What a wild few months it's been for the data storage industry and for IT in general.
Since Oracle (NASDAQ: ORCL) up and bought Sun Microsystems (NASDAQ: JAVA), it seems like all hell has broken loose. Or did it start when Cisco (NASDAQ: CSCO) introduced its Unified Computing System (UCS)?
Whatever sparked it, it's been a nutty year for the IT industry, and data storage vendors have been at the heart of it. EMC (NYSE: EMC) and NetApp (NASDAQ: NTAP) have been fighting over Data Domain (NASDAQ: DDUP). Broadcom (NASDAQ: BRCM) has launched a hostile bid for Emulex (NYSE: ELX). IBM (NYSE: IBM) and HP (NYSE: HPQ) have been funneling business to Brocade (NASDAQ: BRCD) and away from Cisco. And HP managed to lure away EMC's top storage official. Have we left anything out?
Illuminata analyst John Webster thinks the seeds for the current upheaval in the IT industry were sowed years ago, when EMC acquired server virtualization leader VMware (NYSE: VMW).
"You can trace it all back to when EMC acquired VMware, a brilliant move on EMC's part," said Webster. "Virtualization begets this cloud idea, and everybody seems to be agreeing that the cloud is the future."
Regardless of what started the whole mess, there appears to be no stopping it now. And most analysts agree on where it's heading into an even more intense period of consolidation and vendor jockeying.
"Clearly, some of the consolidation is brought on by the economic situation resulting in the opportunistic purchase of relatively cheap intellectual property/market share, and I'm sure we haven't seen the last of this," said Mark Peters, an analyst with Enterprise Strategy Group. "It can also lead to more sudden-friends-syndrome to restrict choice and maximize vendor revenues/margins."
The Future Turns Cloudy
The upheaval goes well beyond the data storage market and concerns IT as a whole. Peters believes that consolidation of the entire IT stack is underway.
"Once the cat is out of the bag that commodity components can work just fine; that huge efficiency improvements are possible; that SSD is not just for the lunatic fringe; that scale up/out can support enterprise applications; that storage networking and virtualization are natural siblings of server virtualization the cat isn't going back into the bag," said Peters.
Webster sees the IT industry heading toward an integrated stack that encompasses servers, the network, storage, management apps and security, furthering the overall cloud vision.
"Cisco UCS shows the beginnings of where the cloud infrastructure play is going," said Webster.
Oracle's acquisition of Sun will likely result in similarly integrated products. And watch out for competitive offerings from HP and IBM in the near future. Webster sees this as the latest evolution of IT: from the large centralized mainframe, where everything was inside one room in big boxes, to the "disaggregation" of the client/server and PC revolutions, and now the re-aggregation and recentralization with VMware as the catalyst.
Leading the charge are various juggernauts such as IBM and HP, as well as combinations such as EMC/VMware/Cisco and Oracle/Sun, as well as Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOG), all trying to amass more cloud clout.
Oracle's Murky Moves
Oracle's goals are perhaps the most obscure. Will it dump Sun's tape and disk storage assets despite pledges to keep them? Is Oracle only after Java and Open Solaris, or does it really care about server and storage hardware? Such questions will have to wait until the company reveals more of its plans.
More recently, Oracle acquired Virtual Iron (VI), a move that puzzled many.
"Oracle's Sun acquisition makes this VI buy particularly confusing," said Andi Mann, an analyst with Enterprise Management Associates. "Sun's xVM Ops Center arguably does a major part of what VI does. I suspect xVM and OpsCenter may already be dead internally, just waiting for their best parts to be consumed by Oracle VM and Enterprise Manager."
According to Mann, Oracle Enterprise Manager is underpowered in both virtualization management (managing specific components such as hypervisors and virtual machines) and virtual systems management (VSM more holistic management of entire virtual systems, including capacity, power, automation, provisioning, configuration, network automation, storage efficiencies, and so on). VI gives some of these capabilities to Oracle.
Mann sees VSM as the reason behind the acquisition madness, as virtualization itself has become a commodity. As many enterprises have already picked the low-hanging fruit of consolidation, the next wave is being driven by demand for higher-level efficiencies around staff efficiency, power management, higher resource utilization, and the like. This is opening up a market for broad VSM an area where tools are still relatively basic.