Seagate’s Blueprint to a Brighter Future
Summary of observations from Seagate’s Cloud Summit
On July 11, 2013 I attended Seagate’s first Cloud Summit where select analysts had been invited for a day of presentations and interaction on the topic of cloud. It was the first time I had spent any length of time with Seagate executives. Frankly, we have taken hard disk drives for granted in this industry. At least as analysts Taneja Group has focused above disk drives, assuming the presence of the drive, with its rotational speed, seek time and latency and certain amount of IOPs. But our analysis has been mostly at the array level, and above. It is not that we didn’t recognize that designing and building a disk drive requires more technology and manufacturing finesse than almost anything else in the storage industry but we have always been able to assume the presence of disk drive that simply works. As such we have always taken Seagate for granted. All that changed for me after my visit to San Francisco.
Why, you ask? In a nutshell, I would say the world is changing in such as way that Seagate can no longer be taken for granted. And, while there are many reasons, cloud is at the center of it. Pre-cloud Seagate’s business model was rather simple: build a variety of hard disk drives, make deals with large OEMs (HP, IBM, EMC, Dell, NetApp, Xyratex, HDS and a few others) and let them do the heavy lifting on integration, sales and marketing. In this role, Seagate could focus on R&D and manufacturing excellence and interact with a very small number of customers who were well defined and constant. All that changed with the advent of cloud. And Seagate management recognizes that wholesale, based on my interactions with them.
According to Seagate, 25% of all storage, amounting to 450 Exabytes, was shipped into cloud applications in 2011. This must include a loose definition of private cloud, as we see it. Most private data centers today do not meet our definition of a private cloud but they are headed that way, having virtualized a majority of workloads. Seagate expects 6 Zettabytes to be shipped in the cloud in 2020. Whatever the number are, we cannot argue that enterprise data centers are increasingly trying to convert themselves as internal service providers and for that they need cloud-like infrastructures. And the same enterprise is looking to place an increasing amount of information into the public cloud. But what does this trend have anything to do with Seagate? Plenty, I say.
Cloud changes everything. In the private data center, the CIO is challenged to build clouds that can deliver economics similar to that delivered by public clouds. And for this the CIO may or may not interact with his favorite strategic storage supplier, that is mostly focused on selling him their proprietary storage arrays and expensive software. Seagate sees this as an opportunity to interact directly with that CIO, something that was meaningless in the past. Similarly, public cloud developers, such as Amazon, Rackspace, Google, Microsoft Azure, Verizon Terremark, and literally hundreds of others know they cannot afford to build economical clouds with proprietary storage boxes from the usual suspects. They have already interacted with Seagate over the past three or more years, to build what they have. And this interaction is not simply a bulk purchase decision. It has involved R&D discussions and potential for the development of special devices, that would only be available to them. Public cloud vendors want to differentiate themselves from other public cloud providers and, given the size of purchases they are capable of making, they certainly have a desire to deal directly with the developer of such devises.
Then there is the open source community (Hadoop, ZFS, Cephstack, Openstack, CloudScaling, Swiftstack, Nebula, Inktank, Euclyptus, etc.) that has increasing influence in the market. Of course, the open source community has been around for a long time and never really impacted storage that much. But with the economics and pervasiveness of the cloud and its need for openness, open source takes on a different meaning altogether. This community recognizes that interacting directly with the force that will provide the main underpinnings of the cloud is crucial. As such they have reached out to Seagate and found a willing partner.
Whereas Seagate was a somewhat isolated company, with limited and very well defined partners in the past, they suddenly have become important to a much wider audience. In addition to direct interaction with system OEMs and ODMs, now there is reason to interact with and provide leadership to ISVs, open source community, cloud community, both private and public, and the cloud service provider itself. And being invited to interact directly with CIOs of the largest corporations gives Seagate leverage they have never enjoyed in the past.
To convert this new environment into opportunity, Seagate has embarked on a theme of Collaborative Innovation, with three elements: Invest, Open, and Engage. Using this strategy, Seagate has already started investing in higher functions than simply a disk drive; they are and will increasingly allow access to their hardware and software via open APIs; and through Engage, they plan to collaborate actively with host software providers, and enable developers directly. They are embarking on this new strategy with interactions with the open source community first and foremost, with other interactions happening more opportunistically.
Seagate is no longer the company it used to be. Whether or not it wanted to, events uncontrolled by them have lifted them and plunked them center stage. This cannot be an easy transition for Seagate. I am sure they would have been content to play the quiet role they have played for decades. But opportunities like this come once in a lifetime. Fundamental changes like the ones the storage industry is experiencing right now are fraught with dangers and opportunities for all storage purveyors. But for Seagate it represents mostly opportunity to play a much bigger role in the industry. Will they succeed? Well, that remains to be seen. All I can say right now is that Seagate management understands that the way the winds are blowing and the opportunity that lies in front of them and they seem to be acting on it, fervently. To be sure, the big gorillas are not going to take it lying down. They would rather see Seagate stay in their well-defined sandbox and play by their rules. I believe Seagate should do what destiny has thrust upon them.
A very long time ago Quantum was trying to recruit me to run their marketing organization. I didn’t accept the position primarily because I felt the hard disk drive business was boring. That may have been true then but based on what I heard at the Cloud Summit disk drive business is about to change big time. You ain’t seen nothing yet!
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