APRIL 13, 2001
NEWS
ANALYSIS
Scale Eight's
Special Sauce |
Its patent-pending software
provides the ability to use the public Internet to offer
redundant storage capability for clients
|
In the spring of
1999, Joshua Coates went to his bosses at Inktomi with an innovative
idea. The 26-year-old software guru claimed he could use
off-the-shelf hard-disk drives linked over the public Internet with
specialized software to create a far cheaper way to store and
retrieve data. Inktomi took a pass, and that summer Coates struck
off on his own to start Scale Eight.
Smart move. Today,
Scale Eight has raised $31.5 million in venture capital, making it
one of the hottest startups in a red-hot market. The company has a
truly revolutionary business model -- to transform data storage from
a hardware business into a software business. Coates boasts that his
service isn't just more reliable but that he can provide it for 80%
less than the existing hardware systems. That could overturn the
cart for some big apples such as Sun Microsystems, Network
Appliance, EMC, and others (see BW Online, 4/13/01, "Fujitsu's
Late Start in Storage").
Too good to be true? There are
question marks. Storage pros say using the public Internet to store
and deliver files might be slower than using directly attached
storage equipment. And, by Scale Eight's own admission, its system
won't work with big Oracle databases that require the superfast
response times that only a direct-attached storage system can bring.
BALLOONING COSTS. The
company counters that it is aiming for retrieval of media files from
the Internet, a scenario where response times are measured in
seconds as opposed to microseconds. But even if Scale Eight can
capture a fraction of today's $20 billion storage-device market, the
company would be a success.
Clearly, the market opportunity
for Scale Eight is huge. As storing and retrieving data has become
increasingly essential to doing business, storage infrastructure
costs have ballooned to consume more than 50% of the information
technology capital budget of many corporations. The global market in
storage devices is expected to triple to $60 billion by the year
2003.
The prevalent storage solution is to pay engineers big
bucks to manage pricey specialized hardware designed specifically to
reliably store and quickly retrieve data, largely from databases.
These "refrigerators" sit astride corporate networks in one location
and guard all the data.
RELIABLE. Scale Eight takes an opposite
approach. Customers contract with the company to store a certain
amount of data, and Scale Eight maintains the infrastructure.
Customers located across the globe can access, update, and store a
rich-media file while viewing a common file system that looks like a
disk drive on your desktop.
When a file is uploaded to one
of Scale Eight's storage centers, the data is geographically
mirrored across all the company's data centers in Tokyo, San Jose,
London, and Reston, Va. This redundancy creates reliability Coates
claims is 99.9%. In the data centers are off-the-shelf disk drives
linked with patent-pending software that is the special sauce of
Scale Eight's business plan.
Coates says large increases in
storage can be provided in minutes, and customers pay based on how
much data they access and how often. In contrast, companies opting
for traditional storage would have to buy and install new hardware
storage devices to add their own capacity -- a process that could
take weeks. "We really haven't seen, in a long time, a company that
adds so much value. The degree to which the team has thought this
whole thing out is incredible," says Nick Allen, an analyst with
tech consultancy Gartner Group.
"WHERE
THE MONEY IS." Scale Eight claims that its storage
system is particularly suited to monstrous unstructured files that
include everything from e-mail logs to rich media such as audio or
video. Coates may be right on target, considering the increasing
tendency to store everything from PowerPoint presentations to phone
messages on corporate intranets, as well as the rising tide of rich
media on the Internet.
The worldwide installed storage of
rich digital media is expected to grow from 900 terabytes (a single
terabyte equals 1,000 gigabytes) today to 7,000 terabytes in 2003,
according to the International Data Corp. "That's where the money is
and the need is," asserts Coates.
Naysayers say Scale
Eight's radical approach could be stymied by bandwidth. "The 'last
mile' problem is as yet unsolved," says Jai Menon, an IBM storage
expert, referring to what typically is still the weakest link, the
connection from the user to the Internet service provider's
computers. A bottleneck in the last mile could lead to slow
retrieval times.
Futhermore, Scale Eight is not as
well-suited to the storage needs of companies that want top
performance for databases attached directly to their networks. That
means it's at a disadvantage in most of the storage market today or
in dealing with corporate customers that want both direct-attached
and Internet-based storage. "Scale Eight has a niche play within the
storage space," says Brad O'Neill, director of corporate strategy
for competitor StorageNetworks.
TOO GOOD
TO PASS UP. But if companies take a cotton to using the
Internet to store and retrieve video files and audio files, counters
the company, then who cares? "Over the Internet it's a whole new
paradigm. If a user wants to pull up a video file or a MP3 file,
they'll never notice the difference," says Patrick Rogers,
vice-president for product management at Scale Eight.
And
Scale Eight's prices might be too good to pass up. The company's
MediaStore service costs $25,000 per managed mirrored terabyte per
month. That compares to Storage Networks' $120,000 per terabyte per
month. By relying on off-the-shelf hardware and software knowhow,
Scale Eight's model should be easier to scale and should control
costs more easily than the proprietary hardware on which
corporations rely.
Coates also has a secret weapon in chief
scientist David Patterson. A University of California at Berkeley
professor, Patterson's 1987 invention -- known as the redundant
array of inexpensive disks (RAID) -- forms the foundation of all
existing storage systems today. Coates says the software he and
Patterson developed is so good it will give them a hefty head start
on any competition.
VOTE OF CONFIDENCE.
The 95-person company has already snagged some big
customers, including Web-site performance enhancer Akamai and Sony
spin-off Unsurface, which stores music catalogs online. And in
March, Scale Eight got a huge vote of confidence when it started
storing and serving all the rich-media files for Viacom's MTVi,
which covers 30 sites including MTV.com and VH1.com.
Coates
also has a stellar resale partner in market-leading Web-hoster
Exodus Communications. Scale Eight has lined up several Fortune 100
customers to use its service on a trial basis. The company aims to
be profitable by mid-2001. That could be ambitious in light of the
tech slump. But if Scale Eight can scale up business fast enough, it
could turn into one of the monsters of storage.
By Kalpana Mohan in San Jose, Calif.
Edited by Alex Salkever
|
Copyright 2001 ,
by The McGraw-Hill Companies Inc. All rights reserved.
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