Storage costs eat up at least 11 percent of IT hardware budgets, but there are plenty of ways to save money without sacrificing performance or security. In a new report called "Five Key Storage Strategies for a Down Economy," Forrester analyst Andrew Reichman provides a road map for smart purchasing and maximizing the resources you already have. Here's a summary.

1. Play hardball with vendors. The storage market is highly competitive, but vendors also know that the cost of switching can be prohibitive. (Compare storage products.) This means your current vendor might have become complacent, particularly if you have been loyal for many years, expanding capacity without competitive bids, Reichman writes.

[ Get the latest on storage developments with InfoWorld's Storage Adviser blog and Storage Report newsletter. ]

But as the economy gets worse, "storage vendors will be trying even harder to win new deals and protect their existing accounts from competitors trying to do the same thing," Reichman writes. "Use this situation to your advantage by introducing a fresh sense of competition among the vendors you work with." By undertaking a request for proposals bidding process, you can win discounts from your current vendor or discover a new, less-expensive vendor you weren't aware of.

2. Avoid new purchases by reclaiming what you have. Wasted storage, not surprisingly, is a waste of money. Storage is allocated but not used all the time for many reasons. "Some applications and operating systems don't lend themselves to gradual storage expansion over time; they require a large up-front allocation that may or may not be consumed eventually," Reichman writes. "This tendency for over-allocation combined with limited ability to effectively forecast data growth in most organizations leads to a significant gap in the amount of capacity that is allocated versus actually used."

Reclaiming wasted storage will often require application downtime, making careful planning necessary. Using storage virtualization is one way to migrate without disruption.

Other examples of wasted storage include: servers that have been taken off-line without its associated storage being returned to the free pool, and storage that's "'mapped but not masked,' meaning it has been allocated within the storage array but not recognized by a server."

3. Audit backup and replication configurations to cut waste. As important as disaster recovery is, the technologies that enable it sometimes lead to waste. "In a typical storage environment, there can often be as many as 10 copies of the same data -- several days of full backups, a couple of snapshots, and a fully replicated copy at the alternative site," Reichman notes. "Most backup systems have inadequate reporting capabilities, so it's difficult for storage administrators to associate applications to their backup jobs and their retention schedules."

An audit of backup policies and storage configurations can "eliminate unnecessary backup jobs, snapshots, clones and replication, and can return unused disk or tape media to the free pool to reduce future expenditure." Another strategy is to review replication levels to make sure the right amount of storage is being allocated to each application. This work can be tedious but can also be done internally and for little cost. (Compare data backup and replication products.)

4. Rethink storage network decisions. When you need high performance and availability, Fibre Channel isn't the only option. Alternatives that can sometimes provide both lower cost and meet performance needs include iSCSI, the Network File System (NFS) protocol, and direct-attached storage, Reichman writes.

Oracle and VMware are throwing "their hat into the NFS ring," he says, noting that more applications are supporting NFS as a way to connect servers to storage. Direct-attached storage is also a good alternative when the benefits of centralized networked storage are limited, such as when each storage device is dedicated to one application.

"While these options might not make sense for every application or every environment, cost-conscious firms should take a good, hard look at their storage network decisions and give some consideration to [these] approaches," Reichman writes.

5. Use a tiering methodology that delivers results simply. Every cost-control strategy requires an up-front investment of time or money, but for some the ROI happens quickly. Tiering, on the other hand, has to be viewed as a long-term strategy because you won't realize savings right away. For many users, the complexity of tiered storage has outweighed cost savings, but that doesn't mean it can't be effective.

"If tiering means buying a wholly separate platform in addition to the tier one infrastructure, it can take years to realize any benefit," Reichman notes. "By shifting investments you would already have made to lower tiers instead, you can realize cost avoidance."

Because of the down economy, more businesses are putting data on tier two storage right from the beginning, and only promoting it to tier one if the performance is unacceptable, he writes. "Buying cheaper, dense disks in the systems you already own makes sense for tiering without the added cost of a separate platform," Reichman writes. "Remember to keep it simple and consistent -- having too many tiers and options makes it hard to manage the environment, which can negatively impact cost savings."

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The Power 570, IBM's top-selling midrange server, is now available with a 5GHz Power6 processor, which was previously available only in IBM's high-end Power 595 system, as IBM targets customers who want to use its hardware for virtualization and server consolidation. The manufacturing yields for the 5GHz chip have been good enough that IBM can offer it in higher-volume systems, said Scott Handy, IBM vice president of worldwide marketing and strategy.

IBM also doubled the maximum density for the Power 570, so customers can put up to eight 4.2GHz processors in each server node, or up to four 5GHz processors. The nodes can be stacked four high for a total of 32 4.2GHz processors in a single box.

The enhancements boost the performance customers can get from each square foot of server space and from each watt of power, making the 570 well-suited for virtualization and consolidation, Handy said.

IBM is also testing a new capability for its PowerVM virtualization software that allows administrators to share virtual system memory between partitions, in the same way they can share virtual processors today. Called Active Memory Sharing, the technology is in closed beta and due for general availability in the first half of next year.

Also planned is a new version of Active Energy Manager that lets administrators cap the energy being used by a pool of servers. Due later this quarter, the software will throttle down processor and fan speeds if an application tries to exceed a certain power threshold. The software will be a plug-in for IBM Systems Director . The portion for monitoring power use is free, but the tool for throttling down consumption will cost about $275 per server for the Power 570, an IBM spokesman said.

IBM hopes the improvements will help keep it on top of the Unix server market. IBM regained its lead in Unix server revenue in the second quarter, growing its share 5 percentage points from a year earlier, according to IDC. Sun Microsystems, in second place, dropped 5.6 percent percentage points over the same period, while third-place Hewlett-Packard gained 1 point, IDC said.

"Ever since their resurgence in the Unix market, IBM has been pushing performance up and prices down when they really don't have to," said Dan Olds, principal analyst at Gabriel Consulting Group in Beaverton, Oregon. "Right now they have the performance lead, and they are still pushing the speeds and feeds higher. They're keeping constant pressure on Sun and HP."

Among the other IBM Unix news Tuesday:

* A new technology for ensuring high availability for applications, called hot node and repair, will be available later in the quarter for the Power 570 and 595 systems. If a server indicates it is about to fail, the software allows an administrator to shift a workload to a different server while the first server is repaired, and then move back again without losing transactions, according to IBM.* IBM doubled the processor cores available in its System i servers, which run its i OS, to bring them on par with its AIX and Linux offerings. The System i 550, for example, now comes with up to eight processor cores, up from four. IBM said the move completes an effort to offer a common hardware platform for its servers running Linux, AIX or i5/OS.* A new server for mid-size companies, the Power 560 Express, is due on Nov. 21. It uses a 3.6Ghz Power6 processor, comes in four-, eight- and 16-node configurations, and packs a hefty 384GB of memory. It's designed for companies looking to run multiple applications on a virtualized system. It will be offered with Linux, AIX or i. Pricing wasn't announced.

--IBM said its JS12 Express blade server can now be pre-installed with its i software and attached to its DS3200 storage gear to create a low-cost SAN.

-- Handy said almost two-thirds of IBM's Unix servers shipped in the second quarter included its PowerVM virtualization software, up from 21 percent in the second quarter the year before.

Nippon Telegraph and Telephone Corporation (NTT), Japan's largest telecommunications company, has formed a "wide-ranging strategic partnership" with EnterpriseDB that includes an undisclosed financial investment in the open source database maker.

The NTT announcement follows news earlier this year that IBM had become an investor in EnterpriseDB.

[ Track the latest trends in open source with InfoWorld's Open Sources blog. ]

"Many startup [database] vendors have one validating investment from a big company. It's pretty unusual, however, to have two," said Curt Monash, president of Monash Research.

NTT and EnterpriseDB will work together to improve the PostgreSQL database technology at the heart of the vendor's product line, focusing on high availability and scalability, and to promote adoption of PostgreSQL both within and outside NTT, according to a statement.

In an interview, EnterpriseDB CEO Ed Boyajian declined to reveal the size of NTT's investment, which he said had been in the works for "quite some time."

PostgreSQL, which competes with other open source databases like Sun's MySQL, is "useful for a broad range of applications," Monash said. "There are many reasons not to port from your existing brand-name [database management system], but if you're looking at a new application, you should look very hard at PostgreSQL, rather than building on a closed-source DBMS."

For its part, EnterpriseDB has positioned itself as a ready alternative to the dominant proprietary vendors, releasing an update to its Advanced Server product last year that made it easier to run applications written for Oracle on its own system.

Boyajian said he expected NTT, which could not immediately be reached for comment Tuesday, to use EnterpriseDB for new projects and to replace other platforms.

Dell is putting together hardware and software for backup and recovery in one system, with integrated software, for small and medium-size businesses.

The need for large-scale backups is growing as organizations produce more data and face regulatory requirements to hold onto it longer, analysts say. With its PowerVault DL2000 platform, which will go on sale later this month, Dell aims to make it easier for SMBs and branch offices with limited IT expertise to centralize and automate their backups. It can make those backups as much as 55 percent faster for disk storage and 77 percent faster for tape, Dell claims.

[ Get the latest on storage developments with InfoWorld's Storage Adviser blog and Storage Report newsletter. ]

The platform consists of the DL2000 -- a Windows-based x86 server running either a CommVault or a Symantec software stack -- and a Dell PowerVault MD1000 disk array. As an option, customers can have a PowerVault TL2000, TL4000, or ML6000 Tape Library added on for long-term archiving. The whole system will be put together in the factory and shipped as a turnkey solution, said Sanjeet Singh, a senior product marketing manager. The company designed the system as an alternative to buying several components and integrating them in-house, and claims an IT generalist can get the system started in less than half an hour.

That claim should prove true, said analyst Arun Taneja of the Taneja Group. Dell has put together popular SMB software with its own hardware, he said.

"These are good combinations, and I think through the hands of Dell, they will do very well," Taneja said.

The product, with as much as 144TB of usable disk space and a starting price between $10,000 and $15,000, would be best suited to organizations with a few hundred employees, which often have very limited IT skills on hand, Taneja said. As an all-in-one system, it should be most attractive to customers who haven't yet invested in another vendor's backup products, he added.

In addition to the choice of CommVault or Symantec Backup Exec software, users will have a choice of versions for each. A CommVault-based DL2000 can be configured with or without data de-duplication, which makes more efficient use of storage capacity by taking advantage of duplication in the incoming data. There are four editions of the Symantec software, which can provide continuous data protection for Exchange, SQL, and file servers, as well as protection for VMware and Microsoft virtual machines.

Each DL2000 also requires client software licenses for the systems that will back up their data to it. The CommVault Standard Edition comes with five licenses, and the Symantec Starter Edition comes with two.

To get started, IT staff will not have to set up LUNs (Logical Unit Numbers) or do RAID configurations, and it's possible to later add disks to the array on the fly. The systems will come with 3TB of disk capacity to start. Each version of software provides a management console that makes jobs such as setting up policies and backup tasks easy, according to Dell.

Archiving software is available for automatically moving data from disk to tape and setting up tiered storage. This feature, and the optional tape libraries, ought to be useful to medium-size enterprises with regulatory requirements for long-term storage, Taneja said.

AMS's decision to spin off its chip-manufacturing business into a separate company just may save the floundering firm, analysts said.

AMD's decision to split into a chip-designing company and a chipmaking company should help return the company to profitability sooner, said several analysts who watch the chipmaking industry. AMD would remain as the chip-designing company, while the new company, tentatively called The Foundry Co., would focus on chipmaking under the plan, unveiled Tuesday.

[ See this related story on AMD splitting up into two companies. ]

"I think this is a good move for AMD, especially in the current financial environment," said Dean McCarron, principal analyst for Mercury Research. "It frees AMD of the heavy-debt burden of owning a fab and lets it focus on its primary microprocessor and graphics businesses."

The move should allow AMD to return to profitability much faster than if it kept its foundry business, and it allows AMD to stop worrying about underuse of factories during economic downturns, McCarron added.

But the move is not without risks, added Jack Gold, founder and principal analyst at J.Gold Associates. The Foundry Co., despite a huge investment from the Advanced Technology Investment Company (ATIC), faces a competitive marketplace, Gold said. ATIC is a company set up by the government of Abu Dhabi to invest in tech companies worldwide. It will invest $1.4 billion directly in The Foundry Co. and pay another $700 million to AMD, giving it 55.6 percent of the new company. AMD will own the rest of the company.

The Foundry Co. will assume about $1.2 billion of AMD's debt. AMD's revenue from continuing operations for the second quarter of 2008 rose 3 percent from a year earlier, to $1.35 billion. However, the company posted a net loss of $1.19 billion for the quarter.

"AMD gets a sorely needed cash infusion," Gold said. "But the new company will need to get business in the door from other players, not just AMD, if it is to be successful longer-term. While semi-outsourcing to foundries is a major trend in the industry, it is also highly competitive and not always a good margin business."

Most analysts suggested the deal will put some added pressure on AMD competitor Intel.

"This is good for Intel in that it will offer renewed competition for Intel, which will in turn require it to maintain market leadership in designs and especially in its fabs," Gold said. "Intel has not always been the low-cost producer, and this deal will likely force it to see how it can cost-reduce and 'lean out' its manufacturing, which it has been doing already anyway."

Gold sees little potential for a negative impact to Intel, he said. "In fact, anything that makes AMD more competitive forces Intel to increase its own innovation, which is good for everyone -- Intel, system vendors, and consumers," he added.

The deal should put pressure on Intel to improve its technology, added Roger Kay, president of Endpoint Technologies Associates.

"The deal makes AMD much more viable over the long run, which directly challenges Intel, and that it will chase Intel into process manufacturing down at least to 22nm (nanometers) both as a chip company and as a foundry," Kay said. "The deal also puts other Intel competitors, like Nvidia, in a better position by supplying a great alternative foundry."

Intel doesn't yet know enough about the deal to understand how it will work, said Intel spokesman Chuck Mulloy. Mulloy called on AMD to allow the details of a confidential cross-licensing agreement between the two companies to be released to the public so that investors can understand the relationship.

Intel will stick with its approach of both making and designing chips, Mulloy said. An integrated design and manufacturing process can reduce time to market and result in better quality and lower costs, he said.

"We have long believed there are significant advantages to being an integrated device manufacturer," he added.

The deal could have a larger impact on other chip foundries, such as Taiwan Semiconductor Manufacturing Co. (TSMC), which supplies chips for AMD's ATI graphics processor arm, said Kay and Gold.

ATI's business with TSMC will continue for now, Gold said. "But eventually I would expect AMD to consolidate its designs around one fab process and one manufacturer," he added. "With the large investment they are making in CPU designs with the new foundry company, I expect that they will ultimately move their GPU designs over as well, cutting business with TSMC substantially."

The financial world seems to be falling apart, but Advanced Micro Devices has just landed several billion dollars from two Abu Dhabi investment groups to fund "Asset Smart," a plan to spin off its chip manufacturing operations into a new company, tentatively called "The Foundry Co."

The company still has to convince regulators and shareholders, but the move is already getting an enthusiastic response from customers and employees in Europe, according to company representatives.

[ See this related story on AMD splitting up into two companies. ]

"It's one of the most difficult weeks in the history of capitalism," said Emilio Ghilardi, senior vice president and general manager of AMD's sales and marketing activities in Europe, Middle East, and Africa (EMEA).

"From AMD's point of view, this is a great time because within this financial turmoil, we can say to our clients and our employees that AMD is a much stronger company," he said.

By spinning off its semiconductor fabrication plants, or fabs, into a new company and selling a majority share of that to one Abu Dhabi investment fund, and selling a smaller stake in its continuing business of processor design and marketing to another, AMD hopes to have greater financial freedom to invest in new product development.

"Talking to our key customers in Europe, I only got enthusiastic responses," Ghilardi said.

Ghilardi will stay with what he referred to as "AMD 2.0," the part of the company that will design and market the processors.

That company will retain some manufacturing activities related to testing and packaging, the final stages before the processors are shipped to customers.

"We can say to our customers 'Business as usual'," said Ghilardi, adding that there will be no change in the way the company manages customers orders or priority shipments.

On the other side of the coming dividing line will be Jens Drews, currently AMD's director of government relations for EMEA and a longtime resident of the German city of Dresden, the site of AMD's European semiconductor fabs.

"I've thrown my hat into the Foundry Co. side," said Drews.

Based in Europe, Drews won't be involved in one of the most pressing tasks the new company faces in government relations: negotiating the transfer of subsidies that the state of New York agreed to give AMD in return for building a new fab there.

The Foundry Co. plans to upgrade one of its two existing fabs in Dresden. Drews said he sees no need to seek fresh approval for state subsidies already granted for that operation.

Workers at that plant are taking the changes in their stride.

"In the cafeteria today, I sensed a growing excitement," he said. "It gives us a new opportunity," he said.