Those who read my blogs know that I often draw analogies to the telecom sector and its history as a reference to what I see happening in the Cloud. There are a couple of reasons for this. First, a colleague of mine was a senior telecom executive during the industry’s most tumultuous years, and has great first-hand insight into how emerging technology dramatically changed this industry; he likes to tell war stories, and occasionally I listen. Second, I’m an academic/technologist/historian at heart, and I’m fascinated by how entire industries change when new technology arrives on the scene. I find that reading about and researching the past, provides great insight into the here and now.
In the early 1990’s, when the Internet first appeared on the scene, it was viewed as a consumer-focused offering that had little value for the business world. The IT gurus of the era dismissed IP networking as pop-gun technology that would never meet the security, reliability and performance standards inherent in private, dedicated networks.
The online secure storage business is the long distance business of the early 90’s.
Vast, highly lucrative and about to disappear as the Cloud renders storage
a pennies per GB commodity.
Well, we all know how this story played out. The issues that plagued early efforts to establish IP networks as business-appropriate services quickly dissipated, and IP Broadband networks popped up worldwide with the telcos leading the charge. Businesses flocked to them on mass, while vendors, resellers and service providers couldn’t move fast enough to add these capabilities.
Along the way, something rather drastic happened to one of the economic pillars of the telecom industry – long distance disappeared, seemingly overnight. Business L.D. that was still commanding $0.12-$0.15 per minute as late as 2000, dwindled to fractions of pennies with the widespread adoption of Voice over IP (VOIP). The telcos were forced to introduce new services to survive, and the smart ones did. Take a look at the lines of business of major telcos today, and you’ll see what I mean: Wireless, Entertainment, Managed Services. Not a whole lot of long distance in the mix.
I believe that the revolution that happened in the telecom industry due to emerging technology is about to occur in the online back-up and storage industry, and quickly. And its all because of the Cloud and its rapid progression from a non-essential data storage medium (e.g. consumer photos and files) into a trusted business-enabled environment that’s on the radar of every company, large and small.
What exactly does this mean? The emerging online back-up and storage industry revolution means that businesses who traditionally entrusted their data to companies whose core business is secure data storage and protection, will soon be migrating their data to Cloud storage providers, who are increasingly seen as secure, reliable and very viable options. And here’s the kicker: the new Cloud players in the secure data storage and protection space (including some big names like Amazon) are or will be in the market at prices dramatically below what the incumbents are charging. Like LD, secure storage is being rapidly commoditized.
How do the incumbents protect themselves? One respected Cloud guru, David A. Chapa provides an intriguing perspective that might provide the answer, writing “...ask yourself not what you are doing for data protection, but what are you doing for business protection.” Chapa elaborates on the concept that business consumers are looking for more than just strictly backup, daring business to “Think differently, challenge your vendors and resellers to think differently.”
I think the data storage providers of the world need to ask a similar question? What are they doing to transition the data they’re protecting into business protection? If they can answer that question, and respond strategically, I believe they can withstand the impending storage wars, and survive and thrive.
