Big Data: The New Pursuit (Part One)
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Data storage is a market with high demands. Companies want to be able to store massive amounts of information but have it available without hesitation. In an ever evolving world of advanced technology and the constant flux data needs, newer storage systems are in demand and on the rise.
In February 2012 EMC (NYSE: EMC) stepped into the data storage systems industry introducing its Symmetrix system, a solid state storage system. Solid state storage systems present a higher initial expense, roughly $300,000 per, than traditional disk based storage but offers faster performance of low cost servers which companies are willing to pay for. The solid state storage market is predicted to reach about $4 billion by 2015, a dramatic increase from the $95 million the market commanded in 2010.
Companies make tough decisions regarding their information technology budgets. Data storage is just as much of a concern as computers, networking gear, and services. In tough economies pulling the most performance from their technology takes precedence and whatever will help them achieve those goals receives higher priority than the average solution.
Faster, easily accessible data storage has become front and center for an increasing amount of businesses; the growing trend has helped companies like EMC, Net App (NASDAQ: NTAP), Fusion-io (NYSE: FIO), Western Digital (NASDAQ: WDC), and other makers of hard drives and storage systems see revenues rise.
Generally, companies reserve about 15% of their IT budgets for storage; however, they are adding almost 50% more data annually to their storage facilities. While corporate IT budgets are expected to increase an average of 2.5% over the next year the across the board spending on data storage is growing at a much faster rate. It is expected that enterprise spending on data storage systems will reach $42.4 billion by 2016; an increase from the 2011 at $33.4 billion.
Western Digital and Seagate Technology (NASDAQ: STX) manufacture the majority of hard disk drives for laptop and desktop computers which managed to survive the rough industry shake-out where price wars drove many hard disk manufacturers out of business during the course of the last two and half decades. During those years data storage capacity has improved. Seagate started off with the 5.25 inch hard drive which stored 5 megabytes of information at a cost of $1,500 eventually developing today’s hard disk drive at 3.5 inches holding 3 terabytes of data at a cost of $230.
As technology develops, customers are getting more value for their dollar; currently data storage costs roughly $1.50 per gigabyte but is estimated to drop to about 0.68 cents per gigabyte by 2014. Despite the efficiency in the development of storage spac,e the industry has stalled on how fast the device actually work. Speed is money to put it simply; if a company has to move large quantities of data from one point to another, a time delay can cost the company money. Traditional storage disks have a high end spin of 15,000 rpm (revolutions per minute). This speed, while healthy, isn’t fast enough to meet today’s transfer needs. This is where solid-state flash based storage walks onto the scene to emerge as a rival for traditional storage disk manufacturers.
Solid State storage uses flash type memory chips and is found in most mobile phones and iPads. Fusion-io and OCZ Technology make solid state devices that can be plugged directly into servers speeding up the delivery of Web based information. Fusion-io’s biggest customers are Facebook and Apple.
Even with the introduction of solid state data storage, traditional disk storage dominates data storage centers mostly because they are already in use. Net App and EMC sell storage systems, both large and small, lacked with disk drives. The systems connect with multiple servers using high speed computer networks. The storage systems usually contain the same technology and components including hard disk drives. The challenge is for solid state vendors and suppliers to present themselves as a better alternative. One option is selling proprietary software. Management tools and operating systems that result in more efficient and secure data storage will help profit margins.
The Motley Fool owns shares of EMC and Western Digital. BobbieJohnson has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
