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COVID-19 dominates enterprise storage news so far this year

The year hasn't gone as expected in enterprise storage, with the pandemic affecting conferences, sales results, use cases, funding and even CEO health.

Like with just about any business, you could throw out all the beginning-of-the-year predictions for the data storage industry early in 2020.

The COVID-19 pandemic that shook up the world certainly had an impact on the enterprise storage world, making its mark on the news over the first half of the year.

This was supposed to be the year of NVMe and QLC flash, storage as a service, fast object storage and a need for container storage. It may still turn out that way. But the rise of COVID-19 in mid-March abruptly changed storage buying and usage patterns.

At least two CEOs of storage vendors -- Charles Giancarlo of Pure Storage and Antonio Neri of Hewlett Packard Enterprise (HPE) -- contracted and recovered from COVID-19. But the pandemic affected the entire IT industry from financial and technology perspectives.

The coronavirus accelerated a move to cloud storage and virtual desktop infrastructure (in the cloud and on premises) and a de-emphasis of mainstream enterprise arrays. Commercial enterprise storage systems suddenly needed to support remote workers, and required buying, implementation and management from outside the data center. For data protection, COVID-19 meant a greater emphasis on remote security, ransomware protection and disaster recovery as a service.

Here are the biggest news stories and trends from the first half of 2020:

Veeam's blockbuster buyout; NetApp collects cloud crumbs

Insight Partners acquired Veeam Software in January, a blockbuster deal that was the biggest pre-pandemic storage news of 2020. Private equity firm Insight Partners previously held a minority stake in the data protection company, but Veeam had been under the control of its founders. With the move, Veeam's Russian-born founders, Ratmir Timashev and Andrei Baronov, stepped away from day-to-day management of the company they built into a multi-billion backup giant in 13 years. Long-time Veeam employee William Largent moved back into the CEO role as the vendor sharpened its focus on establishing U.S. headquarters and a greater share of the U.S. market.

The other early acquisitions of 2020 were much smaller deals. Veeam rival Rubrik was on the acquiring end of an M&A, picking up artificial intelligence startup Opas AI. Rubrik intends to use the Opas AI root cause analysis technology to give customers proactive alerts and better availability, among other improvements.

Early cloud NAS vendor Panzura also was acquired by a private equity firm, Profile Management Capital. As with Veeam, the Panzura deal brought a CEO change. Profile Management brought in Jill Stelfox to replace Patrick Harr, who became Panzura CEO in 2016.

NetApp made three acquisitions in early 2020 to try and accelerate its move from an on-premises storage leader to a cloud storage vendor and provider. With its storage product revenue shrinking, NetApp acquired cloud virtual desktop startup CloudJumper for $34 million, global file cache and sync vendor Talon Storage for $23 million, and cloud management startup Spot for an undisclosed price.

The deals add Talon Storage Fast software suite, Virtual Desktop Service and Spot Cloud Analyzer for cloud capacity management to NetApp's portfolio.

Nvidia picked up SwiftStack to incorporate the object storage vendor's technology into its AI stack.

Shows undergo digital transformation

Live conferences drive a lot of storage news, as vendors use their shows to launch products, unveil keynotes and put interesting customer stories on display. May and June were set up as a busy time for storage conferences this year, with Dell EMC, IBM, Hewlett Packard Enterprise, Nutanix, Veeam, Rubrik and Zerto set to hold shows. COVID-19 fallout blew a hole in that schedule, with all of those conferences becoming virtual instead. Dell EMC and Nutanix also pushed their virtual shows to later in the year.

The success of virtual conferences varied. While online events increase the potential audience, they can also take on the characteristics of a webinar. Lack of face-to-face meetings defeats much of the purpose of virtual shows, and some events were cut from several days to a single day.

Perhaps Veeam's Largent summed it up best when he called the VeeamON 2020 virtual event "the next best thing to being live" and quickly added, "We're planning on going physical next year."

It will be worth watching to see if virtual shows get more creative and interactive in the second half of the year. Some to keep an eye on: Nutanix .NEXT (Sept. 8), VMworld (Sept. 29), Dell Technologies World (late October) and NetApp Insight (Oct. 28).

Sales also go virtual … but hold steady

It wasn't only conference attendees who lost face-to-face contact. Sales calls and other business meetings have gone virtual. Enterprise storage vendor executives say there was no discernable negative impact, although on-premises storage sales dropped in early 2020 while more organizations turned to public clouds.

IDC said external storage sales fell 8.2% in the first quarter of 2020 from the previous year, and that included only around a month of significant COVID-19 impact. IDC also reported sales of IT infrastructure products for clouds increased 2.2%, while sales of traditional non-cloud infrastructure fell 16.3% year-over-year. Much of that non-cloud infrastructure spending went to public clouds, which increased 6.4%.

Hyper-converged infrastructure leaders Dell EMC/VMware and Nutanix reported increases in sales in the early days of COVID-19. An uptick in virtual desktop infrastructure -- an early driver of HCI -- and public cloud adoption pushed those increases.

Early second-quarter results showed modest sales increases. IBM said its storage revenue increased 3% year-over-year and hard drive vendor Seagate's revenue increased 6%, to $2.52 billion. Data protection vendor Commvault reported revenue of $173 million for the quarter, up 7% from last year. Commvault CEO Sanjay Mirchandani said the company recorded a record number of million-dollar-plus deals, including a $10 million-plus subscription contract -- the largest deal in the vendor's history. Mirchandani said the large deals prove the importance of data protection during the changes caused by the pandemic.

Once the implications of COVID became real, data protection came back on the agenda for customers.
Sanjay MirchandaniCEO, Commvault

"I think that once the implications of COVID became real, data protection came back on the agenda for customers," he said during Commvault's quarterly earnings call. "With that data fragmentation -- remote workers with no access to data centers -- data protection business continuity bubbles up to the top as being important."

Seagate's sales showed how the pandemic affects industries differently. Seagate executives say high-capacity drives for cloud providers increased significantly, while sales to enterprises and video customers failed to meet expectations.

Storage vendors' employees didn't all make it through the rocky months unscathed. HPE, Dell, IBM, Seagate and Nutanix all enacted layoffs, salary reductions or freezes, furloughs or other cutbacks.

Dell EMC's PowerStore leads product launches

Dell EMC's new midrange storage array finally arrived in May, a year or so after its original due date. PowerStore, infused with NVMe storage and integrated with Dell's VMware virtualization, is the new flagship of Dell EMC's crowded midrange storage portfolio.

Dell EMC also extended its Power brand to its Isilon scale-out NAS platform, launching a PowerScale unified file and object storage family in June. PowerScale consists of Isilon NAS and support for the AWS S3 object storage API running on Dell PowerEdge servers.

Hitachi Vantara countered with competitors for PowerStore and PowerScale. Hitachi brought out the latest version of its Virtual Storage Platform midrange family, the E990 array, with consumption pricing. The Hitachi Content Platform also expanded with the HCP G-11, an all-flash system that incorporates startup WekaIO's file system through an OEM deal to complement HCP's object storage.

IBM rolled out a new IBM Elastic Storage System 5000 system for large data sets, targeting AI and analytics use cases. 

Data protection vendor Commvault expanded its HyperScale appliance lineup with HyperScale X, which uses Hedvig storage that Commvault acquired in 2019.

Major enterprise storage vendors also continued their push to integrate the cloud. HPE Cloud Volumes Backup enables protection of data sets running on public cloud compute, Qumulo Shift for Amazon Web Services Simple Storage Service and converts file data on Qumulo clusters to S3 object storage, and Dell EMC made the Isilon OneFS file system available for analytics in the Google Cloud Platform.

A stoppage in startups

The storage world has historically been startup-friendly, but that trend came to a grinding halt in early 2020, when only a couple of companies came out of stealth.

One was Samsung spinoff Stellus Technologies, which developed a file system based on key-value storage technology for traditional NAS workloads. Stellus launched with $70 million in funding and the backing of a $200 billion giant.

Nebulon was the other storage newcomer in early 2020, coming out with server-based storage managed through the cloud. Nebulon, founded by former 3PAR and HPE executives, launched with no venture capital, although it's expected to seek VC funding soon.

Enterprise storage funding hasn't dried up, but it's gone to mature companies. Backup vendor Cohesity took in $250 million, NAS vendor Qumulo raised $125 million, DR software company Zerto picked up $53 million, cloud NAS vendor Nasuni grabbed $40 million and cloud storage provider Wasabi added $30 million in early 2020. Those companies all have a strong cloud connection, which can help customers adapt to life during a pandemic.

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