Network Attached Storage: The Internet's Best Storage Standard

by Chris Connor

Overview

Basically, a network attached storage (NAS) device is a group of small hard disk drives that connect to a network, usually by Ethernet.  Unlike Storage Area Networks (SANs), Network Attached Storage devices are not slaves to servers.  The NAS model links to a network via an Ethernet card,  instead of tying a server directly to a storage device.  In fact, the NAS device with its processor and operating system, acts like a server itself.  Using Ethernet, NAS circumvents the need for more expensive fibre channel technology, which serves as the backbone for a SAN.  In the near future, fibre channel technology will not be required for broadband access, as Ethernet speed will increase dramatically.

Cheap and Easy

Simply put, Network Attached Storage appliances seek to eliminate network bottlenecks the way that SANs do, but in a easier and more cost-effective fashion.  NAS appliances should cost less than SANs, over the long term, because they are cheaper to install and expand than SANs.  SAN's relatively high cost is attributable to its use of fibre channel technology.  Fibre channel is currently faster than Ethernet, but it is much harder to install because it is specialized for input/output (I/O).  IT professionals are required to install and maintain fibre channel because I/O is designed for the computer - not the network like Ethernet.  Ethernet is less intelligent than fibre channel, but that works to Ethernet's advantage because it is cheaper and easier to install.  With Ethernet, the cable is just plugged in and  installed on the network with the use of a simple browser and installation wizard. 

One of the Biggest Growth Areas in Storage

Without a doubt, NAS and SANs make up the lion's share of future growth in storage.  International Data Corp feels that the NAS market will soar from $540 million in 1998 to over $5 billion by 2003.  This annual growth rate of 54 percent should easily outpace the projected 11 percent annual growth for the overall storage market.  Some areas of the SAN market are expected to grow at a rate of 50 percent or more per year as well. 

One Dominant Player in NAS

The NAS market is dominated primarily by one company, Network Appliance {NTAP}, which holds around a 40 percent share of the NAS market.  In addition, Network Appliance appears to possess the most investment potential of all the NAS stocks by a substantial  margin.  Most of the other major NAS players have been plagued with losses, declining revenues, and laggardly stock prices.  For instance, the number two NAS provider, Auspex {ASPX}, has half the market share of Network Appliance in the network attached storage market with about a 20 percent market share, but the company's sales have dwindled down to $26 million in its first fiscal quarter of 2000 from $43 million in its first fiscal quarter of 1997. 

Procom {PRCM} has an award winning (Network Computing's "Editor's Choice" Award) NAS product with its DataFORCE NAS server.  However, Procom has not yet been able to transfer the merits of this product to its operating results.  In the quarter ended Oct.31, 1999, revenues not only fell to $18.9 million from $24.2 million in the prior quarter - they also declined from $30.4 million in the same period one year earlier.  In addition, Procom has begun to lose money in its last three quarters.  Procom is divesting non-strategic product lines to better focus on NAS, but that shift in focus does not fully justify the company's weak operating results.

Quantum {DSS} could rival Network Appliance's dominance in the future with its recent acquisition Meridian Data.  The acquisition of Meridian Data is significant because not only does it allow Quantum to enter the NAS market, but Quantum also acquires the highly successful Snap Server NAS product line.  Snap Server leads the market for workgroup-level NAS appliances.  Moreover, Snap Server's NAS presence should increase dramatically with Quantum's distribution capabilities.  

Weaknesses of NAS

The biggest weakness of NAS is with cross platform file sharing as is described in John William Toigo's The Holy Grail of Data Storage Management.  Inconsistencies in heterogeneous operating and file systems have hampered the practicability of true data sharing.  The closest to true data sharing that NAS can come is with Network Appliance's Write Anywhere File Layout (WAFL) systems - which likely explains Network Appliance's dominance in the NAS market.  WAFL is considered to be highly efficient, but it does not constitute true data sharing.  True data sharing would require one file system, instead of several such as Unix, Windows NT, and Linux.  To a lesser extent, NAS lacks the speed of SANs because fibre channel is faster than Ethernet.  However, Ethernet is getting substantially faster with advent of gigabit Ethernet.  Moreover, Lucent {LU} and Cisco {CSCO} have created 10 gigabit Ethernet, which will roll out en masse in the future.  

Summary

NAS represents the superior long term storage standard due to ease of use, relatively low costs, increasing bandwidth, and easy scalability.  However, investors do not have very many attractive choices in this market.  Network Appliance represents the only NAS stock worthy of consideration until the laggard companies like Auspex and Procom can get their acts together.  Quantum is stronger than those two companies, but NAS accounts for only a small portion of its revenues to date.  However, that situation could change in the future as Quantum will likely maximize the potential of its newly acquired SnapServer.