Cloud Pluses and Storage Minuses

Hewlett-Packard Co. (HP) announced new virtualization servers in partnership with Microsoft Corp. for more rapid workload deployments and cloud usage while IBM Corp. unveiled its new Platform as a Service (PaaS) offering, SmartCloud Enterprise Plus. In other cloud news, EMC Corp. revealed new software for its vBlock solutions that will improve automation and offer tighter integration with VMware Inc.'s vCenter server.  Meanwhile, Dell Inc.'s 10-year reseller relationship with EMC has ended. On a more general storage note, floods in Thailand has forced the shutdown of approximately 25 percent of the world's hard disk manufacturing capacity, which may lead to near-term shortages.

Focal Points:

• HP announced HP VirtualSystem for Microsoft, which is designed to speed the virtualization and delivery of diverse, business-critical workloads such as Microsoft SharePoint, Exchange and SQL Server. The system includes HP servers and Microsoft's Hyper-V virtualization software and system resources can be managed using HP's Insight Control and Microsoft System Centers. Using a single console, clients will be able to track application services and pinpoint and resolve issues without downtime across hardware infrastructure, hypervisor, operating system, and Microsoft applications. The servers provide a path to help customers build private and public clouds, and link the two in a hybrid cloud, according to company executives. The VirtualSystem for Microsoft will be available starting in November and will have an entry price of $175,000, not including Microsoft application software licenses. IBM just released its IBM SmartCloud Enterprise Plus PaaS offering, which is designed to migrate customers' traditional and high availability applications to the cloud and will be offered with a full complement of managed services. IBM's production-oriented public cloud provides multiple levels of security isolation and comes with an SLA guarantee of 99.9 percent or more, depending upon the maintenance agreement. The IBM PaaS supports DB2, the OVF open virtual file format support, Rational tools, REST, the Tivoli stack, WebSphere, and other parts of the IBM ecosystem. Enterprise Plus also provides capabilities such as automation tools, governance, open standards support, and payment and billing.
• EMC and the Virtual Computing Environment alliance (VCE), which is jointly owned by Cisco Systems Inc., EMC and VMware, announced an enhancement to vBlock management with a new release of EMC's Ionix UIM/P (Unified Infrastructure Manager/Provisioning) software. UIM/P 3.0 improves integration with VMware tools, such as vCloud Director, and has an Elastic Provisioning feature, which allows server, network, and storage resources to be non-disruptively added or removed as needed. EMC officials claim Elastic Provisioning increases the speed by up to 50 percent with which vBlock platforms can be provisioned. In other EMC-related news, Dell reported it was ending its 10-year relationship with EMC this month, two years before its reseller agreement is set to expire. This was not unexpected in that Dell has invested more than $2 billion over the past three-and-a-half years to acquire its own family of storage products. Now that it has acquired Compellent Technologies, EqualLogic, Exanet, and Ocarina, Dell no longer wants to sell Dell-branded EMC storage products, including Clariion SAN arrays, Celerra NAS servers, Data Domain deduplication appliances and VNX NAS/SAN combination arrays. However, the company will continue to provide existing Dell/EMC customers with Dell services and support.
• Severe flooding in Thailand, which has reportedly killed more than 300 people, inundated homes, and disrupted transport links, has also forced the shutdown of approximately 25 percent of the world's hard disk capacity. Western Digital Corp. disk manufacturing sites were shut down due to floods around Bangkok last week and are expected to remain shut for several more days. Western Digital produced 32.5 million drives from its plants in Thailand last quarter. The company is the largest hard disk manufacturer and makes more than 30 percent of all hard drives in the world, with 60 percent of that coming from Thailand. The company claims it could take between five to eight months to get the plants fully back online. In addition, Toshiba Corp., which makes more than 10 percent of the world's hard disks, has half of its capacity in Thailand and its plant has also been closed due to flooding. Moreover, while Seagate Technology LLC sites are still open, they rely on several suppliers that have been shuttered due to the floods. Seagate, the second largest hard disk manufacturer, reported that the hard disk drive component supply chain is being disrupted and it is expected that certain components in the supply chain will be constrained.

Experton Group believes the major vendors like HP, IBM and VCE are starting to fill in the gaps, which are hindering the growth of private and public cloud offerings. These package offerings and tools are needed to expedite the adoption and management of cloud environments. IT executives will look more favorably on cloud computing as automation, availability, data extract/transform/load, integration, management, monitoring, performance, privacy, security and service level concerns are satisfactorily addressed.

The end of the Dell-EMC relationship was long expected and will not impact EMC's outlook; however, Dell has seen its storage sales diminish, as users were expecting the deals termination. Dell has a work to do to integrate all its storage offerings (Compellent, EqualLogic, and PowerVault arrays, as well as data migration software like Dell Fluid Data) and convince users that its product lines are top tier.

Moreover, Dell still needs to transform itself into a relationship-based vendor from a transaction-oriented one if it is to compete on more than just price. Lastly, the extended hard disk production hiatus will cause shortages, which in turn will drive up prices.

IT executives are used to seeing disk prices drop about four percent per quarter. IT executives should expect prices to hold, and likely rise, over the next three to six months before they resume their downward trend. IT executives expecting to make major purchases over the short term should negotiate the best deal they can and lock in prices now before shortages appear and cost structures change.