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By Any Name, NAS Is Certain To Be Hot

The mass adoption of broadband has once again taken a leading role in bringing another technology into the home; this time it is network attached storage (NAS), although a consumer will rarely see that acronym on a retail box.

Manufactures of consumer NAS products said there is little doubt that category will be a force to be reckoned with in 2005 because the ingredient for success are either in place or about to come into play. These factors are broadband, which is now in about 62 million homes nationwide; home computer networks; huge sales of digital music; the continuing popularity of digital imaging; and HDTV. And coming up is video-on-demand.

The advent of home NAS was not a surprise for the industry.

“This is a pretty natural progression for home networking. We saw the same thing happen in the corporate world,” said Shaun Walsh, SimpleTech’s storage marketing director.

SimpleTech, which introduced the SimpleShare office storage server this year, cited IDC data that has the retail NAS market growing from $71 million in 2004 to $807 in 2005. By 2008, the IDC sees the market at $7.1 billion.

During the first few years, sales will be driven by traditional storage demands, said Paul Streit, Maxtor’s product marketing senior manager. Families are piling up more digital images and music files than can be stored on a PC, but, more importantly, the family members all want access to the files. However, what will truly drive the need for large amounts of networked storage is high-definition TV programming and, eventually, downloadable video content.

“Eventually, the CE applications will be more important than the PC. A lot of what we are designing into our products is the ability to maintain an entertainment system,” said Wayne Arvidson, Iomega’s director of professional storage.

The first such products designed to meet this need were introduced in 2004 with a slew more being unveiled at International CES in January. For the most part they are scaled-down versions of the NAS devices used by most corporations to back up data. They differ by being easier to set up and having simple user interfaces. Maxtor, Iomega, SimpleTech and ADS are among those rolling out NAS devices for the home market. Netgear also introduced its own storage device that is based on somewhat different technology developed by a company called Zetera.

Like their enterprise-level cousins, the NAS devices have microprocessors and use basic file-sharing technology to organize and store the data. The Zetera approach is based on Internet protocol and traditional network switches to handle the data flow. This allows for a much higher data-transfer rate and lower product cost structure, said Chuck Cortright, Zetera’s president/CEO.

NAS devices differ greatly from their cousin — the external hard drive. While both are based around hard disk storage, the external products work with only one PC and are intended as a space to back up a PC’s hard drive and for extra storage. NAS can handle this chore while allowing the storage space to be shared among several PCs and CE products like personal video recorders. NAS attaches into the network via the router and can be partitioned to give each PC a set amount of space. In addition, certain areas can be blocked off if the parents/network administrators wish to keep some files away from their children.

“CE is the most promising market, but it is still emerging. We are very excited about it because it makes a lot of sense to have a single device to store all digital media content,” said Maxtor’s Streit.

Of the potential CE applications video-on-demand could prove the most important, the vendors said. However, they must first work through the digital rights management issues that surround any programming likely to be downloaded.

“VOD will be the big driver of the category going forward,” said Walsh, adding that a standard is still in the works.

Arvidson was hopeful that the DRM situation would be solved by International CES 2006.

Another potential hot niche for NAS is as additional storage capacity for TiVo or other digital video recording systems. Once HDTV greatly increases its home penetration, consumers will need a much larger amount of storage space. Another selling point is NAS will allow the stored entertainment to be shared around a home through the network.

Iomega will attack this area with the follow-up to the 100D, its first consumer device, which will have more media server functionality. Arvidson did not say when it would ship, but the upcoming model will be based on Iomega’s 200D, a business-class NAS product.

In the meantime, vendors are working with retailers on how to market the current crop of devices. The silently agreed upon starting point has been the elimination of the term NAS from the product packaging. Maxtor refers to it as “shared storage” while SimpleTech likes “storage server.” Not only does NAS imply that the device is complicated, but the name does not convey its usefulness.

Because of the product’s varied uses, proper merchandising of the product is another area being given great consideration. Streit and Walsh see it selling with external hard drives in the storage aisle and also in the networking area, but because it can work with CE devices it could be helpful to make it visible in that part of the store. However, this is not likely to take place until the DRM situation is clarified and video-on-demand becomes a reality, said Streit.

The final impact NAS will have on the external hard drive market is hard to determine. Arvidson does not anticipate NAS cannibalizing hard drive sales, but he does think it might limit their potential expansion. Maxtor considers the two markets separate, with its hard drive sales not being impacted because people buy them to meet a different need.