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VARs cash in on iSCSI momentum

iSCSI's lower-cost approach is finally overtaking Fibre Channel in some storage networking installations.

After several years competing against the more dominant Fibre Channel (FC), VARs say they've found new customers at small to medium-sized businesses (SMBs) whose fast growing adoption of iSCSI is moving the storage protocol up to the top of the charts as a technology they can rely on to secure more deals as well as garner additional services.

"It's growing dramatically. I would say 65% of our business last year was iSCSI and the growth has probably double from the year before," said Greg Knieriemen, vice president at CHI Corporation, based in Cleveland, Ohio.

Mark Tuggle, vice president of sales at USI Corporation in Western Springs, III., concurs saying his company's implementations of iSCSI "surpassed our net new Fibre Channel installations mid way through last year."

Mike Strain, director of storage at Alexander Open Systems, Inc. of Overland Park, Kan., said that between May and December of 2006, his company closed 30 net new deals involving iSCSI implementation.

"Customers are very excited about the ability to do iSCSI and frankly it shakes out thousands of dollars in savings per host. When customers hear that, they get very interested and the discussion goes from there," Strain said.

A recent report published by the Enterprise Strategy Group (ESG), shows that of the 511 IT professionals interviewed, 17% have iSCSI deployed in a production environment, and another 20% plan to deploy an iSCSI storage area network (SAN) during the next two years.

The combined number of early adopters and those who plan to adopt iSCSI this year represents 37% of the total surveyed putting iSCSI "well within the early mainstream of market adoption," the report concluded. "Today, iSCSI adoption is highest in the small enterprise market (defined as organizations with 1,000 to 4,999 employees), although there is significant interest and usage across all market segments," it read

ESG's research also found that the technology has evolved to a much more mature one in the view of those surveyed, with 50% of all iSCSI early adopters using it for mission-critical, tier-one storage.

The figures shore up IDC's conclusion that iSCSI is the fastest-growing area of the storage market -- with an expected 73% compound annual growth rate (CAGR) for 2006-2010, and the market reaching $5.1B in 2010.

Customers are very excited about the ability to do iSCSI and frankly it shakes out thousands of dollars in savings per host."
Mike Strain
Director of StorageAlexander Open Systems Inc.

Vendors looking to sell their storage to SMB customers have begun to take notice.

Just this month EMC introduced the CLARiiON CX3-10 for midsized businesses, which has both FC and iSCSI capabilities. A much earlier adoption for the SMB market came in June 2006, when Network Appliance, Inc. introduced the StoreVault S500 which supports NAS, iSCSI SAN and FC SAN. In September, Hewlett-Packard Corporation introduced its All-in-One Storage for the SMB market, which has iSCSI connectivity.

HP storage executives are also watching very closely to guage the SMB market potential for iSCSI.

"From the data we've seen, probably two-thirds of servers are still using direct attached storage in the SMB space," said Kyle Fitze, HP's storage works SAN marketing director.

Fitze said HP has two different strategies for iSCSI implementation.

For high-end customers who have completed storage consolidation and invested in FC, HP suggests that iSCSI is an opportunity to lower the cost of adding additional servers to their SAN compared to adding a host bus adapter (HBA) for each server. HP is also suggesting iSCSI as a way to further consolidate SAN islands or replicate data from one SAN to another, using a lower-cost method than FC.

"These customers are now able to use the IP in their existing network to connect their edge servers or blade servers to a SAN and get more value out of that consolidation and to actually extend the amount of data that they are consolidating in their enterprise," Fitze said.

The second strategy is to work with SMBs, many of whom have not begun to consolidate using storage networking. Typically, they have remote offices where they are still deploying direct attached or server-based storage and they have fewer resources and less management expertise when compared to larger enterprises. Fitze said HP is depending on the channel to help SMBs understand the benefits of iSCSI.

That conversation is easy to have, especially since iSCSI has cheaper implementation costs, even though FC implementation costs have been reduced over the years.

"Our survey indicates [ISCSI implementation costs are] between an 11% to 30% range in cost reduction compared to FC. That is still significant enough for end users to prefer iSCSI. There is also an operation cost that is about that same range, which is also attractive to end users," Tony Asaro, senior analyst at ESG said.

CHI Corporation's Knieriemen said there are other factors that make iSCSI an attractive sell to end users.

"Most IT people already understand IP, and VARs can communicate to end users the ease of use of iSCSI and the fact that you don't need to invest in additional training and additional resources to implement iSCSI," Knieriemen said.

In addition to knowledge of IP, Asaro said IT managers who don't have lots of storage expertise can bank on their knowledge of Ethernet and Windows which gives them a head start.

"For example, iSCSI storage systems may support the Microsoft Management Console (MMC), VDS and VSS tools for Windows," Asaro said.

And what about iSCSI's future?

While today's VARs and SIs are primarily working in the SMB space, Arun Taneja, founder of the Teneja Group, believes the prospects are bright for the channel to win high-end customers when 10-gigabit iSCSI comes to the market.

"I had a look at some of the performance numbers with the 10-gigabit product line, and it's clear to me that on the performance aspect iSCSI will be able to go neck to neck with FC," Taneja said. "Today, FC at 4 gigabit to Ethernet at 1 gigabit, which is where iSCSI is today there's no question, FC has significant performance advantage, but when iSCSI jumps over to 10 gigabit then relative to 4-gigabit FC it seems to be performing really well," Taneja said.

Still, while a 10-gigabit iSCSI solution is about six months away, and early adoption may be another two more years, Taneja believes the prospects for iSCSI adoption in vertical markets like scientific labs and universities may present very good prospects for VARs and SIs.

IDC analyst Robert Gray said 10-gigabit Ethernet presents another challenge.

"There's a generation of blade servers at the rack level with a switch 10-gigabit Ethernet backbone. That means if you are going to stay with FC as your storage you're going to have to go through some sort of expensive adapters between the Ethernet and the FC," Gray said.

It's scenarios like these that help companies like Alexander Open Systems, a storage integrator and Cisco partner, to take advantage of iSCSI opportunities in other areas.

"iSCSI opportunities do help us from our Cisco business standpoint. It could mean the customer wants new switches or new routers, whatever the switching environment requires Cisco does that very well," Strain said.

Let us know what you think about this story; email: Nicole Lewis, Senior News Writer.

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