There have been a few articles written lately which claim cloud computing will hurt smaller storage companies like 3Par, Compellent, Xiotech, etc…. The theory being that there will have to be some industry consolidation. I disagree. Cloud computing should be a net gain for storage companies and here's why.

First, what is cloud computing and cloud storage? In many ways it is the consolidation of small business and home users. Clearly there are cases where large companies are using cloud services, but for the most part it is small businesses. These are businesses that are too small for the storage systems manufacturers to cater to. The result of this consolidation of small businesses actually means more opportunities. If a cloud service provider consolidates the computing and storage of thousands of small businesses that are too small for these storage players to sell to into one large customer, that is a net gain for these companies.

Second, there is an assumption that cloud services will be the sole domain of a few big players. This will certainly not be the case, at least not initially. If cloud computing and cloud storage really catch on and grow like some analysts believe, there will be too many cloud service providers. Each of these will need to select a storage system based on their needs and business model. Most will buy a combination of fast online storage from the providers mentioned above and archive storage from companies like Permabit, Copan Systems, and Nexsan.

Third, cloud computing is an ideal use case for virtualized storage as provided by these manufacturers. Virtual storage's ability to provision on the fly, scale as the I/O and capacity needs demand while keeping the management of the system easy, are critical for the scale-out business model that a successful cloud services company will possess.

The other suggestion is that cloud service providers will take the route of Google and Amazon and create their own storage infrastructure. New entrants to cloud services will not have the resources or the need to roll their own solution. If, as a cloud service provider, you can remain cost effective without having to invest engineering resources in developing and, more important, supporting a customer storage platform, why would you? It makes more sense to focus on your core service.

What about the big storage players? They each now offer some sort of cloud storage play. Wouldn't it make sense to get all the storage types from a single manufacturer? It might, but there may be a stronger case in the cloud market for best of breed at each tier. Regardless, the challenge that the larger manufacturers face is that there is little to no integration between their cloud storage offerings and their other storage offerings. Other than logo's matching, what is the advantage?

Cloud service providers are typically going to have a heavy IT knowledge base internal to the company, they're going to understand the value of not reinventing the wheel and focus more on optimizing the asset.

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George Crump is founder of Storage Switzerland, an analyst firm focused on the virtualization and storage marketplaces. It provides strategic consulting and analysis to storage users, suppliers, and integrators. An industry veteran of more than 25 years, Crump has held engineering and sales positions at various IT industry manufacturers and integrators. Prior to Storage Switzerland, he was CTO at one of the nation's largest integrators.