Despite Recession, External Disk Storage Sales Grew 8.8%

But overall disk storage market shows only a modest 1.1% increase in Q3, IDC reports

December 6, 2008

4 Min Read
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Despite the slumping economy and a slowdown in tech spending, the storage market is holding up well, according to IDC . The research firm reported today that factory revenues for worldwide external disk storage systems increased 8.8 percent year-over-year to hit $4.9 billion in the third quarter. The overall market for disk storage systems grew 1.1 percent to $6.6 billion, IDC said.

Highlighting the ongoing need that most businesses have for more storage as well as the decline in prices for storage, the firm said total disk systems capacity shipped in the quarter reached 2,170 Pbytes, up 41.7 percent from a year ago, which is substantially higher than the revenue increase.

"Numerous IDC surveys of IT users suggest that storage is one of a few hardware categories where buyers are reluctant to cut spending independent of the economic situation," said Natalya Yezhkova, research manager of storage systems research at IDC, in a statement. "At the same time, current market conditions and tightening budgets are leading to longer purchasing cycles for storage systems and to the adoption of technologies designed to optimize storage utilization and/or reduce total cost of ownership."

EMC Corp. (NYSE: EMC) remains the leader in external disk storage systems, increasing its share of revenue from 21.6 percent in the third quarter of 2007 to 23 percent this year. EMC's revenue for the quarter was $1.12 billion, an increase of 16.2 percent.

IDC reported that the next three storage vendors for the quarter were IBM Corp. (NYSE: IBM), with a 12.7 percent market share and $616 million in revenue; Hewlett-Packard Co. (NYSE: HPQ) with 12.5 percent share and $608 million in revenue; and Dell Inc. (Nasdaq: DELL), with 9.1 percent share and $444 million in revenue. NetApp Inc. (Nasdaq: NTAP) (8.2 percent share, $398 million revenue) and Hitachi Ltd. (NYSE: HIT; Paris: PHA) (8.0 percent and $389 million) were in a statistical dead heat for fifth place, IDC said.Along with EMC, NetApp was the only vendor to post double-digit gains in the external disk market for the quarter, growing revenue by 13.8 percent, IDC said. IBM was the only top storage vendor to post a decline in that market segment, with revenue for the quarter slipping 0.3 percent.

Network disk storage systems (NAS combined with Open SAN) increased 15.3 percent to more than $3.7 billion for the third quarter. EMC remains on top of the total network storage market, with a 27.9 percent share of the overall revenue. HP was in second place with 12.3 percent. More specifically, IDC said the Open SAN market grew 14.0 percent, led by EMC (25.0 percent) and HP (14.7 percent). The NAS market grew 19.7 percent, with EMC (37.7 percent) on top, followed by NetApp (28.2 percent).

The single strongest growth segment of the storage market was iSCSI SANs, which posted revenue growth of 96.7 percent, IDC reported. Dell was on top with 31.1 percent of the quarter's revenue, followed by EMC (13.3 percent) and NetApp (12.5 percent).

IDC research analyst Liz Conner said sales of mid-range systems priced between $15,000 and $299,999 were strong, growing 15 percent year-over-year. "IP storage played a major part in this growth fueled by the strong adoption of iSCSI SANs, specifically within virtualized server environments, as well as solid growth in NAS-based solutions, addressing the ever increasing growth in file-level data," she said.

In the overall worldwide disk storage systems market, HP was on top for the quarter with a share of 19.8 percent and revenue of $1.31 billion, followed by EMC (16.9 percent share of the market and revenue of $1.12 billion); IBM (15.2 percent, $1.01 billion); Dell (10.4 percent, $690 million); Hitachi (6.0 percent, $400 million); and NetApp (6.0 percent, $398 million).EMC recorded the biggest gain for the quarter, with revenue increasing 16.2 percent year-over-year. NetApp also posted double-digit gains, with revenue up 13.8 percent. IDC said IBM's revenue for the quarter declined 18.1 percent year-over-year, while Dell posted a decline of 8.7 percent and HP posted a decline of 0.5 percent.

IDC defines a disk storage system as a set of storage elements, including controllers, cables, and in some instances host bus adapters, associated with three or more disks. The average cost of the disk storage systems does not include infrastructure storage hardware (i.e. switches) and non-bundled storage software, the research firm said.

Sun Microsystems Inc. (Nasdaq: JAVA), which wasn't in the top five in any category mentioned in the IDC release, quickly issued its own release touting its strong revenue growth. The systems vendor said the IDC Worldwide Quarterly Disk Storage Systems Tracker showed it had revenue growth for total disk storage systems sales of 25 percent year-over-year, its fourth consecutive quarter of growth.

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