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Annuals

STORAGE: The Year of Pureplay

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DQI Bureau
New Update

EMC was indeed the biggest success story of the year-in the
external storage market it grabbed the pole position growing by an astonishing
394% thereby dethroning the long-reigning storage supremo HP. NetApp and Hitachi
Data Systems were the other major gainers-growing by 69% and 166% over their
FY 2003-04 revenues. Within these numbers was hidden one important tale-perhaps
the most important learning from the storage segment during the year. Gone were
the days when primarily server vendors like HP and IBM used to push storage
boxes along with their primary offerings. Since storage was till now primarily
restricted to DAS (either within servers only or external DAS), it was easier
for these server giants to market their storage wares under one umbrella.

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However, FY 2004-05 was perhaps the turnaround year, not only
in India but also globally, when enterprises finally realized the need for
specialized storage vendors. This perhaps explained why EMC also led the charts
globally, while NetApp and HDS too fared fairly well. And, at the same time, why
the storage stars did not shine that well for HP, IBM or Sun-however,
globally, Dell took big strides on the storage front, but they were not so
active in India other than some partnership with EMC for some of the low-end
products.

However, EMC's India success was not only because of the
enterprise shift towards pure storage vendors, but it was also the culmination
of a five-prong strategy to educate the market, have a comprehensive portfolio
of products and solutions, strengthen and build partnerships as well as the
services portfolio, and also to increase focus on CAS and NAS. Some of the
largest customers EMC added during the year included Reliance Industries, Tata
Teleservices, Shipping Corporation, SAIL, Ranbaxy, Mahindra & Mahindra,
National Remote Sensing Agency, ITC, Hutch, General Motors, GE, Cognizant,
Citibank, Cisco and Air India amongst others. Another major acquisition for EMC
India was Grameen Phones of Bangladesh.

However, the coup d'état for EMC was its development
center in Bangalore that came up during the year. As the largest software
development facility outside North America, it reinstated EMC's greater focus
on solutions. As the storage industry in India shifted from a DAS model to a
networked storage model, increasing the importance of software and services, EMC
changed its market focus to become increasingly software and service-oriented.
In FY 2003-04, EMC's focus was 70% on hardware and 30% on software and
services but in FY 2004-05, the split was 47% on hardware and 53% on software
and services.

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In May 2004 it launched a comprehensive partner program
called Velocity to extend its reach in the local market. Its partner and channel
network in India included global systems integrators such as Dell and Datacraft,
and Indian systems integrators such as Wipro Infotech, Tata Elxsi, HCL
Infosystems, Tata Infotech and CMC. EMC had also appointed Redington as its
distributor for India, Sri Lanka and Bangladesh. Additionally, EMC has 32
resellers to offer storage platforms, software and services to more than 30
cities in India. It also introduced a slew of new products-not only in SAN and
NAS, but also in content-addressed storage (CAS) with its Centera range of
solutions.

Switching it to the SAN
One secondary market that witnessed robust growth during the year was the
fiber channel switches market. While Cisco and McData ruled the roost in this
segment, Brocade too made its presence felt amongst the SMBs. To tap the high
end of the market, Brocade launched a new director-class switch christened the
Silkworm 24000, while its predecessor, the Silkworm 12000, was a big hit amongst
SMBs. In addition, it also launched two new switches, the Silkworm 3250 and
Silkworm 3850, both aimed at the SME market. Cisco, on the other hand, launched
the MDS 9216i fabric switch and the Multiprotocol Services Module to compete
better against Brocade and McData.

The Supporting Cast Winners

NetApp has also performed creditably in India to reach Rs 91.5 crore-obviously
the FAS systems and NearStore proved to be more mature businesses than iSCSI in
this market. Apara and Wipro were two of its largest system integrators in the
country. It bagged customers across multiple verticals including ONGC, Reliance
Industries, Yahoo, Rediff, Kotak Bank, Aviva Life Insurance, Cisco, Texas
Instruments, National Semiconductor, ONGC, Times of India, ACNielsen, ST
Microelectronics, Polaris, Sasken, GECIS and AOL among others. For iSCSI, NetApp
got a flagship customer HDFC Standard Life in India.

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On the storage software front, Veritas remained numero uno,
bucking the global trend where EMC snatched the number one position. Through its
various solutions in different areas like e-mail archiving, server provisioning,
clustering and replication, as well as backup and archiving applications enabled
Veritas to gain this exalted position where it clocked Rs 50 crore in revenue to
garner 43% of the storage software market share. Veritas evangelized the concept
of utility computing throughout the year to push its software sales but with one
major difference-it claimed that it never had a hidden hardware agenda to push
through unlike vendors like HP or IBM. Hathway and HDFC Bank were two of the
marquee customers attained during the year. However, with Veritas getting
acquired by Symantec, the future is not really clear for this 2004 winner.

Indian SMBs Go on a Storage Overdrive

The storage market never had it so good amongst SMBs in India. During
2004-05, Indian SMBs spent Rs 116 crore on DAS and another Rs 74 crore on
network storage, making it the watershed year for storage in their category,
according to research firm AMI-Partners. This was more than a one and a half
times increase over the spending during the previous year. While DAS was
traditionally the default choice among India's SMBs as their storage option,
yet the ballooning number of network users, as well as the speed, capacity and
plummeting prices offered by network storage, made it the preferred storage
solution during the year.

Almost each and every vendor could boast of SAN or NAS deployments or
sometimes a combination of both amongst SMBs spanning across diverse verticals.
While EMC had a SAN-NAS combination working in Maya Entertainment, Ramoji Film
City, Freescale Semi Conductors, Geojit Financial Services and India Bulls
Securities, NetApp boasted of pedigree dotcom clients like Rediff and Yahoo as
well as other SMBs like Kotak Bank, National Semiconductor, ST Microelectronics,
Polaris and Sasken. Even a new entrant like Intransa bagged Mumbai-based
Quintiles and Sun Pharma for its IP SAN offering for storage consolidation;
established biggies like HP, on the other hand, bagged customers like Brakes
India, Artisan Technologies, Gaurav International and Tech Nip, while Pidilite
Industries, Sanmar Engineering, India Life Hewitt and Kolkata Port Trust fell
into IBM's kitty. Not to be left behind HDS had Arvind Mills, HFCL and Spice
Telecom while Sun had got India Today, Gati Cargo Management Services, Hathway,
Siticable, MTR Foods, Madura Garments and West Coast Paper Mills in its fold.

HP emerged as the market leader in India's SMB storage market, with almost
half of the storage Medium Businesses and over 40% of storage Small Businesses
owning at least one HP storage product. It aggressively pursued the lucrative
Indian SMB market and maintained its momentum throughout the year with new
products and programs focused on SMBs. However, just like in larger enterprises,
it started facing growing competition in network storage from vendors like EMC
and NetApp, who also expanded their presence in this market.

The AMI research showed that a third of medium businesses believed increases
in required storage capacity are generated by growth in the number of users,
while more than one in four cited the expanding network of business partners
with whom they conducted individual electronic transactions. This was true of
small businesses also, with nearly one fifth of PC-owning SBs citing expanding
storage requirements due to increase in the number of network users and
electronic transactions with business partners.

Moreover, India's SMBs also finally realized the importance of customer
relationship management, and gradually adopted enterprise CRM applications in
larger numbers to provide better customer service. While nearly 5% of small and
medium businesses had already adopted CRM software, an additional 15% of
businesses invested in CRM solutions during the year. This, combined with an
increased spending on enterprise-level applications such as ERP, the usage of
which was still at an embryonic stage, also fueled the need for storage amongst
SMBs. The increasing focus on security also led many SMBs to invest in data
backup and disaster recovery solutions. Need to create data backup was cited as
the reason for increased storage requirements by 29% of MBs and 15% of SBs.

The New Upstart

Intransa might not have topped the charts in any of the storage categories, but
it did indeed make an impressive debut in India during the year. Intransa made
more than 15 installations in the country. Datacenters of technology companies
like mPhasiS, HCL Technologies, DR sites of L&T, as well as clients in
diverse sectors like Sun Pharma and Wipro BPO. Ingram Micro and SES Technologies
were appointed the distributors while Ramco and HCL Technologies were the
preferred system integrators.

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Rajneesh De

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