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However, some early flash SSDs implementations come with a set of limitations that customers need to be aware of, notably around usability and resilience. This note illustrates how the combination of technological advances and declining prices will open up new use cases for flash SSDs in the enterprise, while flagging some of the caveats that customers need to be aware of.

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The long-term future of storage is about smart software that manages a large pool of cheap interchangeable hardware. However, in the near term, mainstream enterprise buyers continue to move cautiously while upgrading their existing installed base mostly with more of the same from vendors such as EMC and NetApp. But the current recession is making them more price-sensitive and creating pressure to try technology from newer vendors such as 3PAR and Data Domain for growing pockets of use cases. Cloud/online service providers are the most price-sensitive and open to new approaches since their storage capital and operating expenditures have a direct impact on their ability to offer competitive pricing.

Customers are transitioning from storage typically bought for a specific application to a more horizontal, virtual pool that better matches the shared resource model of their virtual servers. Much of the growth is occurring in two customer archetypes that are very different from the legacy enterprise data center characterized by scale-up architectures.

Scale up describes a model of using bigger, more expensive machines, whether for storage or servers, to get more performance. The scale-out model is when many smaller, inexpensive machines working together are used for better performance. Just about all enterprise software is written to scale up while cloud-based software is primarily written to scale out.

• Many new high-growth workloads in the enterprise are best handled as NAS-based file-oriented data, as opposed to highly structured SAN-based block-oriented data. They include web serving, film and animation processing for media companies, seismic modeling for oil exploration, financial simulation in banking, etc. These workloads generate so much data that customers have been willing to try newer vendors with less expensive scale-out architectures such as Isilon.
• The very largest cloud/online service providers, such as Google, Yahoo, Amazon Web Services and Microsoft tend to build their own scale-out storage software to run on commodity storage hardware. This do-it-yourself model is an extreme example of what analysts are referring to when they say storage will become as commoditized as servers.

Storage technology is morphing in the direction of server technology, more slowly in the enterprise and faster in the cloud.

• Server virtualization is putting a layer in front of storage that over the next several years will start to homogenize the differences between storage products for applications and administrators.
• As modular or commodity storage manages more workloads, the storage software can sit either on the x86 controller or the x86 server. That will make it easier for customers to benchmark and put pressure on hardware prices, even if the software comes from the same storage vendor providing the controller and disk drives.
• Customers are rolling out storage efficiency functionality that improves utilization similar to server virtualization. However, customers are using technologies such as snapshots, thin provisioning and de-duplication to accelerate data growth, particularly backup or nearline, while only modestly compressing their storage budgets.
• Flash memory will drastically improve the price/performance for virtually all classes of storage. In particular, over the next several years using flash as cache to augment magnetic disk performance will have a bigger impact than flash-based solid-state disks.

While these last two trends are very significant for the storage industry, we are treating them as outside the scope of this report, which deals with the commoditization of storage in the midst of a transition to virtualization and cloud computing.

Changing customer workloads and emerging technologies are driving changes in vendor business models.

• For all but the most high performance and resilient systems, storage hardware and software will increasingly be sold and priced as two distinct parts of one integrated product line, starting especially with cloud/online service providers. Even though these two components will likely come from the same vendor most of the time, this change will force storage vendors to sell software based on business value rather than systems based on capacity.
• To the extent that customers shift more of their data to the cloud, aggregate industry demand for storage will move from a ‘just in case’ capacity, upfront capex model to a ‘just in time’ capacity, ongoing opex model. This is because online service providers are running at much higher asset utilization than the typical customer can add capacity in more granular increments and are able to extract very favorable pricing from their suppliers. During this transiti0n period, which we can think of as a form of industry-wide thin provisioning coupled with collective bargaining, storage vendors may see a temporary slowdown in revenue growth. More importantly, they may experience lower margins for a prolonged period.
• Truly interchangeable storage software and commodity hardware will likely be limited to the largest cloud / online service providers, such as Google, Yahoo, Amazon and Microsoft. Enterprises lack the scarce talent required to combine third-party or open source storage software with commodity hardware in a way that ensures scalability and resilience. In other words, the ‘mix and match’ model of server hardware and software is not likely to become prevalent in mainstream storage anytime soon.
• The storage vendor mix in traditional enterprises is unlikely to be radically reshuffled anytime soon, since the innovative storage software challengers have to contend with customers’ concerns about interoperability, supportability and resilience. A major OEM endorsement of a startup vendor such as Virsto or Sanbolic would change that dynamic. While Cisco is the most likely vendor to fill the role of disruptor, HP, Dell or IBM might be somewhat more conflicted about accelerating storage hardware commoditization.

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• Removing the barriers that slow the advance of virtualization into more performance-sensitive, business critical workloads such as SQL Server, Exchange or SAP.  For instance, we estimate that less than 5 percent of SAP production workloads running on x86 hardware are virtualized today, unlike test and development workloads, which are already widely virtualized. That explains the primary focus on increased performance and scalability.  Based on our primary research with customers and channel partners, we believe that virtualization may be reaching an inflection point over the next 12-18 months as far as adoption for more business critical production workloads is concerned.
• Increasing storage efficiency and energy efficiency, which should resonate in today’s environment where CFOs have a much more prominent role at the table in IT buying decisions.  In principle, this should lead to reduced capital and operating expenditures associated with VMware deployments.
• Automating resource management and simplifying operations. This is most relevant to large virtualized environments (50 physical servers and up).  While the new product capabilities are positioned to reduce the 70 percent of IT budgets being spent on keeping the lights on, frankly, they reinforces the functionality of other parts of the suite in mitigating the challenges created by wide-scale virtualization adoption, notably the proliferation of virtual machines.

VMware has captured the marketing zeitgeist by labeling its suite “the industry’s first operating system for building the internal cloud.”  Private clouds are, in fact, being adopted ahead of public clouds, and VMware is right that it will only be successful if it enables mainstream commercial workloads to be run in these clouds without requiring modifications to the applications. The company claims that “for hosting service providers, VMware vSphere 4 will enable a more economic and efficient path to delivering cloud services that are compatible with customers’ internal cloud infrastructures.” While VMware is by far the best-positioned vendor to enable these, and is building that stack from the bottom up, we would have liked to see more detail on what that top-to-bottom private cloud stack would look like.

As Gregory Smith of IT and telecommunications outsourcing firm T-Systems articulated at the April 2009 SAP Virtualization Week, a true private cloud provides infrastructure-as-a-service (IaaS) to enable end-to-end application services delivery. While virtualization provides the crucial foundation for IaaS, VMware is still assembling the top layers of the IaaS stack – such as the ability to charge internal departments based on their usage of IT resources. Moreover, vSphere 4 maxes out at 32 physical servers in a single logical resource pool, which represents the scale of a medium-sized puddle, not the large pool required for an enterprise cloud.  Clearly private clouds are still very immature today.  VMware could have used that opportunity though to provide customers with more clarity on which workloads should be put into private clouds first and what the barriers are for more critical workloads.

The company did not emphasize its previous aspirations of managing end-to-end application services delivery.  We expect VMware to ship an upgrade to its highly regarded AppSpeed application performance management product some time later in 2009.  However, it will only provide application-level intelligence for a limited number of workloads, including J2EE frameworks, .NET, SQL Server and a few others.  We believe VMware is leaving the application-level management to others because it did not want to compete head-on against Microsoft and the Big Four systems management vendors.  Moreover, most customers prefer to have their existing systems management tools span across and provide an integrated, single view into both physical and virtual infrastructures.

The company did not talk about its desktop virtualization product line, renamed View. Since View is based on the newly refreshed server virtualization infrastructure, we would expect to see a refresh toward the end of the year. For users accessing a desktop environment streamed from servers, the increased storage efficiency will help bring capex costs down toward those of traditional desktop environments.  Better presentation protocols, including the one coming from the joint work with Teradici, will bring Adobe Flash and other rich media support to end-users.  What’s not clear yet is when the client-side bare metal hypervisor that works in occasionally-connected environments will finally ship. However, many of the fifty VMware customers and channel partners we interviewed did say that, given VMware’s advantage in managing servers, their customers expect to use that same infrastructure to manage their desktops, when and if they start that migration.

Overall, we are impressed by the product announcement, with which VMware will further expand its already considerable lead over Microsoft and Citrix.  However, we suspect the company will face formidable challenges in transitioning its own sales force and particularly its channel partners toward a multi-disciplinary, solutions-led sale.

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