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Are EMC And IBM Reliable Storage Bellwethers?

Their success is no guarantee of success for other vendors, but dismal results from these two companies would augur poorly for the rest of the storage industry, to say the least. And quite apart from my glass half-empty outlook, I'm not sure how much weight to give the recent positive financial performance from EMC and IBM.

No market forecasters are saying we've hit bottom with this rocky economy. And there's plenty of evidence that some storage vendors aren't weathering this hiccup or recession as well as they'd like. Still, VCs haven't been shy when it comes to ponying up more money for storage startups –- or pulling the plug.

Maybe a company like Isilon Systems, which has had it shares of ups and downs in the last 12 months, is a better barometer. The clustered storage space in which it plays is a good overall measure of storage spending and customer confidence. And though Isilon has largely weathered some tough times, it's unclear how it and other midsized storage vendors will come through this current economic period.

This article does a good job capturing the pervading sense of uncertainty, as we all wait to see how bad the mortgage crisis really is, or if another Bear Stearns is lurking in Wall Street's midst. Does it really matter if storage vendors begin deriving more revenue from software and services than hardware -- isn't that what big guys like EMC, NetApp, and IBM have been building toward?

Take this to the bank: There's more churn ahead -- not just in my gut after opening my 401(k) statements, but in a market where costs are rising, demand is slowing, and fear is rampant.

Those aren't such welcome bellwethers either.

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