The outlook on the economy continues to be less than stellar. The National Bureau of Economic Research formally declared that we are in a recession. Thanks guys for stating the obvious! Tough times create difficulties for everyone. We have already seen vendors including NetApp, Quantum and Copan announcing cutbacks. Sequoia Capital added to the bleak forecast with their gloomy outlook slide deck. The big question is what does this mean to technology vendors?
In these difficult times, companies must focus on their bottom line. Every technology purchase will be scrutinized and the payback must be clearly quantified. As I posted previously, ROI is vital.
The good news for data protection companies is that data volumes do not go down in a recession and retention times do not shorten. The current difficulties in the financial sector suggest that we may see even stricter regulations and longer retentions. Deduplication-enabled solutions can still thrive in this environment because they provide compelling value. They reduce backup administration time and cost while dramatically lowering acquisition cost. However, remember that not all systems are alike and you must consider future performance and capacity requirements. Adding multiple independent systems will negatively impact ROI. The result is that scalable deduplication solutions like those sold by SEPATON can provide strong ROIs and thus can weather the storm of a tough economy better than other technologies with weaker value propositions.
Recently, an independent market research firm who reviews the purchasing trends of companies of all sizes told us that their research indicates that companies over-purchased primary storage in the first half of 2008 and that the outlook for this sector was gloomy. In contrast, deduplication technology was the one bright spot. So far our experience has suggested that their analysis is accurate.
A difficult economy is a test of everyone’s staying power. Companies are scrutinizing every purchase and focus only on those technologies that provide truly compelling value. Deduplication enabled solutions are fortunate because of the value they bring. This is not to say that these technologies are immune, but rather that they will fare better than most.