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Storage Networks: Leading the Outsourced Storage Revolution by Chris Connor Early SSP LeaderIf the storage industry was a classroom and the teacher asked the question "Who wants to store data for companies instead of just selling them storage hardware?", Storage Networks {STOR} would raise its hand and shout "pick me, pick me!". STOR is the leading storage service provider (SSP) because it has taken the initiative to build a global network (primarily fiber-optic) devoted to storing other companies' data. By building this global network, the company's customers can simply plug their computer systems into the network to store and access all of their data. In fact, Storage Network's approach to storage is not unlike the way that most phone companies operate their businesses; the company charges customers based on the usage of its network. Benefits of Using a SSPWhy would a company want to outsource its storage to a SSP? For one thing, the management of storage is becoming more and more complex as new architectures such as storage area networks (SANs), network attached storage (NAS), and Infiniband become more prevalent. The management of storage is also becoming more complex as companies continue to add storage capacity at a rapid pace due to the overwhelming amount of data created by the Internet and corporate intranets. Furthermore, a SSP takes a load off a company's IT staff (there is currently a shortage of IT personnel in the workplace), who might not be familiar with the intricacies of managing storage systems. By outsourcing storage to a SSP, IT departments are then free to concentrate on revenue-generating activities. Competitive Advantages Why can't other companies pursue a similar strategy to Storage Network's? Well, that is what is happening because the idea of outsourcing storage has definitely caught on as fellow Infrastructure service providers such as Exodus {EXDS} and Akamai {AKAM} have thrown their hats into the SSP ring; however, STOR has a few advantages that should allow the company to stay in the forefront of the industry. One such proprietary offering is its Virtual Storage Portal software that allows customers to monitor and manage their stored data 24x7 through a simple web browser. Other advantages the fact that a large percentage of its network is already in place and the impressive customer list, which includes Yahoo {YHOO}, Lycos {TRLY}, Best Buy {BBY}, Playboy {PLA}, and Merrill Lynch {MER}. Looking ForwardWith little doubt, managing storage resources will continue to grow increasingly complex for the foreseeable future, which will serve to catapult SSPs to the forefront of the storage industry. In other words, a majority of companies will likely prefer to outsource their storage needs instead of keeping them in-house. The question is, however, how long can Storage Networks continue to ride on top of this dynamic industry. Given STOR's proprietary software and fiber optic network, the company should stay at the top or at least near the top, but that is not to say that large storage hardware and software companies will not attempt to oust Storage Networks from the top spot. The bottom line is that the SSP is a very attractive market that will eventually be highly competitive. |
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