Net storage for rent

WELLESLEY HILLS, MASS. - Anticipating that companies' storage needs will continue to explode, start-up StorageNetworks, Inc. is readying a nationwide network of storage resources that will be available to customers on an as-needed basis.

The company, formed by a pair of storage industry veterans, says customers would rather rent capacity than constantly upgrade their internal storage resources as users of e-mail and other network applications generate ever-increasing amounts of data.

While StorageNetworks declined to release specific prices, the company claims some of its customers will be able to slash their storage costs by nearly half, largely by reducing IT labor costs.

"StorageNetworks can provide companies with the same storage at a lesser cost than owning it," says Bob Davoli, general partner at Sigma Partners in Boston, one of the start-up's venture capital investors.

"There's no reason for companies to allocate more space, buy more disks and hire more people to manage their storage when it can be outsourced," he says.

The new company hopes to begin offering access to its network by mid-year, says Tom Lahive, a former Dataquest analyst who is StorageNetworks' director of marketing.

The company also plans to help customers set up failproof storage networks at their own sites, he says. In addition, the company will offer business recovery services.

StorageNetworks, which has secured $10 million in venture funding, is still in the early stages of building a network that is scheduled to have 15 points of presence in major U.S. cities by the end of 2000.

The first POP went up in Houston, and the next is planned for New York.

Each POP will be a secure site housing disk drives, backup systems, robotic tape libraries and other storage resources for Windows NT and Unix users.

Customers' sites will be outfitted with "SNI plugs" - switches providing Fibre Channel access to the POPs, which will be connected to one another via fiber-optic lines and Fibre Channel extenders.

Customers' data will be kept on separate storage devices at the POPs, and customers will be able to request more storage or return storage capacity on the fly.

The company says customers will be able to access stored data from POPs up to 20 miles away about as quickly as they can from local networks.

StorageNetworks officials say the company also will be able to link customers to its POPs from hundreds of miles away using fiber-optic extenders.

StorageNetworks will likely find itself competing against the likes of Compaq and EMC in offering customers what these vendors call storage allocation services.

One key difference, however, is that StorageNetworks will rely on storage gear from EMC and others, whereas Compaq and EMC will largely use their own products.

Industry analysts call StorageNetworks' plan intriguing, but they are skeptical.

Dave Hill, an analyst at Aberdeen Group in Boston, says he could see customers using StorageNetworks' service to test new storage gear before buying it, but wonders if renting would really be less expensive than buying.

Anders Lofgren, an analyst at Giga Information Group in Boston, says StorageNetworks' biggest challenge may be convincing customers that their data will be secure.

Bill Miller, StorageNetworks co-founder and chief technology officer, says the company has given security a lot of thought.

Among other things, the company will use security guards and video cameras, and it will use handprint recognition technology at its POPs.

The company is also addressing reliability issues by enabling storage devices to cover for one another in the case of a system failure, says Miller, who formed StorageNetworks with company CEO and former EMC executive Peter Bills.

StorageNetworks: (781) 370-9700