Disk Storage Revenue Up As Customers Open Their Wallets

IDC reports that external disk storage sales revenue rose by 19 percent in the third quarter of this year, compared to the year ago quarter, as companies increased IT spending after a slowdown in 2009 due to the recession. Worldwide sales reached $5.18 billion in the three months ending Sept. 30, from $4.35 billion a year ago.

Total disk storage revenue rose by 18.5 percent in the quarter, to just under $7 billion from $5.9 billion a year ago. Total disk storage includes internal disks that are built into servers, although the lion's share of the market is external storage running in its own hardware.

"Nineteen percent is a very healthy market compared to 2009. It's tremendous growth," says Natalya Yezhkova, a research director at IDC. "And 2008 was a very healthy year."

The severe economic downturn that hit in late 2008 affected only the fourth quarter, but recession-wary IT buyers reduced disk storage and other purchases until this year, Yezhkova says. In addition, storage demand is stimulated by the increasing volumes of data that companies and other enterprises need to save.

Among the top five external disk storage vendors, NetApp reported the largest sales growth, boosting revenue by 55 percent to $601 million, from $388 million a year ago. This brought NetApp into a statistical tie with HP for third place in terms of market share, with about 11 percent each. The other market share rankings were EMC (first with a 26.1 percent share), IBM (second at 12.9 percent) and Dell (fifth at 9.1 percent). The disk storage market has undergone some consolidation of late with EMC's announcement in November of its $2.25 billion acquisition of network-attached storage (NAS) vendor Isilon Systems. That followed HP's acquisition in September of the high-end storage vendor 3PAR for $2.35 billion, winning a bidding war with Dell. The fourth quarter will be the first quarter in which HP and 3PAR sales will be counted together, says Yezhkova. "It was a high price HP paid, and they will have to justify the purchase that they made," she says.

The IDC report provides a further breakdown of sales performance in specific storage segments. The total "open networked disk storage" market, which IDC describes as network-attached storage (NAS) combined with open/iSCSI storage area networks (SANs), grew 26.4 percent year over year in the quarter to $4.3 billion in revenues. EMC and NetApp were the top two vendors in that segment, based on market share.

In the open SAN market, revenue grew by 18.5 percent year over year, with EMC, IBM and HP the market share leaders, in that order. The NAS market grew 49.8 percent in the quarter, led by EMC and NetApp. The iSCSI SAN market grew 41.4 percent, led by Dell, EMC and HP, IDC reports.