It is that time of the year again when everyone expects analysts to put it on the line and predict the future....
But, before I jump into that, let me say that for 2006 I had predicted that we would have 20 mergers/acquisitions. I have not done the count, but I think that number is pretty close. The surprise to me was not that we had these mergers; the surprise was the beautiful prices associated with most. Kashya, Topio, Avamar, AppIQ all enjoyed stunning prices. The other surprise to me was the occurrence of IPOs. Not that I didn't expect Riverbed, CommVault and Isilon to do successful IPOs. But, I didn't expect them to happen in 2006. I thought they would happen in 2007. I am glad they did, however, as it is a sign of good times returning for all parties involved: IT buyers, vendors, VCs [venture capitalists] and investors. Frankly, I didn't see the DoubleTake IPO happening. That hit me from the side. All said and done, 2006 was a great year for storage.
But now for 2007.
In 2000 and 2001, a massive number of storage companies were funded. For those that developed a product you cared about (and whose VCs that were thoughtful and patient), the products finally came to market sometime in 2003, just as your budgets were starting to inch upward. These companies, including Isilon, Avamar, Kashya, 3PAR, EqualLogic, LeftHand Networks and many others, started to get real traction in 2004 or 2005 and most are doing great right now. I expect those that have not already been acquired, will be this year.
Of course, now that IPOs have begun, that could be the other avenue for them. But to me "fruition" means more than that. Many of the companies in question fall in the category of next-generation data protection, iSCSI or storage virtualization. The year 2007 will be, in my view, when all these technologies go mainstream. That means I expect most of you would actually go beyond pilot programs, trials and the like to actually implement large production systems in these categories. I also include active archiving in this very broad definition of data protection. Data protection management would get a super lift as well. Many products in these categories are fully baked and ready for prime time. Combine that with increased budgets and compliance pressures and you can see large implementations happening in 2007. I think this is great for the industry and for IT. We have been waiting for five years for this, and now we have it. Of course, in this euphoria, one can jump in head first and find out that all products are not born equal. You will need to be selective, but the products are there to choose from. Yes, sir, I do consider 2007 as the year a lot of technologies will bear fruit.
There is another category of products which will get a big boost, but they are not far enough in their cycle for me to put them in the "fruition" bucket. In particular, I am thinking of "information management" products. Not device managers, but real information managers. Products from companies like Kazeon, Sentric, Index Engines, Njini, Abrevity and the like. We typically put them all in the information classification and management (ICM) category. I think these products provide purpose to why you retain data in the first place. I believe 2007 will be the year that many of you actually conduct pilots using these technologies, but it will be 2008 before you will deploy them wholesale.
I have two more predictions for storage. One, that most of the smaller companies with strong products will either be scooped up by the bigger players or go the IPO route. I don't think it would unreasonable for us to see eight to 10 IPOs, barring some crazy international event, of course. All the big players know that if they do not make a move on an attractive startup right now, it will become prohibitively expensive by mid-2007. I am very aware of which companies are in play, but I will have to kill you if I told you. It would be fair to assume, however, that the VTL players fall in this category. I know that most of you couldn't care less if a startup does an IPO or is acquired. The reason I think you do, without even realizing it, is that it makes "best of breed" products available to you from a big, strategic vendor and thus reduces your risk.
My last and final prediction is that many companies that have already burned $50 million to $100 million of VC money, but still do not have enough customers lined up, will be sold for mere assets. Unfortunately, a number of chip companies fall in this category. Aristos Logic, Astute, iStor, iVivity immediately come to mind. There are a few others. These companies have been at it for five to six years now, working their tails off. They even have decent products. But, some do not necessarily have enough customers committed to buying their products in adequate quantities. Their VCs are likely tired of pumping fresh money every year. In 2007, some of them will cut off the supply.
I could probably go on for another two pages. But for now, I will sign off. I wish you all a very "fruitful" 2007.
About the author: Arun Taneja is the founder and consulting analyst for the Taneja Group. Taneja writes columns and answers questions about data management and related topics.