Slow growth expected for cloud computing storage market as security and performance issues remain
May 4, 2012
There has been a lot of conversation and debate about Google’s entry into the cloud storage market and how its new Drive service will compete with the likes of DropBox, SkyDrive, and iCloud.
However, a deeper discussion exists on whether the increased numbers of cloud storage offerings available to businesses signals problems ahead for traditional on-premise storage vendors, like EMC, IBM and Oracle.
The storage-as-a-service market is still underdeveloped when compared to the software-as-a-service market, but this is unlikely to be the case for long, when there is so much industry focus and investment on taking storage services to the cloud…
The cloud offers businesses an almost-infinite amount of space to store data and the ability to expand storage capacity on demand is an attractive proposition.
Analysts continue to argue that security constraints tend to hold back larger enterprises from adopting online storage solutions, but according to Enderle Group analyst Rob Enderle, this will change in the coming years.
"Online storage solutions removes data from IT control, and it is still a solution used predominantly by SMEs," he told V3.
"But there are a number of cloud storage firms that are specifically targeted at the enterprise, and they can often pass security audits better than IT organisations do."
Enderle listed a number of cloud storage firms that meet enterprises requirements when it comes to security, such as Ignite.
Another is Intronis which has offered businesses cloud storage services since 2003, and offers 256-bit AES security and multiple datacentres in different US regions to protect data.
Meanwhile Enderle pointed to other solutions being made available to large businesses to help them decide what data to keep on-premise and which data can be sent to the cloud.
"BMC now helps companies make this decision through offering workshops and offering them the tools to back up their decisions, whether it is the Amazon cloud, an on-premise offering, or a mix of both," added Enderle.
Enderle said the delay in the growth of the online storage market is because the number of such enterprise-grade online storage solutions is few and far between.
The more well-known online storage solutions in the consumer space, like Google Drive and Amazon’s storage services, simply do not live up to enterprise standards on security, he argued.
"Google is seen as too risky by many enterprises. It has had problems in the past with privacy, and its core product aims to give out data to the world," said Enderle.
"Google should probably spin out Drive as a separate company in order to gain businesses’ trust in the service. I doubt that large companies will use it much, especially with the support of IT."
Enderle said Amazon is also not considered by many enterprises for online storage, partly because of the many outages it has suffered. "It’s just still not enterprise class," he noted.
Meanwhile, although the likes of Oracle, IBM and EMC, now offer businesses online storage options, they still lack in ease when compared to the cloud vendor’s offerings.
"What makes cloud offerings attractive is the ability to just swipe a credit card and get a service. They [the traditional on-premise storage firms] just don’t make it easy for businesses to set up cloud storage services. They still expect customers to sign large, on-going contracts"
"The way those vendors are likely to see more enterprise adoption in the online storage market is through acquisition, like EMC acquired the cloud service firm Mozy."
Enderle said the cloud storage market will begin to consolidate as the likes of Ignite and Intronis start to take customers away from firms such as IBM and EMC.
"It is likely that they [the on-premise storage firms] will also wake-up to the market more when they see Google in increasing numbers of contract competitions. They will see Google as a risk, even though its Drive service isn’t really there [enterprise-ready] yet."
"Google may also buy its way into the business market, and acquire an enterprise cloud storage firm. I expect there will be many acquisitions in this space shortly."
Asked when he thought the cloud storage market would really take-off, Enderle gave an estimate of three years.
"Enterprises move very slowly when it comes to IT and these security concerns over cloud storage will hold them back, but the market will probably take-off around mid-decade," he explained.
"The acquisitions need to happen and the buyers need to be comfortable with the solutions before cloud storage explodes."
Apart from security issues, Ovum analyst Tim Stammers said the online storage market is also being held back by enterprise concerns related to the latency issues that come with cloud computing.
"The fact that businesses have to store their data thousands of miles away means there will always be a latency issue," he told V3.
"Latency sensitive business, like financial institutions, would not want to store transactional databases in the cloud with high performance needs, because [when attempting to query the database] the signal will have to travel thousands of miles."
"Enterprises will move to adopting cloud storage solutions but it will be slow. It’s always a case of next year."
Stammers, like Enderle, also drew a line between the enterprise cloud storage offerings supplied by the likes of Microsoft and Amazon, and the more commercial offerings like Google Drive and Dropbox.
"Drive is not an enterprise service. I doubt very much IT departments would adopt the service for a whole business, although they may give employees an account to use."