Cloud Storage May Disrupt Backup Appliances

IDC reports the worldwide purpose-built backup appliance market has remained relatively flat year-over-year, pointing to spending on backup and data protection software as the cause for the "temporary" trend. But the emergence of more advanced, cost-effective cloud-based solutions may have an effect, too.

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Slide9BackupA new IDC report reveals the global purpose-built backup appliance (PBBA) market remained flat for Q3 2012. According to IDC figures, the total revenue for the market hit close to$655.3 million for Q3 2012, and in the "open" PBBA space, the market showed relative growth at 6.4 percent, representing about $567.5 million in overall revenue.

IDC defines PBBA as a standalone server-style disk solution or gateway device that serves one or more purposes in the backup space. In situations where the backup engine application is decoupled with the appliance, IDC still defines these as PBBAs.

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PBBA solutions that have recently graced the channel include EMC Corp.'s latest Avamar appliance, which offers specialized deduplication features targeted at the midmarket, plus virtualization options that expand its flexibility in the data center. EMC was recognized as IDC's 2011 market leader in the PBBA space, owning 65.5 percent of the entire market. In 2012, those figures haven't changed much.

EMC and Symantec Corp. are highlighted by IDC as the two major vendors seeing positive gains in the PBBA market. EMC posted revenues of $436.4 for Q3 2012, a uptick of 7 percent since Q3 2011 revenues of $407.7 million, but Symantec stole the show in terms of overall growth, with 94.4 percent, rising from $23 million in Q3 2011 to $44.7 million in Q3 2012. EMC still commands the market, with 66.6 percent market share for Q3 2012.

Both IBM and Hewlett-Packard Co. saw growth slide, with IBM taking the biggest hit, posting a loss of 42.8 percent and seeing only $70.6 million in PBBA revenue. This represents a  solid drop from $123.4 million in revenue for Q3 2011. HP fared better but saw a loss of 5.9 percent, posting only $29.3 million in revenue, down from an already small $31.1 million in the year-ago quarter.

This market malaise isn't cause for alarm: IDC attests it's a "short-term phenomenon with customers defering spending on data protection and recovery products." Customers are expected to continue spending in this space because the need for new backup infrastructure remain somewhat unchanged. And where customers are spending, the channel should concern itself.

IDC reported that, despite the PBBA market remaining flat, storage capacity shipped saw a sizable growth of 37.5 percent year-over-year, representing 366,956 terabytes of data. This figure is interesting when viewed in light of the continually high price of physical storage. Channelnomics thinks the market plateau for PBBA may be a combination of this high price of storage coupled with the decreasing price of cloud-based storage.  

Recently, Amazon.com Inc., Microsoft Corp. and Google have fought to provide bargain-basement prices on their respective cloud storage solutions. In the same vein, Amazon offers advanced super-charged storage capabilities  with Data Pipe and High Storage Instances, which provide the scaffolding for next-generation cloud storage. Although these options are not the turnkey appliances some organizations look for, any savvy solution provider can build, virtualize and deploy a backup offering via the cloud. It can result in a cheaper and more scalable offering than a traditional on-premise PBBA -- plus providers have the added benefit of reoccurring revenue and the ability to resell the solution to multiple customers

The latest reports predict cloud storage will be $46.8 million market by 2018, so solution providers should not discredit the impact cloud can have on backup space. While these market changes portend shifts in the storage marketplace, the sustainability of on-premises storage as a long-term solution is not long for this world, especially when more robust solutions can be built on the backbone of today's major cloud providers.

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