DataDirect Networks the largest private storage company gears up for hyperscale

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1 DataDirect Networks the largest private storage company gears up for hyperscale Analyst: Simon Robinson 21 Feb, 2012 DataDirect Networks, more commonly referred to as DDN, believes itself to be the largest privately held storage specialist. And with revenue for 2011 closing out at $225m, it's a fairly strong claim. More important is the fact that the company believes it could be larger much larger, especially as more organizations across more industries begin to wrestle with performance challenges created by the 'big data' explosion and growing computing requirements. Thus, 2012 is going to be another year of expansion and investment for the California-based company. The 451 Take DDN's continued growth through a tough period indicates that the privately held specialist is onto something. The company is slowly but surely expanding beyond its HPC heritage, and believes it now has the products, global footprint and partnerships required to take it to critical mass. What is also clear is that the uber-market trends around 'big data' and the move to exascale computing play into DDN's hands especially as nascent next-generation technologies such as object storage move from the early adopter to mainstream market acceptance phase. Whether this ultimately results in an IPO or take-out for DDN remains to be seen, but the storage industry's largest privately held player is increasingly difficult to ignore. Context Copyright The 451 Group 1

2 DDN says its 2011 revenue of $226m represented another year of profitable, double-digit growth; by our reckoning, that's almost 20% growth on the $188m it achieved in 2010 (even more impressive given the HDD constraints at the end of the year caused by the Thai floods), putting it on track for $270m this year if it can maintain that growth rate through It certainly seems to think it can, based on the amount headcount it's planning to add this year it's aiming to close out 2012 with 600 employees, an increase of 150 on the 450 or so it finished 2011 with. From a sales perspective, DDN is now focused in four key vertical markets that are most receptive to its offerings: HPC and life sciences (where its technology is already used in some form by more than 60 of the world's 100 fastest computers), media (especially broadcast and post-production), cloud storage (Web content, MSPs, StaaS and personal cloud storage) and security (especially federal government/dod, geospatial imaging and video surveillance). Each practice area has its own sales specialists, as well as its own support and marketing organization. DDN claims over 1,000 customers in all. Thematically, DDN will continue to focus on opportunities around big data, cloud and data-intensive applications, as well as the challenges presented to achieve exascale computing (for details of DDN's partnership with Whamcloud, see this report). Object storage objective Within this, DDN's product portfolio continues to evolve. One product DDN has so far remained fairly quiet about, but is now starting to promote more aggressively, is the Web Object Scaler (WOS), its object-storage platform. Borrowing from the NoSQL movement, WOS is being marketed as 'HyperScale NoFS' (as in, no file system), where it is aimed at workloads and data stores that go beyond the boundaries of traditional file system (NAS) storage. Data growth here is driven by machines especially sensors as well as humans; this is a world of billions of files and images, requiring access by many (over multiple devices) from any location. Data has to be stored efficiently, affordably, with high resilience and with an understanding of data locality. Early customers for WOS were chiefly in the federal government sector. One major initial win was a multi-agency partnership within the US Department of Defense that involved enabling global access to and analysis of multiple petabytes of geospatial intelligence data captured by satellites, drones, etc., as well as storing and retaining exabytes of data in a 'deep archive.' DDN is starting to see increased interest, especially as it gets smarter itself about how to position the platform. However, this doesn't just mean interest from hosting, cloud and SaaS providers looking to build Amazon S3-style storage clouds. Indeed, DDN says that this is at the less-interesting end of the scale, since it tends to be mostly about racing to the bottom in terms of Copyright The 451 Group 2

3 minimizing cost per GB, rather than focusing on value. Accordingly, DDN is focusing its WOS efforts on applications that have latency/performance requirements, as well as large storage capacity requirements. Its efforts here are still evolving, but one key development to look out for is an 'in-firewall version of Dropbox' that it is currently developing with partner Mezeo Software. It plans to launch the offering, which will be aimed at mid-to-large enterprises, later this year. Total WOS customer numbers are in the 'low dozens.' WOS 2.0 To help achieve this, DDN recently released WOS 2.0 to better cater to these broader use cases. Key additions largely achieved through the partnership with Mezeo include Amazon S3 and CDMI interfaces, support for multi-tenancy and billing for service providers, and support for iphone and ipad clients for Dropbox-style access. An NFS interface was also added (again, courtesy of Mezeo), as was asynchronous replication for increased performance. Last, but not least, a new erasure code-based data protection scheme was added to WOS 2.0, called ObjectAssure, which is designed to lower the cost of data protection. DDN says ObjectAssure allows each WOS node to withstand up to two concurrent drive failures without data or availability loss (objects are split across eight drives plus two parity drives). Note that ObjectAssure does not disperse data across geographically separated nodes (as Cleversafe does); all ObjectAssure data is stored locally, which DDN says improves access performance (since data doesn't have to be moved across the WAN), although there is still some performance impact by not replicating objects within a system. It also means it doesn't have the site-level protection within ObjectAssure (although this is provided by the replication capability). Indeed, DDN notes that users can configure WOS with 'mixed mode' (replication or ObjectAssure) PUT policies, replicating data that needs the fastest access and using erasure coding for data that isn't accessed as frequently. WOS is currently sold only in an appliance format. It comes in two configurations the WOS6000 is a 4U, 60-drive system with eight GbE ports per node, offering up to 2PB of capacity per rack, or 23PB per cluster, with support up to 25 billion objects per rack. The WOS 1600 is a smaller, 3U, 16-drive system with four GbE ports and 544TB per rack. Competition DDN says that the offering that WOS gets compared to most often is Amazon S3, since many organizations deploying hyperscale projects are essentially looking to make a buy vs. rent decision when it comes to cloud storage infrastructure. DDN believes that it becomes more cost effective Copyright The 451 Group 3

4 than S3 from a cost-per-gb perspective at about 500TB, and delivers substantially greater performance (although quantifying such claims with publicly available data is a bit of a smoke-and-mirrors exercise). DDN says WOS is capable of delivering over 55 billion reads per day (roughly twice Amazon S3, it says) and half as many writes. That puts it at an even greater advantage compared to other cloud-based and cloud-enabling platforms, from Google's Megastore to EMC's Atmos. Meanwhile, most other competition often comes down to competing against the incumbents, which, in its verticals, is most often NetApp, although it maintains it does not encounter NetApp selling the StorGrid technology from Bycast. Elsewhere, DDN says it is starting to come across Cleversafe DDN lost out to Cleversafe at Shutterfly because, it says, it wasn't willing to provide a software-only offering (although Shutterfly actually uses DDN hardware). Other specialists in the object-centric space include Scality, Amplidata and Caringo; DDN says it doesn't compete head-on with any of these players so far, but notes that Dell is getting some play in the medical space with its Caringo-based DX platform. Nirvanix is still the leading stand-alone cloud storage service provider. SWOT Analysis Strengths Weaknesses Highly profitable and experiencing more than solid growth, DDN remains a company to watch, especially as its portfolio expands and broader market trends move in its favor. Opportunities Threats If any company is well poised to take on the challenges of exascale computing and big data, it's DDN, since this is its heritage. It's still viewed by many as something of a niche HPC player, and needs to invest more to improve its awareness outside of this sector and within its other target sectors. It risks being drowned out by larger rivals with far more resources at their disposal, while competition in markets such as object storage is also intensifying. Copyright The 451 Group 4

5 Reproduced by permission of The 451 Group; This report was originally published within 451 Research s Market Insight Service. For additional information on 451 Research or to apply for trial access, go to: Copyright The 451 Group 5