IBM's storage momentum continues

Earlier this month, IBM said food distributor J&B Group had chosen its FastT storage devices as well as its server computers and PCs. Business information company First American also is using IBM's FastT storage, to support a growing online database of some 4.5 billion images.

Evan Jafa, chief technology officer of First American's property information division, said Big Blue stood out partly because of its low price tag. IBM charged "several million" dollars for a system that now contains a hefty 200 terabytes devoted to holding images of documents such as deeds of trust, Jafa said. "The alternatives were probably double or triple the cost of what we were able to do with IBM," he said.

Arun Taneja, founder of market research firm Taneja Group, is not surprised that IBM underbid competitors at First American, or that the computing giant is snapping up storage customers. "IBM's been pretty aggressive with pricing," he said. "The storage group seems to be alive and well and kicking."

A couple of years ago, IBM's high-end storage device, the "Shark," was falling behind rival products from EMC and Hitachi Data Systems in performance, Taneja said. But those problems are in the past, he said, and the company's midtier machine, the FastT, has been quite successful. "That's been a barn burner for them," he said.

IBM's share of the worldwide market for disk storage systems climbed to 21.1 percent in the third quarter of last year, up from 19.9 percent in the third quarter of 2002, according to market watcher IDC. Big Blue's disk storage systems revenue rose 5.2 percent to $1 billion in the third quarter, IDC said. That performance allowed second-place IBM to gain ground on leader Hewlett-Packard, whose overall market share dropped slightly from 27 percent in the third quarter of 2002 to 26.4 percent in the third quarter of 2003.

Other companies grew faster than IBM. Third-place EMC saw its revenue jump 20.5 percent year over year to $617 million in the third quarter, according to IDC. And fourth-place Dell posted 22.9 percent growth to $321 million. Dell's figures include storage products manufactured through a partnership with EMC.

Although IBM grew more slowly than Dell and EMC did in disk storage systems, the company's recent win at J&B Group shows it can compete with those rivals. J&B Group is replacing its EMC and Dell storage and server systems with IBM technology, IBM said. A two terabyte IBM FastT900 storage server is connected to an IBM xSeries server system to act as the information technology backbone for J&B Group's business applications and databases, IBM said. In addition, IBM said it is giving J&B Group a data-copying capability, called FlashCopy, for backing up critical information.

"This consolidation of storage and the switch to IBM's xSeries servers and open storage FastT storage servers is crucial for J&B's business," said a statement from Kurt Anderson, vice president of information technology for J&B Group. "The recoverability and redundancy features in these systems allow us to increase manageability and business efficiencies."

In a way, J&B Group's choice of IBM for both storage and servers follows a trend identified last year by IDC analyst John McArthur. Computer server suppliers are an important route to market for external disk storage systems, according to IDC. HP, IBM, Dell and Sun Microsystems captured almost 48 percent of the external storage market in the third quarter of 2003, up slightly from the third quarter of 2002.

McArthur said in December that the server companies' momentum corresponds to customers' desire to deal with fewer vendors. "Companies are looking for simplicity," he said. "Part of simplicity is reducing the number of suppliers."

At First American, another reason IBM beat the competition was its willingness to do more than sell boxes of disks. Big Blue's offer to help design a storage area network (SAN) was critical, Jafa said. SANs are specialized networks linking computers to storage devices for improved utilization and management.

"We were looking for a partner, not just another SAN solution," Jafa said.

One challenge with First American's system involved avoiding bottlenecks as customers use the online database. Jafa said mortgage businesses and other clients are more likely to search for documents related to certain places, such as Los Angeles County. IBM helped set up the storage system so that data from L.A. County isn't all grouped together in one storage "zone," Jafa said.

The system also has to be capable of expanding, since Jafa expects the amount of data to grow 30 percent to 40 percent this year.

Storage expenditures make up a growing share of corporate information technology spending, according to a report last October by research firm International Technology Group. If hardware and software, as well as personnel, storage networking, backup operations, recovery, security and other costs are included, storage resources accounted for more than 17 percent of the IT expenditures at Fortune 500 companies in 2003, according to the report. In 1996, the comparable figure was around 11 percent. Based on current trends, it will exceed 22 percent by 2007, according to the report.