Amazon and other Infrastructure as a Service giants are commoditizing the cloud storage market, offering prices that many specialist cloud storage providers can't compete with. To retain customers and stay relevant in the changing market, providers must expand their cloud storage portfolios to include value-added services.
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Enterprise cloud storage provider Nirvanix recently filed for bankruptcy and asked customers to pull their data back into their own data centers or transfer it to another provider. The announcement highlighted the need for cloud storage providers to offer more than capacity. Storage is now just a feature for more specialized cloud services.
Cloud storage is a good foundation for services such as Disaster Recovery as a Service (DRaaS) and backup. These services are the next step up the value chain for many storage providers rattled by the Nirvanix failure, said Amy Larsen DeCarlo, principal analyst for security and data center services at Washington, D.C.-based Current Analysis Inc.
"Providers can't just offer generic, commodity storage story anymore; there has to be some form of value-add," DeCarlo said. "It's better to position [storage] with important services that are being demanded -- like DRaaS."
Cloud storage providers evolving into backup, disaster recovery providers
Zetta.net, a former cloud storage specialist, shifted to backup and disaster recovery when industry heavyweights -- such as Amazon, Google and Microsoft -- drove down cloud storage prices. Zetta.net, like many cloud startups, was not going to be able to compete in the same market, said Gary Sevounts, vice president of marketing for Zetta.net.
While cloud storage remains an important component of Zetta.net's offerings, the provider knew it would need a broader focus in order to gain customer mind share, he said. "We offer backup, archiving and disaster recovery as Software as a Service offerings, so storage is a feature, not the product," he said.
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While Nirvanix never evolved past selling cloud storage as a solution, Zetta.net noticed early on that many of its customers were using its storage architecture as a foundation of their backup and disaster recovery strategies, Sevounts said. "Our customers really drove us into the archiving, backup and DRaaS area, and we eventually developed software specifically for DR [disaster recovery] -- ZettaMirror."
While cloud storage providers will need to address new requirements in order to expand into offerings such as DRaaS or backup, the evolution won't require a large technical upgrade on the back end, Current Analysis' DeCarlo said. "A lot of the changes will be based on the new service-level agreements and the provider's ability to guarantee timing," she said. Providers will also have to make marketing changes in order to package the new services for their existing customers or appeal to new customers, she said.
The addition of new services -- such as DRaaS and backup -- don't necessarily mean large, up-front costs for providers either, said Henry Baltazar, senior analyst of infrastructure and operations for Cambridge, Mass.-based Forrester Research Inc. "Service providers can put new services in colocation facilities or work with large partners who could provide white-box services," he said. "There are different ways for a provider to grow their business without buying or building new data centers to support new services."
Adding compute to storage: More market opportunities for providers
Coupling compute with storage opens up new doors for storage providers, in addition to expansion into the disaster recovery and backup markets, Baltazar said. Archival and big data demands are also markets that storage providers can tap into to help grow new revenue opportunities and potentially expand their customer base.
Adding compute won't be an easy process for all providers and could vary depending on resources and size, he said. Open source projects such as OpenStack, however, are developing a unified layer of compute and storage resources. "Providers are starting to jump on the OpenStack bandwagon because it's providing storage, networking and server management wrapped together," he said.
Storage providers who add compute services will frequently get customer requests for analytics, search and discovery services tied to storage offerings, Current Analysis' DeCarlo said. "We are seeing a lot of storage providers offering these kinds of value-adds to complement their storage or archival offerings, with some geared [toward] specific industries and their data storage requirements," she said.