Storage Service Provider - Current State of the Business and Mass Market Storage Service
The current state of business for Storage Service Provider is not so bright for some. Especially SSPs in the United States with Fiber-Channel systems are starting to close down. Such as this. The downsides of Fiber-Channel storage system are point-to-point, inflexible, and too costly.
Point-to-point architecture is problematic for replication. Any replication setup could only be from one source storage to one or more target storage(s). Replication requires Fiber connectivity from source to target with DWDM equipment on both sides. iSCSI uses IP, so it could be point-to-multipoint with ease.
Fiber-Channel system is inflexible in such a way that once you need to move the target storage, you need to plan to move the fiber connectivity first. Then you need to move your DWDM equipment along with the target storage system. iSCSI is IP-based. You don't need to worry about re-cabling your fiber connectivity. Just shutdown the target storage, move to the new site with the new IP address. Turn it on, you're back in business.
Costly: renting a dedicated dark fiber between source storage to target storage is very costly.
These are the reasons why Fiber-channel-based Storage Service Provider can not sign up enough clients to be profitable. They need high-profile clients who are willing to pay a lot of money. These clients are typically worried about their confidential information. It is almost impossible for banks to sign up this service. So SSPs in this space never get enough clients to be profitable.
The only way for non-profitable storage service providers to stay in the business. They need to either increase the average subscription fee or reduce their cost. Increasing revenue by increasing fee might be hard. So reducing cost is the only way.
iSCSI storage systems are typically 30-50% cheaper than its fiber-channel counterparts. In addition, iSCSI architecture utilizes IP network for replication - so it does not have Fiber-Channel inflexibility, point-to-point architecture, high-network cost. There are more low-cost iSCSI players popping out on a daily basis.
Current iSCSI systems are very reliable such that some of it could be used in lights-out operations. Our system at True runs with no problems for over a year and a half. There is a sample on the newer iSCSI companies that offers low-cost solution for new SSPs.
The first company that I'd like to introduce is Wasabi Systems. I heard about its name from open iSCSI group. People on open iSCSI list tried to use Wasabi software to build their own iSCSI arrays. The beauty of Wasabi is that they only provide DOM (ROM+software) module that you can plug into IDE port on your PC/server making your PC/server an iSCSI array.
The cost per DOM is very economical - in hundreds of dollars. So a 3TB Wasabi iSCSI array with NAS capability could be built with two thousand US dollars. The only downside of Wasabi is that it does not have cluster capability at the moment. So Wasabi array will have a single point of failure at the controller (your mainboard/CPU/DOM). For most non-critical use, Wasabi storage is perfect. Any geeks who know how to build a PC from scratch will find Wasabi easy to build.
For services like Verizon's that provides massive space for users at low cost (5GB for 5 USD per month) could be built with Wasabi software. Let's do a quick calculation for return on investment.
First, we need to calculate the usable space from 3TB storage. Let's use RAID-5 on 3TB, so we'll have 2.5TB usable. But 2.5TB from 5 hard disk drives does not equal 2.5TB in storage world. It's 2,500,000 MB = 2,500,000/(1024*1024) = 2.38TB.
Assumption:
1. Invest 2,000 USD for 2.38 TB usable.
2. Monthly cost for hosting is 100 USD (3TB storage and a webserver)
3. Monthly cost for one webserver is 100 USD (lease)
4. Salary for a part-time administrator is 1000 USD (shared with IDC)
5. Price point is the same as Verizon's service - 5GB for 5USD/month
Scenarios:
Scenario 1: If I can rent all 2.38TB in the first month, I'll get 2,380 USD in the first month.
After paying for monthly cost (1+2+3+4), I still have 1,180 USD left towards 2,000 USD investment. My return on investment is 2,000/1,180 = 1.6 months
Scenario 2: If I don't pay for #4, I slave myself without pay. My monthly cost is 200 USD. While I start ramping up the service, I sign up 40 users every month. Then the first month revenue is 200 (40*5), second month is 400, ... 12th month is 2,380. I'm going to be 200 USD profitable in the second month (revenue (400) - cost (200)). My return on investment is 5 months.
SSP should engineer their ROI to be somewhere between 1.6 months to 5 months. If all goes well, after the 5th month, SSP can start collecting pure profit to build additional arrays to expand the service. The beauty of this is that owners don't have to be there (lights-out operation) and the money keeps flowing in.
In the end, creating a mass market service from a low-cost storage system is very profitable. If SSPs could not sign up 40 users a month, they need to re-evaluate their marketing plan again. It's either they target the wrong audience. Or the market they want doesn't exist.
If you need help to build Wasabi system or web application to provide Mass-market storage service, let me know. We can build one for you. We also will share sample contracts with end users to the people we help.
I'll elaborate how the web application works in the next blog.
Good luck, all newbie SSPs.
Point-to-point architecture is problematic for replication. Any replication setup could only be from one source storage to one or more target storage(s). Replication requires Fiber connectivity from source to target with DWDM equipment on both sides. iSCSI uses IP, so it could be point-to-multipoint with ease.
Fiber-Channel system is inflexible in such a way that once you need to move the target storage, you need to plan to move the fiber connectivity first. Then you need to move your DWDM equipment along with the target storage system. iSCSI is IP-based. You don't need to worry about re-cabling your fiber connectivity. Just shutdown the target storage, move to the new site with the new IP address. Turn it on, you're back in business.
Costly: renting a dedicated dark fiber between source storage to target storage is very costly.
These are the reasons why Fiber-channel-based Storage Service Provider can not sign up enough clients to be profitable. They need high-profile clients who are willing to pay a lot of money. These clients are typically worried about their confidential information. It is almost impossible for banks to sign up this service. So SSPs in this space never get enough clients to be profitable.
The only way for non-profitable storage service providers to stay in the business. They need to either increase the average subscription fee or reduce their cost. Increasing revenue by increasing fee might be hard. So reducing cost is the only way.
iSCSI storage systems are typically 30-50% cheaper than its fiber-channel counterparts. In addition, iSCSI architecture utilizes IP network for replication - so it does not have Fiber-Channel inflexibility, point-to-point architecture, high-network cost. There are more low-cost iSCSI players popping out on a daily basis.
Current iSCSI systems are very reliable such that some of it could be used in lights-out operations. Our system at True runs with no problems for over a year and a half. There is a sample on the newer iSCSI companies that offers low-cost solution for new SSPs.
The first company that I'd like to introduce is Wasabi Systems. I heard about its name from open iSCSI group. People on open iSCSI list tried to use Wasabi software to build their own iSCSI arrays. The beauty of Wasabi is that they only provide DOM (ROM+software) module that you can plug into IDE port on your PC/server making your PC/server an iSCSI array.
The cost per DOM is very economical - in hundreds of dollars. So a 3TB Wasabi iSCSI array with NAS capability could be built with two thousand US dollars. The only downside of Wasabi is that it does not have cluster capability at the moment. So Wasabi array will have a single point of failure at the controller (your mainboard/CPU/DOM). For most non-critical use, Wasabi storage is perfect. Any geeks who know how to build a PC from scratch will find Wasabi easy to build.
For services like Verizon's that provides massive space for users at low cost (5GB for 5 USD per month) could be built with Wasabi software. Let's do a quick calculation for return on investment.
First, we need to calculate the usable space from 3TB storage. Let's use RAID-5 on 3TB, so we'll have 2.5TB usable. But 2.5TB from 5 hard disk drives does not equal 2.5TB in storage world. It's 2,500,000 MB = 2,500,000/(1024*1024) = 2.38TB.
Assumption:
1. Invest 2,000 USD for 2.38 TB usable.
2. Monthly cost for hosting is 100 USD (3TB storage and a webserver)
3. Monthly cost for one webserver is 100 USD (lease)
4. Salary for a part-time administrator is 1000 USD (shared with IDC)
5. Price point is the same as Verizon's service - 5GB for 5USD/month
Scenarios:
Scenario 1: If I can rent all 2.38TB in the first month, I'll get 2,380 USD in the first month.
After paying for monthly cost (1+2+3+4), I still have 1,180 USD left towards 2,000 USD investment. My return on investment is 2,000/1,180 = 1.6 months
Scenario 2: If I don't pay for #4, I slave myself without pay. My monthly cost is 200 USD. While I start ramping up the service, I sign up 40 users every month. Then the first month revenue is 200 (40*5), second month is 400, ... 12th month is 2,380. I'm going to be 200 USD profitable in the second month (revenue (400) - cost (200)). My return on investment is 5 months.
SSP should engineer their ROI to be somewhere between 1.6 months to 5 months. If all goes well, after the 5th month, SSP can start collecting pure profit to build additional arrays to expand the service. The beauty of this is that owners don't have to be there (lights-out operation) and the money keeps flowing in.
In the end, creating a mass market service from a low-cost storage system is very profitable. If SSPs could not sign up 40 users a month, they need to re-evaluate their marketing plan again. It's either they target the wrong audience. Or the market they want doesn't exist.
If you need help to build Wasabi system or web application to provide Mass-market storage service, let me know. We can build one for you. We also will share sample contracts with end users to the people we help.
I'll elaborate how the web application works in the next blog.
Good luck, all newbie SSPs.
posted by Peter Srivaree-Ratana at
2:06 AM
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