still crazy how the top ranks spend all their capital jockeying for favors instead of (god forbid) actually selling things or talking to real customers.  They have “people” who do that.

Anyone who has “people” who talk to customers is a politician.  When’s the last time you felt comfortable leaving your future in the hands of any politician?  Yikes.

Other than that, I feel compelled to comment.

Why does it take an outrageously bad thing to happen–publicly–before people act appropriately?  Last year, TJX lost the trust of the world and countless millions of dollars due to a bad breach that it could have stopped by spending a hundred grand or so. Now, RSA gets hacked.  Besides the delicious irony of that, there is a real lesson for you mortals to learn from this:  if RSA can be hacked, so can you.

For years I’ve been saying that a strategy designed to keep bad things from happening is nice, but ineffective.  You can’t keep bad guys out forever; you can ONLY mitigate the damage done by them.

Your security strategy should be based on the assumption that you WILL lose your backup tapes.  You will be hacked.  You will have your customer’s name, SS numbers, and bank account information published on a website.

I’m not that smart, but if that is the basis of your strategy, seems to me that you would remove your blinders (which is the nice way of saying “stop trying to see past your rectum, just pull your head out instead”) and realize that if your binary data is going to go missing, it had best be encrypted.

Encrypt it at rest, in flight, on the truck, on the disk, in the lab, in the warehouse, everywhere.  Encrypt it so when you lose it, it gets stolen, or Chuck leaves the tape on his dashboard while at the bar, it can’t do you any harm.

If RSA can get hacked, you sure can.

And yes, I realize that would mean your awesome deduplication purchases last year would now be junk.  Oh well … we’ll figure out something new to sell you.

1. Stop overthinking and start with the basic facts.
   • The block biz for standalone disk arrays is big.  In the midmarket where LSI lived, it’s at least $8B and probably closer to a $11B total market opportunity.
   • NTAP bought what is an $800M or so biz from LSI that MOST IMPORTANTLY spits out well over $100M annually in profits.
   • An enormous percentage of the bill of material cost of a NTAP system is comprised of disk system components supplied by Xyratex.  Logically, we can assume that cost of the BOM component will be replaced by LSI and will lower the cost of those components by north of 15%–which goes directly to the bottom line.
2. Financially, it’s brilliant.  No two ways about it.  It cost NTAP nothing ($480M) to buy.  If they get NO OEM revenue contribution, never sell one single array outside of what it will ship in the FAS series, and only use the buy as a supply chain replacement, it still pays for itself in just a few years–then it promptly feeds the bottom line forever.

   Summary: It’s a good financial deal even if they NEVER see a dime from outside of their own supply chain savings.

3. Since we are all agreed on the previous point, lets move on to reality.  Is IBM going to stop buying LSI today?  Nope.  Even if they wanted to–which they don’t–they couldn’t.  It will take them 9 months to switch IF THEY WANTED TO.  The reality, at least for the foreseeable future, is that the cost of LSI to IBM on the low end is so compelling that they will only stop buying if they absolutely have to.  They don’t have any benefit–and a lot of risk–in that space, at least short term.  It takes the likes of IBM a long time to make a significant supply chain replacement like this and unless Sam P. hates Tom G. much more than I think, the business disruption makes me believe that IBM will be contributing to the cause for at least another 18 months worse case.  Oracle?  I keep hearing how Oracle/Sun hates LSI, but the fact is, it’s not true.  Exadata desperately needs a lower cost alternative and guess what? LSI fills the bill there.  Again, what Oracle cares about is destroying the world by commoditizing as much gear as it can.  Larry does NOT care if he does that by building cheap stuff himself or by buying cheaper better stuff from someone else as long as he hurts those who take money from his deals selling expensive kit. Will they become a $300M NTAP/Engenio customer? Probably not–but again, short term, I see little to no risk.

   Thus, to summarize point 3: for the next 18 months or so, I don’t see a lot of displaced revenue, or the associated profit that gets kicked back, going away.

4. It’s ballsy as all get out.  NTAP has not been an acquisition machine, hasn’t done big deals with a lot of overt success, and as such will be viewed skeptically.  However, while this is a big deal, it isn’t a big “tech” deal.  It’s a cheap way to buy a crapload of value that it will gain day one.  It will be accretive almost immediately.  That doesn’t happen often.
5. Georgens bought what he knows so very well.  He ran the place, for the love of god.  He ran it successfully.  He runs NTAP successfully.  This is not a “hope and pray” deal–the guy is as smart as anyone I know and the fact that he sat inside both boardrooms means there are NO SURPRISES here.  You (and me) can make all the “what if”‘ scenarios we want, but betting that this will fail because it wasn’t thought out will NOT be one of them.  This was thought out in spades.  Have you watched the NTAP numbers since Georgens took the reigns? Absurdly good.  Remember, he didn’t take over a struggling company run by a putz–he took over a company on a killer roll run by a god and he’s IMPROVED it.
6. It may be a reason for IBM and NTAP to head to the marriage counselor.  Probably not, there is a lot of field animosity around the NAS biz that will probably never be fixed, but if NTAP is smart in how it positions the low end LSI block stuff that IBM cares about, they may be able to enjoy a marriage of convenience if nothing else.
7. There is no way to see anything positive in this for Xyratex.  There is a way to see some positive for Dot Hill.  They may not be able to move away fast, but the OEMs will absolutely be looking at alternatives this morning to be able to build contingency plans for their bosses.  Dot Hill looks good here.  Xyratex will need to secure a big deal–probably try to take the IBM business (I would; NTAP is so huge that, for them, IBM’s LSI buy is the only thing even close to a replacement), but even if successful, it will take a bunch of time.  Losing NTAP is going to hurt, but doesn’t have to be fatal.
8. G. While the deal makes financial sense even if they never sell a standalone LSI block box–they will sell some.  I’m not sure the packaging or rationalization yet, but they will sell some.  It lets them participate in a HUGE incremental market with a product that arguably has the largest single install base in the world.  Sure, they have other people’s names on the boxes, but you can’t find a data center without a pile of LSI sitting in it somewhere.  That’s a good thing to build on.
9. 976. While HP, EMC, Dell, etc. are (rightfully) filling the airwaves with FUD on the whole deal, the fact is NTAP is and has been a formidable, and worthy combatant.  They have a great company and great sales force and have not succeeded solely because they are nice guys.  They kick ass and are a threat to all players wherever they show up.  Adding this stuff to their bag isn’t going to suddenly make them less formidable, it’s going to expand the battle fields where they fight–and that, no matter what anyone says, is a threat.  There is a reason NTAP is public enemy number one at EMC: they deserve to be.

That’s all for now.  Go argue amongst yourselves.

The first lesson you should learn is that if you are a VC, or a startup, you should pay more attention, you dumb asses.  I appear to be in the groove, as it were.

So, Greenplum, Vertica, and Aster are gone.  Informatica (public) is still a prime acquisition (big money) candidate (Dell isn’t in the game yet, but will be).  And as we speak, any VC with any money left at all–post the great Armageddon of the past decade–is desperately looking to dump it into anyone who can spell “Big”–being able to spell Data is just gravy at this point.  Most of these investments will be “lemming” investments with zero chance of any significant outcome, but that’s a different story.

Now the fun starts, at least for me.  The reason these companies have been acquired is twofold:  First, there is a legitimate need for better tools to be able to help owners of said big data sift through said big data to find stuff that they can make money on.  Totally legit.  Second, because the other guys made a move first.

So, what we have is the classic follow the leader, keeping up with the Joneses mentality at play, and then we will try to sort out the details post facto.

The issue: now that big dogs have acquired the small dogs in this space, the real work must begin.  The small dogs all sounded a lot like total geek, niche market plays.  Those are not appealing to big dogs.  Selling to the “analytics” guy is arguably more niche/geeky than selling to the “storage” guy.  At least the storage guy has had ten years or more of being “visible” in the IT organization.  The analytics guy is the modern pocket protector-wearing IT dude.  (Take no offense–as always,  I’m just telling you what those uneducated bastards on the 57th floor think).

So, what’s critical for any of this big data business to make the leap from “geek to chic” (I want credit for that, that’s a good one), is MARKETING.  These companies have to establish their broad market appeal (hint: it ain’t about your super spiffy algorithm)–to business buyers, with broad business application.  Talk about the overall value of what happens when you find that nugget of gold out of the piles of dung–not how you found it.  Little guys–and some big guys–love to talk about algorithms.  Algorithms won’t impress the ladies, or ultimately the money players. Algorithms impress fellow geeks–which (sorry again, people) represent a SMALL NICHE MARKET OPPORTUNITY.

If you wanna play against Oracle, you bring forth your best-looking assassin, not your smartest scientist.

Now, let’s get out there and do some bad ass marketing, so that I can tell one of you from the other.  Otherwise, I’ll get bored and write the whole lot of you off.

Nope.

While all those are good things and very worthwhile pursuits, they are not the reasons our industry is so enamored with the construct of big data.  The reason we love big data is far less complex.

There are really two reasons:  first, because Oracle decided to get into the game and second, because once we figured out why they wanted into the game, we realized there was a ton of money to be made–or lost.

A quick history lesson:

Big data means nothing. It’s a well meaning term for (literally) big piles of data, sitting in various massive balls of infrastructure, randomly scattered around our enterprise.  More common terms include data warehouses or decision support systems, etc.

The IT industry has been built on the back of transactional systems: the big iron, big money, big visibility systems that run our companies.  Those are the most expensive, most important systems in our worlds and as such have the best people on them, the most expensive components–both software and hardware–and have the most risk (perceived or real) to our livelihoods, which is why they are the most reliable.

Transactions occur once.  We make sure our systems scale to meet transactional demands–once.  We pay a lot to over-provision in every aspect because transactional scale is not a nice to have, it’s mandatory.

Big data is created by copying transactional data and sticking it on another system. We copy ALL our transactional data and stick it on these systems. Over time, those systems become supersets of our transactional systems. We make lots of copies and put them in lots of big data systems.  Talk about the need for dedupe (which, in big data parlance, is MDM: master data management, but I digress).

Since we used big iron/big databases/big money stuff on our transactional systems, we had the tendency to duplicate those investments on our big data systems even though those systems behave completely differently from each other.  So, lo and behold, we found ourselves with giant systems and giant expenses all over the enterprise, built for transaction processing, that don’t ever do transaction processing.  They sit idle 90% of the time, waiting for an “analyst” to come up with some query to run against the data set.

I figure for every transactional Symmetrix EMC sells, they sell two more for big data apps.  Same with IBM, etc. Oracle sells TONS of RDB licenses for big data infrastructure, even though it seems stupid that that type of data sits inside an RDB.  People are creatures of habit.  Industry counts on it.

So, along comes the benevolent Mr. Ellison. He sees that the masses are paying $3M+ in infrastructure costs for each of their big data piles. He doesn’t think he is getting enough of that pie. So he brilliantly decides that he can radically reduce the spend on hardware by packaging up commodity stuff purpose-built to handle the big data issues. He then bundles all of his magic software–which now consumes 80% of the spend–and puts a bow on it for customers.  Then he gets downright evil (and even more brilliant): he runs into all the big sites, performs a quick software audit, and finds out those sites are all out of licensing compliance.  Suddenly, customer A gets handed a bill for $4M–but not to fret, because the good people at Oracle have a simple solution: instead of just paying up, why not just buy a new Exadata system–which will greatly simplify your life–and we’ll make that little compliance issue disappear?  Genius, really.

I figure there is at least $6B in big iron at risk in this area alone.

Thus, the reason this space is electric right now has nothing to do with the marketing you hear.  It’s not about the promise of driving value out of your data, it’s about vendors figuring out that they either attack that space or get slaughtered watching. EMC didn’t buy Greenplum because they are nice people. They bought it because it helps them go on the offensive in the big data space and–most importantly–it does so by attacking Oracle where its (black) heart is: at the RDB.  You don’t need a $2M Oracle DB license if you use Greenplum, or Vertica, or Aster, or Informatica, etc.  IBM knows it.  HP knows it (which is why they bought Vertica yesterday).  It’s just a matter of time before Dell makes a play.

Now, not to be overtly pessimistic, there is a silver lining.  Once all the plays have been made for their ulterior motives, then everyone will get down to the real value at hand, which is making those random piles of data start generating customer value.  That will happen.

First things first.

The reason is simple–storage is a problem that impedes the ultimate goal in all this virtualization hoopla–which is to create LIQUID IT.  Utility computing models are what we are FINALLY going to end up with.  Praise be to god.

Server virtualization is just the tip of the iceberg–but it’s a mighty tip.  It’s more of a key that has unlocked Pandora’s box.  It has shown the unwashed masses the light of what COULD be.  (And what should be).

The “Cloud”–be it public, private, or hybrid–is the new term we use, which means a service enabled by ORCHESTRATING virtual (liquid, dynamic, autonomic–pick your phrase of choice) infrastructure–to create IT UTILITY SERVICES!!!!! Can I have an amen!

An IT Utility–again, public, private, or hybrid–is an instant-on set of IT resources that has a known cost and a known functional performance level with a known (legitimate) SLA that can be put up or torn down as required.  Hallelujah!

IT has found religion, and it’s foundation is virtualization.  The first order of virtual knights has used SERVER virtualization to be the word of said god, but that is only one faction.

Server virtualization is the great enabler, but only to start.  Until ALL infrastructure is virtualized, connected together, and orchestrated holistically, we will not realize the total benefits before us.

This is the virtual revolution.  Similar to the industrial revolution, it took time to undo all that had come before–it took decades to take hold. Once it did, the world changed forever.  The impact of the virtual revolution may not be as great on a global basis, but what it enables for IT and the business IT supports is of the same magnitude.

Historic IT is horse and buggy.  Piece by piece custom manufacturing.  Virtualized IT is automated assembly lines and advanced robotics.  It’s cars and planes.  You can still ride a horse to work, but you’d be a jackass for doing it.

That’s why it’s inevitable that storage is the next IT industry area ripe for revolution.  It simply has to happen.  Storage is a gate to the IT Utility, and that simply won’t stand.  The traditional storage industry is still building buggies, and trying to get you to hook it up to your car.  They are nice buggies, very plush, very expensive, and custom built–but that’s not what you need.

We need storage to be as virtualized, distributed, orchestrated, and commoditized as servers (and networks) are.  Otherwise it’s like buying a nice new Ferrari, and trying to make it run by stuffing hay into the tank.  Looks good sitting there, but not really very functional.  Eventually, any revolution worthy of the people will occur.  Sometimes it’s bloody, sometimes peaceful, but in the end, you can’t hold back the inevitable.

This is the word according to me.  Shallow be my fame.

is………..

Tom Mendoza, of Netapp lore.

I have had the pleasure to meet hundreds of amazingly interesting people over the last 10 years.  Billionaires, millionaires, and total busts, but when I comprised my list of possible winners (I spent a lot of time, as clearly this will be the most coveted prize east of the Nobel), and there were 64 finalists, Tom was the clear winner.

There are 56 reasons why, which I won’t bore you with here, but take my word for it.

That doesn’t mean I don’t love the rest of you, for I do.  I just love him more.

Congrats Tom.

See you in 2021.

Nirvanix did the behind the scenes parts well–they figured out what market opportunities exist for cloud storage, they figured out the products/technologies required to serve that market, and then they did a strange thing – they forgot to tell the world about it.

You can have the best thing ever, but if no one knows about it, it often doesn’t matter.

Thus, I was stunned when I had a recent update from the company once new CEO Scott Genereux came aboard and dragged long time marketing sidekick Steve Zivanic with him.  I was stunned at just how much the fledgling entity had going for it, and more stunned that I didn’t know.

The Discovery:

• 700 Customers, and I’m not talking mom & pop shops.  I’m talking huge enterprise accounts including GE, Comcast, NBC/Universal, SwissCom, Fox, Cisco, VMware, Logitech and a ton more.
• Big Quantities–several multi-PB consumers including NBC/Universal–putting all of their movie inventory on their sites.
• Interesting Applications–Cisco (and others) keeping their Global Tech Support log files for open cases for customers and accessing them in real-time.
• All the right consumption models–via a cloud gateway, via the public cloud, or via a hybrid software offering that even lets you add your OWN existing storage into your hybrid cloud.  You pick and choose what’s right for you, not what’s right for your vendor.
• They have 7 (5 Nine) data centers operational.

The company claims to outperform every competitor, from the poor man’s cloud (Amazon) to EMC’s Atmos offering and everyone in between.  Most customers have done an evaluation of the alternatives, and still come back to Nirvanix.

So, while it remains to be seen who the runaway victor will be (the market has really only just begun after all), it’s clear that early on–for storage services–these guys are kicking butt and doing it despite the fact that they haven’t bothered to tell anyone along the way.  The new team will change that–they are nothing if not aggressive promoters–and I suspect that we’ll be hearing a lot more success stories soon.

What’s the prognosis now that I’ve been blown away?  If they can reach critical mass–which they are well on the way to doing–someone is going to take them out.  That’s just too much of a head start, too many marquee customers to let them continue to make others look bad.  Every account they land at this point is one that looked at the big boys and made a business decision to go Nirvanix.  Hit a couple thousand customers and the bankers will come sniffing.

Finally, one major reason they are winning these deals is that they have designed the services to be “enterprise” ready.  Secure, multi-tenant, high-performance, distributed services that can support the mission-critical nature enterprises demand is what separates them from that pack at this point.  Others are still “tinkering” with production offerings, Amazon isn’t interested in playing the enterprise game, and the market is ready to consume.  If you shut the market down today, it’s hard to show how anyone would beat Nirvanix.

Imagine how well they would be doing if they told someone?

We looked across Servers, Storage, Networking, Security, and the Application organizations within IT.  Guess what? The answers differ based on who you talk to! (Surprise surprise!)

We segmented the market into (3) categories, based on (4) primary metrics:

1. Scope of Deployment – the % of servers that have been virtualized.
2. Virtual Production Ration – % of VMs in production.
3. Efficiency – consolidation ration of VMs per physical machine.
4. Workload Penetration – deployments across multiple workloads (by types).

I could go on all day about the results, but since I titled this blog in the “management” area, I’ll make a few summary points and then (hopefully) give you management food for thought.

Takeaways:

• Server virtualization is becoming ubiquitous.  Duh.  BUT, and this is a big but….58% of organization have virtualized less than 1/3 of their servers.
• Thus far IT owned applications dominate what’s being virtualized.  File/Print, etc.  59% haven’t virtualized ANY “mission-critical” applications.
• Those who do virtualize are able to document increased return on investment as they become more advanced.
• “Dynamic IT” is still an illusion.  Very few are truly engaged in utilizing the advanced capabilities of virtualization yet.
• There will be an avalanche of growth over the next 24 months–but it IS NOT going to come from the “leaders” (so stop marketing to them, you silly people.)

I can’t tell you what all this means for your business–but an ESG analyst can.  (Bug them, not me!  If you don’t, you are a dope.  You will learn things.)

Anyhow, as I promised long ago in the title, there is an interesting parallel to all of this when it comes to “Managing” stuff–or management products/technologies.

When speaking with ESG’s management guru, Bob Laliberte, it became clear to me.  Bob called it perfectly, he said:

“A laggard IT operation ‘monitors.’  A follower ‘manages.’  A leader ‘automates.’”

Brilliant in its simplicity, it is completely accurate.  Whether we’re talking about managing a virtual environment or a backup process, it’s all true.  For an advanced society, we sure do spend a ton of time “monitoring,” don’t we?  How do you monitor something that isn’t real?  And why bother?

If our management techniques are stuck in medieval times, how do we expect to ever truly reap the rewards of “dynamic IT?”  It’s bullshit.  We never will.  We can put all the VMware in the world all over our environment and without the ability to AUTONOMOUSLY manage it, it will always suck.  Why? Because it will always come down to the lowest common denominator–the ultimate point of failure–a person’s ability to make the right decision at the exact right time and execute it perfectly.  It’s unreasonable.

This IT stuff was brutally hard to manage when it was one stovepipe with one app running to one department.  It’s simply not possible to manage any longer if “monitoring” is even in the conversation.  I contend that you are a liar (mostly to yourself) if you think you are actually “managing” anything.

If you want to really manage–constantly optimize your environment in a never-ending sea of changing requirements and workloads–then your job is to set policy and best practice and let some tool way smarter than you or I can ever be automate it.

Management is NOT knob turning anymore.  Knob turning is how you marginalize yourself out of a job.  Remember those assembly line workers who built cars?  They turned knobs.  Robots do that now.  Robots that are smarter, cheaper, and better at turning those knobs.  Know where the strategic “management” is now? It’s in designing what you want to have happen, and programming the robots to execute on it.

This holds true wherever a knob is twisted.  Storage has TONS of knob turners.  Networking still has knob turners. Servers and Apps and Databases all have lots and lots of knobs–but guess what? The knobs are becoming virtual. Currently, the server virtualization layer is consuming more and more of those infrastructure functions into itself.  I’m not saying it’s right, but it IS happening.  Your knob expertise will be consumed or at least controlled at a different layer–above the device.  You need to become the architect of the OUTCOME, not the guy who fixes the leak.

You architect.  Tools monitor.  Tools manage.  Tools automate your plan.

Then you are truly valuable.

I’m thinking of changing our name back to Enterprise Storage Group, and selling out.

Why is it that companies are willing to spend the GNP of Guam on a company who puts Seagate disks into a pretty box? After all, it’s not like all this is new–we’ve been doing this for a long, long time.  What makes rational people spend money irrationally?

If you take out all the bullshit (secure multi-tenancy, thin provisioning, scale-out, blah blah blah), and recognize that none of these companies have any positive impact to the revenue or bottom line of their acquirers, you are left with one simple premise: storage is hot because it’s the ONLY recession-proof area of IT.

You never need less.  You always only need more.  Data growth is the only constant in our world.  Data growth eventually causes everything we do to break.  If data didn’t grow, we’d have solved all our IT problems long ago.  But it does grow.  Like a fungus.  It creeps along, sometimes slow, sometimes fast, but it always grows.

This crop of fantastic zillion dollar buys is in the right place at the right time.  What they bring to bear is a BETTER way to deal with never-ending data growth.  They allow people to not only store stuff, but to act smarter on the stuff they store.  They let you manage it better.  They let you operate it better.  They let you drive value out of the bits you store, not just store them.  Most of the last 40 years have been about the container.  The new wave is about what you can do with the stuff in the container.  This genre of zillionaires knew that.

Good for them.  Nice folks, all of them.

You know what they have in common besides being disk jockeys? They all spent the time ($) and effort to “invent” themselves from a messaging perspective.  Isilon was up 400% in a year–and while I won’t take all the credit (90%), the primary difference in the company from the previous 12 months was how it was being talked about.  3Par too–they did a great job at hammering home a consistent message over and over and over.  You can learn from these people.  It really doesn’t matter what you do–it matters what people THINK you do.  Marketing, baby.  Data Domain went for $2.5B, Exanet went for $2.50.  Marketing.

Interestingly, the people responsible for the next next thing in the circle of IT life (VCs) are noticeably absent from this euphoric state.  I’m not a big fan of the lemming VC mentality, in case you haven’t noticed.  However, in the primordial ooze that is our ecosystem, the VC and their money are necessary catalysts to life in this business.  They (their money) fuel the gestation of the next generation of smart companies.  The problem, as I see it, is that they have been hiding. They haven’t been doing their job. They have been licking their wounds from the last 10 years of moronic investments, and have made it miserable for entrepreneurs in this space.  That’s going to be a problem eventually.

Failed economic policy, like social policy, takes years to manifest itself.  Right now, anyone with a VC fund is looking for anyone that can spell storage to pour money into them–but it will be many years before we see real innovation come out of it.  In the meantime, a ton of great would-be innovators have given up because they couldn’t get funded because Skip Whiteguy, the 27 year old MBA from Wharton, spent 13 months on due diligence to come to a “pass” decision because he “couldn’t get comfortable with the business model.”  Not that he has any idea what a business model is, mind you, since he’s never held an actual job.

I digress.

The good news/bad news on all of this is that we aren’t done consolidating.  It’s bad news for me, as I lose customers every time a giant buys a small guy.  Eventually it will be bad news for you as small guys innovate much faster than big guys generally.  No small guys = less choice, less innovation, and less control for you, the buyer.

I see the remaining platform/hardware guys probably being eaten up.  BlueArc and Xiotech will probably finally have their day in the sun.  I can even see a giant deal with NetApp being possible now (Cisco).  If HDS ever wanted to sell, now is the time (but I don’t see it happening).

Big Data is going to be the 2011 thing.  Those who mine gold from them there hills will become more and more in vogue.  Uncle Larry is a threat to everyone.  Look for the big guys to build their own “stacks” to compete with Exadata, and for them to acquire the smarts to do it.  Vertica, Informatica, Aster Data, etc. are going to get bought this year.

I love the “google”-like ethernet storage plays, but think it will be 2012 or later before they all pop.

Go Pats.

Dell built a command and control center to monitor social situations relating to it or its competitors. That’s not a big deal in and of itself. What is a bigger deal is that Dell put a couple dozen people from all disciplines of the company outside of that control center to respond to or elevate/navigate things that someone should be paying attention to.

It hit me immediately. I use Twitter as a time saver. Not all do, as we know. Sure, I get bored and tell you about my new cowboy boots (bought some today, make me a good 2″ taller!), but I don’t expect anyone to care. I use Twitter to shorten my time to knowledge of things going down that I care about. It takes work, but I know if a “movement” is afoot much faster via Twitter than any other medium in my world. Good, bad, or ugly–it has become a sentiment indicator in my world. I know who’s in play, who’s in trouble, who’s got a product problem, and who just said something moronic faster than most. The trick is who you listen to and where.

I’m in the information business. So is Dell. So are you.

Dell figured this out. It isn’t just trying to force its view (don’t say anything bad about me or I’ll sue your ass!), but take the good, bad, and ugly–sort the wheat from the chaff, learn from it, and react. In almost real time. Apparently Michael was smart enough to figure out that this could be an invaluable time saver years ago and now it’s being mainstreamed philosophically throughout Dell. I’ll see him later on and find out if this is true. Then I’ll tweet about it!

I happened to be there right before it was announced today, so I got a sneak peak. It’s really impressive. What’s most impressive is that it is NOT used exclusively to cover up, shoot the naysayers, or flood the world with retweets of “I love my new Inspiron!” (although they surely will remind us of that). I saw them scouring the social scene for “intelligence”–how the world is feeling about Dell or competitors–in almost real-time. It’s fascinating. Genius. It’s a competitive weapon. Dell will know things faster than those who don’t use the social world for intelligence gathering. Fact.

I’d rather know the facts, good or bad, faster rather than slower.

FYI, Michael (which is what I call him as we’re BFFs that follow each other on Twitter), is a year younger than I am and we both are married with four kids. So, other than the fact that he is a foot taller and worth $20B more than me, we’re pretty much twins.

P.S. Take note: you cannot succeed in attempting to do this if you “outsource” the responsibility to an agency. You have to commit your OWN people to act. You can have others/tools “listen,” but you have to commit your own people to respond and to act. If you don’t, you are full of shit and the world will know. You are wasting your money.

It is brilliant marketing.  Not unique, but brilliant.

Why? Just as Cisco created its own customer under the guise of certifying the CCNE, so has EMC.  EMC has gone one better, even.  EMC essentially just came up with the Cisco equivalent of  a CCNEB (Cisco Certified Network Engineers’ Boss) certification.

Cisco built the CCNE when networking was a nascent market.  It took advantage of the fact that the networking space was hot, confusing, not standardized, and most importantly un-DOMINATED by any single vendor and created “certification and education” for the unwashed masses.  What it really did was teach those masses how to network the Cisco way.  And guess what they did?  As networking evolved from hype to mainstream, those masses bought from the people who taught them all they knew: the mighty C.  The rest has been history.

EMC faces a more perilous set of challenges.  As virtualization takes mainstream hold across data center infrastructures, in perhaps the ultimate industry irony since it owns VMware, it puts the mighty EMC core storage business at risk.  EMC’s customer of 25 years is the storage guy.  In 5-10 years, the “storage guy” as we know it (their customer) will probably cease to exist.  The storage guy’s primary function–storage management–will happen in the virtualization layer  (Mellow out, I’m not saying there will be no need for anyone to know storage, I’m saying that the data shows overwhelmingly that storage management functions will start to get sucked up into the virtualization layer.  You will either become the “vSys Admin”, who also handles storage [and networking] or a lower level tech.  Don’t shoot the messenger!).  If (when) that happens, EMC’s customer–that it trained so very, very well–will lose buying power.

In many ways, we will go back to a “vSys Admin” dominated buying paradigm–like we had twenty years ago.  EMC, or anyone else who makes their living selling to a Storage Admin, is at risk.

So what do the folks in Hoptown come up with?  They create a certification program in a nascent, fast moving, well misunderstood, and un-DOMINATED space called “cloud” that sits ABOVE the vSys Admin.  Cover all the bases–if you can’t get the next buyer on board, get their boss.  Stunning in its simplicity, why didn’t anyone else think of this first? (Me included).

Will it work?  Who knows, but it’s absolutely brilliant thinking.  I don’t know who came up with it, but kudos all around.

The game is changing.  The stakes are great.  I, for one, am impressed that there are still original, creative ideas that come out of our old, boring industry.  Bravo.

FYI, I have spoken to NO ONE at EMC about this–this is all theory.  However, having hung around the place for all these years, I’m confident that this wasn’t dumb luck.  This was a choreographed piece of brilliance.

Special thanks to Bob Laliberte for opening my eyes to this.

Could this happen in the good old USA?  Unfortunately, yes.  ESG analyst Jon Oltsik just published a new report on cyber security titled, Assessing Cyber Supply Chain Security Vulnerabilities Within the US Critical Infrastructure. The report contains a lot of scary data.  For example, 20% of the critical infrastructure organizations surveyed believe that their security policies, processes, and technology safeguards are either “fair” or “poor.”  Yikes!

These vulnerabilities need to be addressed and if ESG data can help accelerate this, so be it.  To make this happen, ESG is offering this research report for free download, simply go to the ESG website at www.esg-global.com, click on the banner and download the pdf.  You’ll see an example of our great research practice chock full of really frightening data.  It should scare the crap out of you.

Data efficiency is just as it sounds–making the data we need more efficient from an access, usability, and manageability perspective.  Why?  So we can drive more value out of it–which I would argue is the entire raison d’être for IT to begin with.

We layer on server virtualization technologies to make our commodity server hardware more valuable –more readily usable by the various data elements we posses.

In the storage world, deduplication of data has been one of the hot efficiency “enablers,” along with thin provisioning, snapshots, virtualization, multi-tenancy, and compression.  Some of them are new, some have been around forever, it seems.  All of them are important.

When it comes to making data more efficient, it’s important to consider “Why” and not just how.  For example, most deduplication solutions are designed for backup–not primary use data environments.  I’m all for making backup more efficient, but that only represents a small fraction of the value potential for IT.  I would argue that primary storage/data use cases represent an order of magnitude (or more) value to an organization potentially.

We have done a decent job, over the last five or so years, at making our infrastructure systems that store/manage data far more efficient.  We can thin provision (virtualize) physical storage assets such that we get the most usage out of them.  We virtualize data (from a presentation perspective) with the use of snapshots.  With multi-tenancy, we can optimize the utilization of our physical assets across multiple constituents.  All that is good, but new technologies are allowing us to take this much further.

Compression has been around for a long time, but this is one technology going through a renaissance period.  Primary data compression (aka Real-Time) is going to change the fundamental efficiency and overall value proposition users will derive–because the closer to the point of data “creation” that you create efficiencies, the more value you get.

Think of it this way:  If you start with 100GB of primary data, over time you will back it up X times, so you’ll end up with 100GB of primary, and 100GBX of backup–or secondary–data.  Backup deduplication players such as Data Domain spend their time on the 100X problem (which is a good problem to spend time on, don’t misunderstand my point).  There are probably a lot of other uses/duplicates of the originating data throughout the organization between creation and backup–like in test/development, data warehouses, etc.

Optimizing data as early as possible is the key. From that point on, all the downstream benefits are magnified.  Less to move, less to manage, less to back up, less to copy, less to replicate, less to store, less to break.  Less is the new more.

I’m no genius but it seems to me that the way one does this most effectively is to leverage all of the tools at hand.  First, compress the data as much as you can.  We’ve proven that you can squish 50% + of the primary footprint out of almost any kind of data–including databases.  Second, deduplicate it.  Whatever is left post compression that you want deduped should be. People don’t want everything deduped, but that’s ok.  Eliminate what you want, and start clean. That gives you the perfect baseline.

From there snap it, thin provision it, copy it (virtually), and do whatever else you would like to do with it, but at least you begin the journey with an optimized footprint–which can only make everything else you do with that data far more efficient.

The trick is to compress in real-time, without suffering the performance penalties that you remember from 20 years ago.  It can be done today.  We do some amazing things at wire speed that weren’t possible even a few years ago.  There will be a lot of money and R&D spent in this area, as it seems clear to me that it simply has to happen.

Moving the value needle of storage/data optimization from the “dead” end of the wire to the “live” end (where data is created) is inevitably the best way to drive value all the way through the entire lifecycle of that data.  Everywhere that data sits, every time that data is manipulated or used, there is value that can be optimized.

Since I am always right eventually (seriously, it’s uncanny), this means there is a lot MORE money to made in this area.  Data Domain was just the beginning.