To the Cloud... and beyond (part 2)
Phil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In my last blog entry I highlighted the broad and diverse use of the technical term “The Cloud”, which has been extensively used (perhaps abused) in marketing and the media to the point where it has practically become a household term. Although “The Cloud” is so broadly used, its meaning is… well, somewhat cloudy. To help lift the fog a little I have created a categorization of the various Cloud offerings into five major focus areas;
- Personal subscription cloud services
- Personal private storage clouds
- Private enterprise clouds
- Enterprise platform clouds
- Enterprise service clouds
In Part 1 I highlighted the domain and likely evolution of focus area #1; Personal subscription cloud services. In this installment, I will describe #2; Personal private storage clouds.
Personal private storage clouds (#2) are rapidly taking hold in many small and mid-sized businesses (SMB) around the world, and it is also gaining traction in the consumer market, yet this segment of The Cloud is often excluded from most media coverage. A personal private storage cloud is simply digital storage attached to a networking device, making the storage accessible over a home or business network, and also accessible over the Internet. Many businesses and consumers are already using personal private storage clouds, making it a fast growing technology segment.
Explosive storage growth
If you’re like most people in the civilized world today, you probably have a growing collection of digital files, including music, family photos and home videos, business and personal documents, spreadsheets, and many more. Over the years I have personally accumulated several hundred gigabytes of digital content, including home videos, thousands of family photos, all my music LPs and CDs converted to MP3, and many movie DVDs stored digitally so they can be played in my home theater. Anyone who has purchased an HD video camera soon discovers why many households around the world now have terabytes of digital content in their households. Similarly, most businesses around the world are capturing and storing vast quantities of data. In a report published on April 05, 2012, Global Industry Analysts Inc. estimated that storage of information is multiplying at a rate of over 65% annually, and the total data generated worldwide will reach over 3 million petabytes by the year 2020.
Up until a few years ago most small businesses and consumers had few options to deal with their growing digital horde. Data was usually stored on hard drives inside a computer, which became the personal digital vault. This was far from an ideal solution, not only because of the threat of hard drive failure wiping out years of critical corporate data or family memories, but also because access to this wealth of information was usually limited to those with direct access to the computer where the data resides. These days the average small business and the average American household have multiple computers creating and/or consuming digital content, and quite often the content needs to be shared with iPads, smart phones, and even personal entertainment devices such as DVD players, Playstations and TVs. The challenge for the typical modern small business office and the typical household is sharing all this digital content with ease, safely and securely. Although sharing files between multiple computers is not impossible, it can be technically challenging, so copying files to portable storage such as CDs or USB drives is a common practice, which often leads to many file management and security issues. The personal private storage cloud addresses many of these concerns, providing an affordable central repository where files can be kept safe and secure, and the storage can be shared between multiple computers and WiFi enabled devices within and outside the local network. The technology that made this possible is Network Attached Storage (NAS).
Network Attached Storage
There are a growing number of NAS options available to equip personal storage clouds, some are as simple as plugging an external hard drive into the WiFi router, others are more advanced with features such as RAID for fault tolerance, and hot swappable drives so in the event of a drive failure another drive can be swapped in to rebuild your files automatically. Excluding highly sophisticated Enterprise-class NAS equipment, many NAS solutions available for small business and consumers are quite sophisticated and quite affordable. For example, Western Digital’s (NASDAQ: WDC) Sentinel and Netgear’s (NASDAQ: NTGR) ReadyNAS Pro, among others, can be equipped with multiple hot-swappable drive bays, with storage capacities from 2TB up to 18TB, and prices ranging from $800 to $6,000, making them more suitable for small to mid-sized businesses. In consumer class NAS, Netgear’s ReadyNAS and ReadyNAS Ultra, Western Digital’s My Book Live, Seagate’s (NASDAQ: STX) BlackArmor NAS, and Buffalo Technology’s LinkStation and CloudStor, and several others, can be equipped with multiple redundant RAID drives, providing up to 4TB of storage for less than $400.
This segment of The Cloud isn’t nearly as hyped as the online subscription based cloud services like Apple’s (NASDAQ: AAPL) iCloud, Amazon’s Cloud Drive or Google’s (NASDAQ: GOOG) recently unveiled Google Drive, however, personal private storage clouds are powering a sweeping change in personal digital storage. In the Market Share: Network-Attached Storage/Unified Storage, Worldwide, 2011 report published on March 14, 2012, Gartner reported worldwide vendor revenue for the network-attached storage and unified storage market increased 32.5% in 2011 compared with 2010, reaching $6.8 billion. The estimated pure NAS market grew 21.5% to $4.5 billion. The lion’s share of this market is in SMB, while consumer-class NAS makes up a small fraction of the overall market. Furthermore, The Gartner report ranked Netgear the number one vendor in NAS/unified storage system units. Netgear sold more units worldwide than any other vendor. In addition, in terms of revenue, Netgear is ranked number one for NAS/unified storage systems under $5,000, number three for systems under $25,000, and number six overall.
Evolution of the personal storage cloud
In the SMB personal storage cloud market, NAS solutions will continue to become more affordable and easier to integrate with common business systems, such as finance, sales and web applications. Management software will continue to improve, easing the chore of scheduling backups and recovering data. Business Intelligence and data analysis tools will continue to improve and facilitate business decision making, further driving the need to capture more data, which in turn will continue to drive demand for large capacity storage.
Although consumer class personal cloud storage is a small fraction of the overall market, the proliferation of WiFi enabled consumer gadgets, including smart phones, iPods, iPads, DVD players, game consoles, home theater equipment, etc. will continue to drive demand for bigger, better and more seamless integrated storage solutions. Penetration in the consumer market is likely to accelerate as storage demand increases, and the cost of consumer class personal cloud storage continues to improve.
Disk makers, such as Western Digital, Seagate, and Samsung, as well as the NAS device manufacturers, such as EMC, Dell, Netgear, and Buffalo, several of which also supply enterprise customers and many of the cloud vendors around the world, will all benefit from this growing segment of personal private storage.
This concludes the second installment of the series. Please feel free to comment and provide your feedback.
FoolSolo has positions in Apple, Netgear and Western Digital mentioned above. The Motley Fool 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.