The devices, called network-attached storage or NAS, typically are single-purpose machines that can be plugged into a network to ease departmental needs for data storage. The devices span the range from single-purpose, easy-to-configure file servers to fancier machines with customized hardware and operating systems for high speeds.
Sales of NAS products will jump from $540 million in 1998 to $5.1 billion in 2003, market research firm International Data Corporation said today. The reason for the boom is the increase in data that computer users need to locate, the need for secure storage of that data, and the arrival of first-tier companies into the market.
Network Appliance was one of the pioneers in the field, but Hewlett-Packard and Compaq both plan storage appliances by the end of the year. Dell resells Network Appliance "filers" under its own label.
Network-attached storage (NAS) shouldn't be confused with storage area Networks (SANs), which are large, special-purpose networks that centralize data storage for large corporations. IDC also has predicted a rosy future for SANs, a far more complicated technology than NAS. However, both SAN and NAS have lesser revenue projections than storage devices directly attached to servers, IDC said.
NAS is used for a variety of purposes, from simply expanding the amount of shared storage space available to computer users to speeding up Web page transfer speeds though a process called "caching."
Network Appliance led the NAS market with 40 percent of total revenues in 1998, with Auspex in second place at 21 percent revenue share, IDC said.
However, several sellers of NAS products were forced out of the market in recent months, IDC said. "Low-end NAS system suppliers struggled with product, volume, and access-to-market issues," IDC's Robert Gray said in a statement.
IDC said the strong revenue growth in 1998 took place in NAS devices costing $25,000 or more, but in the future, equipment costing $6,000 to $24,999 will experience the fastest revenue growth. Network Appliance, with its relatively expensive products, was well positioned to take advantage of that growth.
More change in the market is under way.
Bigger companies are making their moves, though.
Compaq will sell a file storage appliance under its new "TaskSmart" label this year, said John Young, director of appliance and communication servers at Compaq.
HP announced a similar schedule a few weeks before Compaq. HP is beginning its product line with CD-ROM and DVD-ROM servers, but will add hard-disk based storage at the end of the year, said Michelle Weiss, worldwide marketing manager for NAS at HP. HP plans to aim for a less expensive price point than Network Appliance, she said.
IDC said Network Appliance displaced Auspex as the NAS revenue leader in 1998. "We believe it has had particular success with end users in the online services industry, specifically America Online," IDC said.
However, Auspex is refreshing its product line to try to regain the top spot, IDC said.
As bigger players try to get into the business, they may rely on firms such as Creative Design Services to manufacture systems that big-name companies can sell under their own badges.