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Capacity Remains the Main Driver for Storage Purchases

For more than a decade now, capacity has been the major driver in storage decision making. Data growth has escalated, and companies have installed more storage hardware to deal with that growth. Over the past five years, however, the trend of adding more capacity has become somewhat passé. New concepts such as Storage Resource Management (SRM) and Information Lifecycle Management (ILM) suggest that data growth could be more efficiently managed by better utilizing existing resources, coupled with a better classification system for storing data. But hardware vendors believe that although capacity will still expand, revenue growth will be tepid as storage experiences the "mainframe syndrome"; that is, the price per unit of storage capacity will fall more quickly than overall capacity sales increase.

These trends notwithstanding, capacity and revenue growth are back on center stage, according to recent market research. According to IDC's Worldwide Disk Storage Systems Quarterly Tracker report, worldwide external disk storage systems factory revenues jumped 17.9 percent in fourth quarter 2005. More than 650 petabytes of storage capacity were shipped, growing 54.6 percent.

The fourth quarter results reflect an accelerating demand for storage. For the entire year in 2005, according to IDC, the external disk storage system market climbed 10.7 percent. Gartner's Dataquest report, "Market Share: Disk Array Storage, All Regions, All Countries, 1Q05-4Q05," reported similar numbers, stating an 11.2 percent storage growth.

Growth in network disk storage, which includes NAS as well as Open and iSCSI SANs, was particularly strong. According to IDC, the NAS market climbed to 23.3 percent, while the iSCSI SAN market posted a 130 percent revenue growth.

According to Gartner, the top external disk storage vendors have experienced minor market-share changes. For example, Dell's share increased by 1.7 percent, while Sun Microsystems' market share fell 0.7 percent, and the market share held by companies outside the top seven vendors fell 7.7 percent. According to IDC and Gartner, EMC continues to lead the market for both network disk storage and overall external disk storage revenues, followed by HP, IBM, Dell, and Hitachi Data Systems (HDS).

According to IDC analysts, continuing data growth was a primary factor for storage hardware vendors' robust performance. As important, however, was the emergence of appropriately priced and positioned technology for creating tiered storage systems to address data-protection and business-continuity requirements and enable more accessible and active archives. IDC analysts noted that systems priced between $50,000 and $149,999 were the strongest segment in the market.

From one perspective, you could interpret the fourth-quarter results to show that companies are finally establishing the necessary hardware infrastructure to support more-sophisticated storage environments. But two other factors are in play as well. First, because of regulatory-compliance concerns, many companies have apparently thrown in the towel and have decided to save everything. Second, the data-storage footprint--the places in the infrastructure where data storage is needed--is expanding rapidly. According to a new report from TrendFOCUS, the sales of hard-disk-drive units jumped 25 percent in 2005. Primarily, notebook computers generated the increase, experiencing a 45 percent growth in 2005 as compared with 2004.

Over time, increased local storage capacities on notebooks will generate the need for greater centralized capacity because companies need to secure and manage their corporate data. Although storage administrators are still paying close attention to sophisticated storage management techniques, the trend toward dramatically increased capacity as a primary driver of storage investment has taken on new life.

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