This week has seen two interesting announcements from vendors that will challenge the need for storage at the lower small and medium sized business end of the market.

The first came from Nutanix, a startup that offers hyper-converged solutions, merging compute and storage and removing the need for dedicated SAN equipment.  In a press release earlier this week, the company indicated they had raised a further $101 million from venture capital investors, valuing the company at around $1bn.

Nutanix are not the only player in this part of the market.  There is also SimpliVity, another new startup, founded by Doron Kempel who sold his previous company, Diligent Technologies, to IBM in 2008.  Solutions are also available from Scale Computing and Pivot3.

Customer adoption has been massive across the board but one of the more interesting aspects of our business is the amount of repeat purchasing.  Half of all customers come back and buy again within 6 months and 70% buy again within a year.  The aggregate repeat purchase multiple is currently just over 3x.  That means, if a customer initially purchased $100K of products we can expect the lifetime account value to be $300K.  – Howard Ting, VP Marketing & Product Management, Nutanix Inc

The move to hyper-converged is not a hardware only play, with startup offerings from Maxta, and ScaleIO from EMC.  VMware itself is looking to get a piece of the action with VSAN, although that solution is locked into the kernel of vSphere and therefore unlikely to ever support heterogeneous environments.

The issue for vendors selling modular products at the low to mid end of the market is that as virtualisation increases its coverage in the data centre, solutions can be deployed without SAN storage altogether.  The savings for the customer are clear – reduced cost from hardware, less overhead for maintenance and of course the ability to consider staffing reductions and not run dedicated storage teams.

To date, other than Maxta and ScaleIO, there are only a few distributed storage products available to create self-build solutions.  However, with the second announcement of the week from IBM, this could change quite quickly.  Big Blue has refreshed their server platform and released the x6 generation of servers.  The new systems include a feature called eXflash; NVDIMM (non-volatile DIMM) storage – server RAM memory that doesn’t lose the content when the server is switched off.  The benefit of eXFlash (and the other brandings of Diablo Technologies’ “Memory Channel Storage”) is in the extremely low latency figures achieved.  I/O response times are measured in microseconds rather than milliseconds, promising almost an order of magnitude improvement for persistent data storage.

IBM also announced a new modular design to servers in the x6 range.  This allows them to use removable modules, which support a range of tasks, including general compute, storage and I/O, known as the Compute Book, Storage Book and I/O Book respectively.

The ability to build a customised server means hyper-converged solutions could be expanded and matched to customers’ growth requirements, choosing to add more storage and/or compute as growth dictated, rather than using today’s relatively static configurations.  Although these initially seem like high-end options, expect other server vendors to replicate IBM’s ideas and costs to come down.

So where does all of this leave the storage vendors?  If hyper-converged solutions prove as popular as they seem (Nutanix has already reached $100 million in sales), then the market for block (SAN) storage could shrink significantly.  Offerings from startups such as Nasuni remove the need for dedicated NAS equipment, so in a short time, storage as a separate platform could be removed from the data centre altogether.

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