When Robin Bloor and Gary Bloom sat down to discuss the state of the storage market, IT-Director.com was watching closely. Here's what they had to say....

RB: What do you see as VERITAS's market position?
GB: In the storage industry, there is a value shift going on - from the hardware to the software. This is a frequent shift that often occurs in the industry. You can see an obvious example of this in the difference in financial performance between Intel and Microsoft. Intel is not doing so well, while Microsoft is still showing strong results - and this is in a weak market. VERITAS is strongly positioned as providing the software value in the storage space and the value is shifting from the hardware to our part of the market.

RB: How do you view EMC's move into the software side of the storage market.
GB: If you look at EMC you see that they are suffering to some extent from aggressive forward selling into the big sites. They have been saturating their market by, for example, selling 10tbytes of tin into a site that only needs 5tbytes. They have created a problem for themselves, because there has been a negative shift in sentiment towards them. Customers are hedging their bets and placing business with other vendors like Hitachi, HP, IBM. Moving into our market is going to prove very difficult for them. We don't see them as being able to forge a compelling proposition.

RB: Do you see this as a matter of "the innovator's dilemma". They can't break into the software market because the momentum of their existing business will never support the alternative priority. I've come to view EMC as a candidate for demise - by innovator's dilemma.

"When I was at Oracle a while ago we got a little worried that DB2 was coming into the Unix market, running on Sun, HP and IBM's AIX. We needn't have worried." Gary Bloom, CEO Veritas.

GB: I think its worse than that. It isn't impossible for them to build software for every part of our market. They have enough revenues and they're very big. There's two problems that I don't see them being able to overcome. They may be able to sell on top of EMC hardware, but none of the other hardware guys are going to give them any help. In fact I see VERITAS as very dangerous to them in this respect. We're the arms supplier to all their competitors. We suddenly become part of the competition's strategy. Also, they will have big problems getting technical co-operation from the competition. So they might come forward with good solutions for, say, EMC to EMC back-up, but how well are they going to do EMC to Hitachi. Even if the engineers co-operate, do you think the Hitachi salesman is ever going to want to introduce them? When I was at Oracle a while ago we got a little worried that DB2 was coming into the Unix market, running on Sun, HP and IBM's AIX. We needn't have worried. It never gained much share because the guys from Sun and HP were never going to recommend it. They weren't going to let IBM in the door just like that.

RB: So how do you see the competition for VERITAS.
GB: We are the dominant player on the software side, just as EMC is dominant on the hardware side. We have competition but it is all "point product" competition. We have the solution that spans back-up, recovery, replication, management, the whole space. The big advantage comes from our embedded technology. Our technology is in the file systems across all the major OS's. That makes it very difficult for any competitor. CA just announced BrightStore, but it doesn't give me cause for concern. It is only point product competition and if you look at the market share figures, we have been rising fast and they have been falling fast.

RB: What do you think the market opportunities are at the moment?
GB: Utilisation rates of disk are very low in practice, probably much lower than 50 percent. In most sites the thought process is that 50 percent utilisation is the high water mark, but in many sites it's much lower - around 35 percent. The thinking needs to change. Software can deliver much better utilisation rates than 50 percent, but it hasn't got into the thought process of the operations people yet.

RB: Do you blame the dot com mania for some of this. I heard quite a few stories about dot com companies pouring huge amounts of money into hardware and not utilising it well. Someone even said that the new economy cowboys never got more than 20 percent from one box, before they bought another box.
GB: Well, you had a whole load of companies out there whose buying power was much higher than their maturity. It was like sending a kid into a candy store with $100 to spend - so he comes out with $100 worth of candy. At the time we were doing $1m deals, with companies. You know companies would spend big and then three or six months later they're out of business. Sometimes I'd want to ring up the VCs and thank them for their donations.

RB: But the bricks-and-mortar companies were more savvy than that and of course they still are.
GB: Sure. But few of them get it about disk. Mature companies will get 60-70 percent CPU utilisation, and they'll monitor it and care about it. But it's not the same with storage. The big sites should appoint data storage architects. That isn't even a title. I was speaking to some important CIOs recently and put the idea to them. They all understood that it was a good idea, but nobody had done anything. That's part of the thinking behind our Appliance software product - it is a pre-architected, solution so less architectural thinking is needed. Data management is expensive and data architecture can cut the cost of this.

RB: So it's "big problem, big dollars and nobody doing anything?".
GB: VERITAS is about data management. That's what we're about and we know that there's much more that can be done to cut the costs.

RB: There is a perception problem here. Mostly I see companies implementing point solutions. Their next purchase in the data management area is to solve the last problem that emerged. I don't see much "integration thinking" and I don't see any real action at all. We were saying five years ago that the corporations were going to have to look at the network as a single resource space. Nobody disagreed, they just didn't do it.
GB: Many sites haven't even got the PCs squared away. Last month we sold a 20,000 to 30,000 license for NetBackup. It's a utility to back up PCs and it's still selling well. Much more can be done. We want to turn the PC legacy out there into a storage pool for the corporation. There's a huge amount of unused storage available to do that with. It is an untapped resource.

RB: Yes. Even the lap tops have vast amounts of surplus disk. I also saw some research from last year, which suggested that 55 percent of data in the world is on PCs. Well that means that that data isn't shared and there is no means of getting further value from it.
GB: So you need the software to do that. Tin alone doesn't solve the problem. My guess is that even if there were no further development of products in this software market, the market would still grow to about $5 billion a year.

RB: So how do you see the future?
GB: Well we are currently thinking about "the fringes of the network". There is a big problem with data once it goes outside the corporation onto the Internet. The Internet has lots of weaknesses in the infrastructure. We'd like to manage the data at every point of the transaction from the end device to the corporate network. Caching for performance and preserving its integrity. We're working in this area. We see it as an emerging problem. But it's not all we're doing. We're going after every opportunity in the data management space.

RB: Thanks for your time, Gary.