As vendors fight over the spoils resellers are set to make a motza from the storage market by selling hardware, software and services. Critical is certification.

The humble digital camera is making millions for storage vendor’s resellers and solution providers in Australia.
One click after another it’s driving SMB enterprise to invest in new image editing software, high-quality printers and storage devices and is creating a high demand for new servers.

Companies like Nestle have supplied digital cameras to their sales force who use the devices to photograph retail displays. In turn, these images are being combined with PowerPoint presentations for internal reporting. Executives at Nestle claim that this has driven up their demand for storage.

At the bottom-end of the storage market, companies like Maxtor, Seagate and LaCie are selling terabytes of storage for under $2000. This same storage five years ago cost hundreds of thousands of dollars. Also getting in on the act are wireless vendors like Netgear and D-Link. At the top end of the SMB market, EMC in partnership with LAN Systems has entered the market with a combination of storage hardware and software solutions that, for resellers and solution providers, offers an opportunity to sell hardware, software and ongoing services as a total package.

Wendy O’Keefe, managing director of LAN Systems, says: “We didn’t take on EMC to sell hardware. We took them on because they have wisely acquired software organisations that allow us to work with resellers and solution providers in the storage market with a combination of hardware, software and backup services. These solutions allow the channel to generate ongoing management revenue. For example, with EMC we can now sell scalability, both from a hardware prospective right through to the software. We can sell Retrospect back at the bottom-end and Legato at the higher-end. We can scale the hardware while providing access to support and information that helps our customers make money.”

 She adds that SMBs used to skimp on security because they thought they were too small to be targets for hackers: “But SMBs now realise that they are just as vulnerable to worms, spam and other random cyber plagues as large enterprises. SMBs, in fact, are taking security seriously, and VARs have plenty of budget-minded solutions for them. It’s knowing how to sell them to that slice of the market that’s key.”

David Henderson is responsible for EMC’s development of SMB storage solutions and is currently working hand in hand with LAN Systems to build a network of resellers and solution providers. He says that certification is critical. “We have a lot of interest in the EMC offering and right now we are running certification courses with resellers and solution providers who are moving from the likes of HP and IBM to EMC. By growing the base of certified storage providers we can help organisations grow their business, as with EMC they will be able to sell hardware, software and follow-up service and expansion.”

Jordan Reizes, country marketing manager of EMC, says: “Retrospect gives us a product that has been built from the ground up to work in an SMB environment. What we are looking to do is drive greater demand for these products to small to mid-size businesses, homes and home offices. Before the acquisition of Dantz we didn’t have a product range to suit customers in all of these markets.”

The move into SMB and SOHO backup is a natural extension for EMC. Megan Dahlgren, IDC senior market analyst, software, says: “EMC is in a very strong position in the SMB space. Its products provide customers with what they need at the right price point, and the go-to-market model has a well-supported channel and strong partnership with Dell – all contribute to a strong position for EMC in the SMB space.”

There are challenges though. EMC will be directing its software at a market segment it has previously not addressed, and the company will have to relearn how best to market such a low-end product set.

In contrast, Symantec is a company with a long pedigree in the SMB and SOHO space. Though it too faces its challenges – Symantec does not have much of a background in storage and backup. The company’s Ghost tool has provided some experience, but it’s a far cry from the business it will find itself in when the acquisition of Veritas is completed. It also heads into a mature market with a number of ‘complete solution’ offerings by the likes of IBM, HP, Sun and EMC. To succeed, Symantec will certainly need to keep on its toes.

Dahlgren says: “Veritas’ strength has traditionally been in the backup and archive software market, but over the last three years has been moving up the value chain to end-to-end storage, application and performance management areas as well. Veritas has a strong direct sales force and they tend to work with enterprise customers engaging in long, in-depth pre-sales cycles to scope out requirements and help them to solve their business challenges with IT solutions. Symantec has historically had a volume shrink-wrap product business through the channel.”

While Symantec has recently been getting strong in services-led engagements to help customers solve end-to-end IT security needs, the go-to-market models of the companies have historically been quite different. In addition, from a technical point-of-view, storage and security software are still separate both from a technology and procurement standpoint. Symantec and Veritas tend to have very different customers, even within the same account.

Dahlgren believes: “IT security professionals and network administrators (Symantec’s historical customers) do not tend to make decisions about infrastructure management – the area Veritas’ customers tends to focus on in the systems and storage environment. There is a gap that will need to be filled from a technology and R&D point-of-view, as well as from a go-to-market point-of-view.”

Symantec acquired Veritas in order to develop end-to-end data management and security solutions. It is a step towards its recently articulated new vision called ‘information integrity’, which is meant to encompass all of the various aspects of security and availability of data. The acquisition of Veritas also gives Symantec the ability to broaden its market coverage beyond just security software – a market with limited, albeit significant, growth potential.

According to Dahlgren, resellers will benefit tremendously from competitor EMC also broadening its offerings for the SMB market segment. EMC has invested in its PartnerLink program, website, support services, and infrastructure in order to make it easy for partners to engage with EMC, and have the access to resources they need to sell solutions effectively to customers.

Simon Elisha, strategic technical architect for Veritas, welcomes the competition from EMC: “The EMC/DANTZ Retrospect product has a very different SMB focus. They [SMBs] won’t be dictated to how they should do things and they know what they are getting with Veritas’ backup products. We have spent years building our relationship up with our clients.”

All the same, in this climate of uncertainty, resellers in the SMB market will need to brace themselves for change. As Graham Penn, IDC associate vice president, Asia Pacific storage, points out: “Resellers to the SMB segment will need to work closely with a much larger organisation that may not be entirely focused on the segment and inevitably there will be a new channel strategy. In some cases previous partners will not continue which can make support an issue.”