Intel eyeing storage white boxes?

Having successfully sparked the production of commodity server computers, the chipmaker may move next to help off-brand companies make low-end disk storage systems.

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By Ed Frauenheim

What market will Intel make over next? Experts say storage.

By producing blueprints for server computers and assembling most of their critical components, Intel helped generate significant production of low-end machines, often by lesser-known manufacturers. In a similar way, the company is poised to fuel the "white box" market for storage disk arrays, said David Freund, an analyst with researcher .

"The server-commoditization wave is being repeated in storage," Freund wrote in a recent report. "Intel is planting (its) seeds and planning to reap the rewards."

The chip giant already makes a variety of semiconductor products for storage systems. But it is now weaving its efforts into a more comprehensive whole that would reduce the independent engineering needed to make a system.

Intel is working with a partner to integrate some storage functions with processor chips, which could speed up performance and cut costs. At a trade show earlier this year, Intel demonstrated prototypes of inexpensive storage systems. Intel has invested in numerous storage-related companies. And the company has begun coordinating the work of several divisions that each touch on the storage world, said Seth Bobroff, director of marketing programs and communications for Intel's networking and storage group.

"It's absolutely a key area and one we see growing," Bobroff said. "We see the opportunity and are working as one."

Such a move, over time, could have a significant impact on the industry. Smaller PC and server makers could start to sell their own storage systems by using the fundamental engineering and design work performed by Intel. Conversely, large storage companies such as EMC could feel a pinch in their plans to target small and midsize businesses.

Intel declined to provide figures on its storage-related revenue or its specific plans related to white box storage systems. But Bobroff hinted the company is ready to give the low end of the market a push. Intel wants to work with an "ecosystem" when it comes to storage products, he said. But, he added, if that ecosystem isn't moving, Intel asks itself, "What do we do to try to help move it along?"

Industry statistics show an , thanks to factors including government regulations for retaining data and the growing digitalization of content such as music. The amount of disk storage system capacity shipped worldwide in the first quarter of this year hit 247 petabytes, up 39.4 percent from the first quarter of 2003, according to researcher IDC. A petabyte is a million gigabytes.

Revenue for disk storage systems is growing much less quickly, as prices fall. According to IDC, total disk storage system revenue grew 3.5 percent in the first quarter, to $5.1 billion.

Storage for the have-nots
Data storage equipment can reside within server and PC computers as well as in separate boxes full of disk drives, known as disk arrays.

Both internal and external storage systems frequently are set up using redundant array of independent disk, or RAID, technology, which allows data to be preserved even if a drive fails. Historically, storage heavyweights EMC, Hewlett-Packard, IBM and Hitachi have focused much of their attention on making high-end external arrays. These products, such as EMC's Symmetrix, connect to multiple servers for more efficient use of storage resources and improved management. But the machines, which can hold scores of terabytes and include sophisticated data-copying features, can cost .

Storage manufacturers have been paying more attention to the lower end of the market lately. Dell, which has a partnership with EMC to make and sell arrays, recently that can hold up to 3 terabytes and has a starting price of about $5,000. Samsung, which also has a partnership with EMC, is aiming to sell storage equipment to .

John McArthur, analyst at IDC, thinks there is a considerable market for white box makers focused on bare-bones storage arrays, especially outside the United States, in places like China. "There's a lot of units in that low-end storage space," he said. "It is not unreasonable to expect Intel to try to increase their presence in the white box market."

Aside from businesses, homes also are seen as a possible new and vast market for data storage products. With consumers storing more and more audio and video files, computer makers have begun selling equipment to hold and manage the data. Bobroff says the home storage arena is on the company's radar, and notes Intel also has a .

Commoditization comes to storage
Another factor that may pave the way for an Intel-led charge toward cheaper storage boxes is that a number of storage technologies are becoming commoditized, Freund said. Disk drives are one example, he said. He also pointed to a relatively new disk drive interface, . This is a higher-performance upgrade to the ATA interface common to desktop computer disk drives, and in most cases offers a cheaper alternative to drives using the higher-end SCSI interface, Freund said.

Freund doesn't expect Intel itself to go so far as to assemble storage white boxes, but to work with partners, such as Asia-based manufacturers. He suggests Intel could provide chips with integrated storage functions, storage motherboard products and "increasingly complete reference models, including third-party software components."

If Intel actively seeks to rev up a commodity industry in storage, it would be following a familiar path. Over the years, the company has helped generate a market in low-end servers by chips, chipsets, motherboards, reference designs and even servers that contain everything but a few easily integrated components like memory. Manufacturers can decide how little, or much, technology they want to buy.

Kraftway, a Russian server maker, and Chinese giant Legend Holdings both have purchased complete Intel servers and then subsequently adjusted them for their respective local markets. So have IBM, Hewlett-Packard and Dell in certain markets.

Intel produced a blueprint for a low-end storage product and showed such devices at a trade show earlier this year. The company created small so-called Network Attached Storage, or NAS, boxes, which serve up data in file form. "The buzz around these devices was just incredible," Bobroff said. The company is making the NAS reference design available to interested companies. Bobroff said Intel has a price goal for products based on the blueprint of less than $1,000.

Intel is also primed to put together technologies at the silicon level. The company currently sells RAID controllers and Serial ATA controllers. Last year it began working with partner Emulex to integrate more functions into input-output processors. Bobroff says the company is working to add SATA and —another new disk interface technology. Intel is on target to see initial results of the effort by the end of this year and volume production late next year, he said.

Creating a single piece of silicon with multiple storage functions, rather than having to create a variety of chips and connect them via copper wires on a motherboard, can improve a system's performance and reduce production costs, Freund said.

Investing in storage
One way Intel is prodding the storage world is through its investments. The company has sunk its dollars into storage-related hardware and software companies, including storage system makers , and , which makes processors for storage networks that can run on common Ethernet networks.

The emerging iSCSI protocol allows computers and storage devices to connect over Ethernet networks and is seen as a way to create networked storage setups that are cheaper than those using the Fibre Channel standard often employed today. Intel currently sells an adapter for servers to connect to storage systems using iSCSI.

All of Intel's storage activity might seem threatening to partners such as IBM, HP and EMC. IBM, for example, declined to speak on Intel's possible storage white box efforts, saying it doesn't comment "on its competitors' plans." A Dell representative also declined to comment on Intel's specific storage initiatives. EMC declined to speak specifically about the white box issue, but noted that EMC's Clariion line of midrange and entry-level storage products use Intel components.

Freund thinks the big guns in storage will eventually embrace Intel's push, because they increasingly see software—not hardware—as the key to adding value to their products. Also, he said, the storage building blocks Intel offers could help major vendors cut prices and sell more effectively to smaller businesses or consumers.

A key challenge Intel faces in promoting lower-end storage devices is the need to make them very easy to use, Bobroff said. Steps such as adding capacity must be simple, because the task may be done by a nontechie such as the manager of a doctor's office, he suggested.

Intel does not have a spotless record in the storage arena, according to Roland Baker, CEO of computer manufacturer . Baker, whose company puts together computers and storage devices from off-the-shelf parts, said Intel did a poor job of handling its acquisition of German storage company ICP Vortex. Intel acquired ICP Vortex in 2001 and sold the business to Adaptec last year. Baker said Intel failed to offer decent customer assistance for RAID controllers from ICP Vortex. "The controller support was just nonexistent," he said.

Intel declined to comment on Baker's charge.

Intel also faces competition from the likes of Broadcom, Adaptec and LSI Logic. And Freund notes that the company's forays into new arenas—such as the telecommunications market—haven't always gone smoothly.

But he argues that the chip giant is about to make waves in storage. "There's a quiet momentum," Freund said. "There's a very large fish that has made a turn in the ocean."

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