Report: Data Storage To Gain Faster Than Overall IT

Although IT budgets remain tight, spending for data storage is expected to gain somewhat faster than other IT segments, even as market pressure forces suppliers to cut prices, according to a new report from Standard & Poor's Equity Research.

Specifically, Richard Stice, author of the report, said in an interview that the emerging iSCSI interface will begin putting pressure on fibre channel networking, as he cited just one of a number of developments that are changing the storage landscape.

Noting the recent unveiling of high-end data-storage systems by Hitachi Data Systems and an expected move by IBM in the high-end space, Stice predicted that high-end hardware systems will see pricing pressure through the remainder of this year. Even so, he said, prices are expected to trend downward in an orderly manner. "There's enough demand to keep it [pricing] orderly," he said. "Everybody benefits if it's done in a sensible way."

Stice, who is S&P's computer storage and peripherals equity analyst, said prices of disk-storage systems typically decrease by about 30 percent a year. Past bloodletting in storage hardware encouraged many storage players to emphasize software-storage products and services, whose pricing is more stable, he noted.

While Stice said there are indications that 2005 may not be as robust an IT-buying year as was thought earlier, he is looking for near-term storage spending to gain as much as 5 to 6 percent. "Spending for storage should go up faster, because storage tends to be a higher IT priority," he said. "The data-storage industry continues to be a focal point for corporate IT departments. Corporate IT managers are finally beginning to allocate more funds for various storage initiatives."Also covered in the report--which is the first in a planned series of semiannual studies on storage--are discussions of emerging storage technologies, including iSCSI and serial ATA. "I look for iSCSI to take a little bit of share from fibre channel [initially]," he said. "While we expect iSCSI to broaden the overall storage-networking market, we do not see it supplanting fibre channel for at least the next one or two years."

Helping fuel the move to iSCSI, he said, is the fact that, since the interface technology is based in IP protocol, it is familiar to most IT managers, who find it relatively easy to implement. "The primary disadvantage of iSCSI is its lack of networking speed relative to fibre channel," he said. "Fibre channel is still king of the storage hill."

As for serial ATA, Stice said that it, too, could have an impact on fibre channel technology, although he said the impact is likely to be slight. "For data items that can be accessed a few seconds slower than with fibre channel, serial ATA is a cost-effective alternative," he said, observing that serial ATA is likely to have a heavier impact on tape. He sees tape storage having a role to play in the storage universe, although it is likely to be used more to store less important data elements.