IDC: SAN Storage Rocks in Q1

Research firm IDC says the overall storage systems market in the first quarter of 2003 got a lift from strong sales of SAN-attached storage, which grew nearly 14 percent year-over-year in terms of revenue (see IDC: SAN Sales Up 14% in Q1).

And network storage has finally reached the tipping point: IDC says sales of NAS and SAN systems have now overtaken direct-attached storage. "Network storage for the first time represents more than half (53% revenue share) of the total external disk storage systems market, up 5 points from a year ago," said Charlotte Rancourt, research director of IDC's disk storage systems program, in a statement.

Hewlett-Packard Co. (NYSE: HPQ) retained its overall market lead in the quarter, despite a 6.7 percent year-over-year drop in revenue, according to IDC (see IDC: HP Leads Storage Market in Q1 and IDC: HP Still Top Dog).

Roger Archibald, VP of infrastructure and NAS in HP's Network Storage Solutions group, acknowledges that the company's first-quarter storage sales were down, compared with the combined sales of HP and Compaq Computer a year ago, but he points to the fact that HP has managed to keep the lead spot in the market despite declining sales. "Everyone hopes we've seen the turnaround now in the economy," he says.

And though EMC Corp. (NYSE: EMC) remained the No. 1 network storage vendor, with 26.3 percent share of the combined SAN and NAS market in the first quarter, it too saw a decline in year-over-year revenues -- dipping 9.8 percent, IDC says.Also slipping were Sun Microsystems Inc. (Nasdaq: SUNW), down 9.2 percent year-over-year, and Hitachi Ltd. (NYSE: HIT; Paris: PHA), down 8.5 percent.

The big gainers for the quarter were IBM Corp. (NYSE: IBM) and Dell Computer Corp. (Nasdaq: DELL). Big Blue's storage revenues climbed 17 percent year-over-year, and Dell, which is a major EMC partner in the midrange storage market, boosted its sales by 37.5 percent (see IBM's Q1 Storage Sales Up 17% and Dell's Even Sweeter on Storage).

However, IBM actually experienced a significant 32 percent sequential drop in sales, from $1.34 billion in Q4 of 2002 to $917 million in Q1 2003.

The top two market leaders in each storage networking segment remain unchanged. In open SANs, HP was No. 1 with 27.9 percent share, followed closely by EMC at 24.5 percent. In the NAS market, Network Appliance Inc. (Nasdaq: NTAP) maintained its pole position with 37.3 percent share, with EMC in second at 33.7 percent.

Overall, IDC estimates storage sales totaled $4.8 billion in the first quarter of 2003, down 1 percent compared with the first quarter of 2002. That's less than the 8 percent year-over-year slide in the fourth quarter of 2002, which IDC believes indicates that spending in the market is stabilizing. The research firm also notes that the growth of storage capacity is continuing to outpace revenue, with raw disk capacity shipped in the quarter growing nearly 49 percent year-over-year, to 175.6 petabytes.Table 1: Worldwide Disk Storage Systems Factory Revenue, Q1 2003 ($Millions)

Todd Spangler, US Editor, Byte and Switch