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BOOM! Seagate attacks storage array hardware market

'DEHHINO' tech titans must go all-flash to survive

Cat's out of the bag

Luczo: OEMs caught between CSPs and component makers

Now it's out in the open. Barron's reports from CES in Las Vegas that Seagate CEO and chairman Steve Luczo now sees that Seagate (and WD) could take over the hardware storage array business from the DEHHINO group, with them changing into software-focussed businesses.

He is quoted as saying that the "traditional OEMs are coming to us because they are caught in the middle between the CSPs (Cloud Service Providers, like Amazon) and the component makers ... a company such as an EMC would say 'We are a software company and that means we don’t really want to do the hardware long term'."

The ClusterStor business is growing, with Luczo commenting that: "I think that business will be on a billion-dollar run rate in a year from now.”

WD's HGST unit is doing what Seagate is doing, and moving into high-capacity, scale-out systems with its Active Archive object storage array being built with Amplidata technology.

For the DEHHINO suppliers the invasion of their hardware business turf by Seagate and WD/HGST is not good news. This is massively disruptive. It is unlikely, highly unlikely we think, that billions of dollars of array hardware revenues can be transferred to software, meaning they face their core businesses becoming smaller businesses.

One option could be to go all-flash, buying in flash componentry from non-system suppliers such as Intel, Micron, Samsung and SanDisk. That means massive software rewrites, except for HDS and HP, but it does keep them in the hardware business with its associated cashflow.

Another is to go all-software, and buy into big data storage and analytics software technology. Thus is software above the storage array software stack, but that layer is pretty much done and becoming a commodity in its own right

EMC is active here and has widespread storage and server virtualisation software initiatives. Oracle is also extremely well-placed, having come from the upper software (database) stack layer in the first place, integrated downwards into hardware by buying Sun, and now rapidly ramping up its cloud business.

DEHHINO has to go all-flash, to give it a hardware presence outside the disk array, and also look to software layers above storage array controllers, because that's where the value is moving and there's no way they can effectively compete against WD and Seagate in packing disk drives into tin boxes.

That, to our way of thinking, is the writing on the wall. Cue a period of flash technology and upper layer software technology acquisitions by them as they struggle to fill the revenue hole left by their disappearing array hardware business.

Where does all this leave Dot Hill? Unless it can move up into massive capacity big data arrays, it will remain as a niche component storage array supplier to smaller array system customers – who are too small to attract the attentions of Seagate and WD.

Dot Hill ought to be able to make a good living there, as long as Supermicro and other white box suppliers lack its specialist expertise.

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