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And the Bad News is...

David Doering

July 2000 | Seen these headlines? "Smart and Friendly Declares Bankruptcy." "SciNet Folds." "MDI Drastically Restructures."

This last year hasn't been good to the optical storage industry.

Yet this last year was a banner year for optical storage--a year when storage area networks and network-attached storage became hot topics for administrators. So what gives? Interest in DVD is strong, with more and more desktops (and laptops) shipping with DVD as standard equipment. CD-R has passed into the mainstream as has CD-RW. More and more users have embraced recordable CD as the tidal wave of interest in online video and MP3 music hits.

For corporate and government networks, demand for storage solutions soared as well. The end of the 20th Century saw the transition from paper-based presentations to slick animated PowerPoint slide shows. Such shows have become so abundant, so bloated, that the U.S. Department of Defense is now toying with banning this particular network burden altogether.

So if the 120mm optical drive is now universal, and storage demands have skyrocketed, why do we see smart players knocked from the arena? In the last couple of years, we've also seen the departure of pioneer Ornetix from the NAS space, and Sony from the 120mm optical space. 3Com has dropped its SAN plans, and Jukebox vendors have struggled.

The question is: if a vendor as successful as Smart and Friendly disappears from the market, what does it say about the market? There's no more canny or astute player in this arena than Smart and Friendly CEO Perry Solomon. If he finds unexpected bumps in the road, what does this say about the coming year for other vendors less perceptive in the market?

Some say this is just the natural order of things. The hightech industry has ferocious turnover. Today's leader is in Chapter 11 bankruptcy tomorrow. Apple might have invented the PDA, but 3Com perfected it. Smart and Friendly might have popularized high-speed CD-R, but it is left for someone else to perfect. In fact, the whole DVD/CD industry might just dry up and go the way of DOS utilities or 9-pin printers.

In fact, it shouldn't be. We have highlighted in the past several hurdles the DVD/CD community faces and still does. Foremost among them: lack of end-user education.

It surprises me to find out even at this late date how little the average network administrator understands about the value of DVD or CD technology in their work. It's more surprising that many administrators cannot distinguish between what SAN and NAS mean and how they differ. (Just wait till they see Adaptec's new Ethernet-based SAN!)

We've mentioned tape-drive innovator Ecrix before. It touts its VXA tapes as being able to survive being dropped into coffee and remaining readable (try that DLT!) and it is getting a lot of attention for it. But 120mm does that naturally! DVDs and CDs are among the most durable storage media around. Sure, we have the best evangelist in the world in Jim Taylor for demystifying DVD. But we need a legion of Jim Taylors to win in the long term. Perry Solomon as the new head of OSTA was just starting to make a difference.

As for the reseller side of things, I heard at Networld+Interop 2000 about the challenges for NAS, SAN, and optical storage on the reseller side. Some are counterintuitive.

Surprisingly, for example, NAS delivers too well on its promises of ease of use. With a one-minute install (just ask Quantum), nothing in network administration could be easier than upgrading with NAS. But many resellers aren't keen on promoting these products. Why? Because there's no value-add to the equation. A one-time sale with a slim margin isn't going to draw a lot of interest from a reseller. Worse, the overall pricing for NAS (although extremely appealing to administrators) is too low. Maybe if Maxtor charged $40,000 for its rack-mount unit, resellers would push a million of them out the door every month instead of a couple of hundred.

SANs seem like a much more profitable area for resellers, so that's why there's more momentum there. Even so, continued interoperability problems plague SAN. Yes, there's a large potential value-add for resellers in SAN services. There's also a lot that even a savvy integrator might not be able to resolve in deploying a SAN.

(Anyone else notice how many SAN labs have sprung up in the last year to "certify" interoperability? What does it say about the state of SAN technology when seven or eight of them crop up in a year?)

Companies like Smart and Friendly haven't failed because they had poor technology. They struggle because the stories they sell with are less than compelling. (And there has to be more to the story than pricing, especially against the ubiquitous no-margin online retail outlets.)

Bottom line is, therefore, more than the bottom line. We have to sell by telling better stories to our network audiences. Sell to resellers with more compelling profitable packages (look at Internet caching servers, a winning NAS solution.) Sell to administrators with a more compelling package of services (server-less backup). We need to bring SANity to SAN sales (with Adaptec in the lead using standard Ethernet hardware.) We need to get NASty about NAS and make it a standard peripheral for every network sale (like laser printers). Network administrators do want this technology.

Let's meet back here in a year, and celebrate more success instead of lamenting more DOA companies.

The Network ObServer columnist David Doering (dave@techvoice.com), an EMedia contributing editor, is also senior analyst with TechVoice Inc., an Orem, Utah-based consultancy.

Comments? Email us at letters@onlineinc.com.

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