Storage Vendors Court Web Audience

The surging popularity of user-content driven social networking Web sites and greater corporate demand for Web 2.0 applications is putting pressure on storage vendors to expand and diversify their offerings to meet the demands of a broader audience, say storage analysts.

Bob Laliberte, analyst at Milford, Mass.-based Enterprise Strategy Group, said the recent report that EMC Corp. is on the verge of paying US$76 million for Berkeley Data Systems Inc.'s Mozy online backup technology is but one example of efforts to meet the demand of the rapidly growing universe of Web 2.0 users for online data storage options.

"Web 2.0 is huge and growing, and what you're seeing is a lot more traditional brick-and-mortar companies trying to figure out how to leverage 2.0," said Laliberte. "One of the first applications that people are finding to be useful is online storage, and [EMC's rumored purchase of Mozy] definitely supports the Web 2.0 movement and validates that the online backup space is very real and growing."

An EMC purchase of Mozy would be just the latest example of a major storage vendor purchasing established online storage systems, Laliberte noted. For example, Seagate Technology LLC gobbled up Evault Inc. for $185 million last December and Iron Mountain Inc. purchased LiveVault for $50 million in 2005.

EMC Chairman and CEO Joe Tucci told attendees at the company's EMC World user conference in May that EMC is looking at options for entering the consumer storage market it has traditionally shied away from.

A purchase of Mozy would instantly give Hopkinton, Mass.-based EMC a considerable foothold in both the consumer and small and midsize business markets, Laliberte said, adding that it would also provide a hosted solution sought by users of Web 2.0 tools.

"Consumers just have the mind-set that they're willing to store their data somewhere other than their homes," Laliberte said. "At this point [users of] YouTube and Facebook and all those Web 2.0 applications are pretty comfortable with fact that data resides somewhere else. It's a big cultural shift."

Doug Chandler, an analyst at Framingham, Mass.-based IDC, said that it's too early to tell whether Web 2.0 users will flock to hosted online storage offerings.

"This is all so new for the most part. We're not quite at a point where there are established players competing with each other, and I think customers are still feeling their way," said Chandler. "If online backup looks like it's going to take off in a serious way, [major vendors] will be seriously involved."