Data protection is rapidly emerging as one of the hottest subsets of the enterprise storage market, and it’s becoming ripe for consolidation as the battle for market share intensifies between legacy players and a host of well-funded startups.

In his latest Breaking Analysis video, Dave Vellante, chief analyst at SiliconANGLE sister market research firm Wikibon and co-host of SiliconANGLE’s video studio theCUBE, said the accelerating demand for data backup software is being driven by new workloads, including data analytics, cloud computing, container platforms and modern data warehousing. That’s happening even while the overall storage market remains somewhat depressed, the analyst said.

“Storage overall is down, but there are a couple of shining stars in the market,” Vellante said, pointing to companies such as Cohesity Inc., Nutanix Inc., Pure Storage Inc., Rubrik Inc. and Veeam Software Inc. as noteworthy upstarts challenging the incumbents.

Vellante said organizations are placing more importance on data backup because the amount of information they’re accumulating is growing exponentially, and it’s vital they leverage this if they’re to achieve digital transformation. According to Vellante, the conversation is evolving from one of backup to data protection, data management, data assurance —particularly with containers– and copy data management, a discipline that was popularized by Actifio, Inc. 

“[It’s] all about how you leverage data, and so if you’re making your business a data business and a digital business, well you’d better have a way to protect it and manage data,” Vellante said.

Vellante cited data from Enterprise Technology Research that shows how the likes of Rubrik, Veeam and Cohesity are all benefiting from increased spending on data backup services. And those companies are now seriously challenging some of the more established legacy players in the storage space, including Dell EMC, IBM Corp., Commvault and Veritas Technologies LLC.

“Dell EMC took its eye off the ball in storage generally, but specifically in the data protection business,” Vellante said.

But it has since gotten its act together, having earlier combined its Avamar and Data Domain products and becoming much more competitive by refreshing the Data Domain line of productrs. Meanwhile IBM has re-emerged as a serious player thanks to its Spectrum Protect Plus data protection service, which is a software-oriented approach and in part, focused on container workloads.

The data backup landscape is likely to be complicated further too by the expansion of public cloud companies such as Amazon Web Services Inc., Microsoft Corp. and Google LLC, all of which will be looking to double down on the storage opportunity, Vellante said.

The growing competitiveness means that consolidation in the market is all but inevitable, and indeed, we’ve already seen evidence of that taking shape. Commvault’s acquisition of Hedvig Inc. in September is a prime example of that, while Veeam recently took a half-billion dollars in funding and is now believed to be looking at an initial public offering.

“Its investors are going to want an exit, and so are Cohesity’s and Rubrik’s, which together have raised almost a billion dollars,” Vellante said. Then there are other, smaller players such as Druva Inc. and Zerto Ltd., which are more likely to be acquisition targets rather than IPO candidates. He cited Clumio as another new entrant that is trying to disrupt incumbents with a pure SaaS offering.

“I think you’re going to see at least one, maybe two – and the favorites are Cohesity and Rubrik – that will achieve escape velocity,” Vellante said. “I don’t think there’s enough room in the space for there to be several blockbuster IPOs that can survive long-term, but this data management thing has legs and we’re going to continue watching it here.”

Here’s Vellante’s complete video analysis:

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