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No Surprises in Long-Term Storage Market Trends

The long-term trends in the enterprise storage arena are holding steady, according to two recently released reports by IDC. EMC continues as the overall market leader in the growing external storage system market and in storage software. Dell continues to experience the most rapid growth in the hardware sector, and HP holds the top spot in the overall hardware market, which includes both internal and external storage systems.

The big picture looks like this. According to IDC, the worldwide external disk storage market as measured by revenue grew 6.7 percent year over year in the first quarter of 2005 to $23.8 billion. This marks the eighth consecutive quarter of overall positive growth. The total disk storage market, which includes internal storage, grew 6.0 percent. At the same time, total storage capacity shipped continues to far outstrip revenue growth. As measured by petabytes shipped, external disk capacity jumped a whopping 58.6 percent year over year to an impressive 409 petabytes, which represents a lot of data.

There was little change in the position of the market leaders or the rates at which specific players were growing. EMC remained the leader in the overall external disk market, holding a 21.4 percent revenue share of the market, followed by HP, IBM, Hitachi Data Systems, and Dell. Dell continues to turn in an impressive performance, recording the strongest year-over-year gains in the first quarter, with revenue climbing 29.2 percent. EMC also turned in a strong performance, increasing revenue 12.2 percent.

The story wasn't much different in the in the total network storage arena, which includes NAS and Open SAN (i.e., Fibre Channel SANs that work with heterogeneous products) and iSCSI SAN. EMC maintained its lead in that sector as well, retaining a 29.0 percent revenue share followed by HP, Dell, and Network Appliance. Dell and NetApp recorded the strongest growth, as Dell's revenue increased 47.1 percent and NetApp's rose 29.7 percent.

EMC, on the other hand, emerged as the clear leader in the Open/iSCSI SAN market. It captured a 26.7 percent share, edging ahead of HP, which held a 23.9 percent share. This sector grew 16.6 percent overall to $1.9 billion, giving it a growth rate that far outstrips the overall market. The iSCSI SAN sector alone grew a robust 22 percent, with NetApp claiming 43.3 percent of the market compared to second-place EMC's 28.6 percent.

Due in part to an adjustment in the way it makes its calculations, EMC overtook longtime leader NetApp in the NAS market. IDC now puts EMC's market share at 37.9 percent compared with NetApp's 34.2 percent.

Finally, in the overall hardware sector, including both internal and external systems, HP maintained its market leadership with 22.5 percent of the market, followed by IBM, EMC, and Dell. Once again, Dell had the strongest growth rate, with revenues jumping 26.2 percent. EMC recorded the second best performance, with double-digit growth as well.

On the software side, the market also continues to move along the same established trend lines, according to IDC. The overall market grew 14.9 percent to $2.1 billion. This makes it the sixth consecutive quarter that storage software has recorded double-digit year-over-year gains.

As in the storage hardware sector, EMC is also on top of the storage software heap, holding 30 percent of the market, followed by VERITAS, which has a 21.4 percent revenue share. IBM, NetApp, and HP held the next three positions. NetApp software sales increased an eye-opening 61.1 percent. EMC recorded a 17.9 percent increase in the first quarter year over year, and VERITAS enjoyed an 11.4 percent gain.

Storage resource management and backup and archiving remain the two largest storage-software niches. Each accounts for approximately one-third of the market. The storage-replication market grew nearly 20 percent in the first quarter, while file-systems software climbed more than 25 percent year over year.

So the long-term trends are clear. As has been the case for some time now, revenues generated by storage software continue to grow more quickly than revenues generated by storage hardware. In the hardware arena, the cost per terabyte of storage continues to plunge but not quite as fast as the jump in the total amount of storage capacity shipped. In network storage, the use of iSCSI SAN technology is growing rapidly. And finally--and this point is significant--to a large degree, despite ongoing predictions that it would change, EMC continues to be the market leader both the dynamic network storage hardware and storage software arena overall. And it shows no sign of relinquishing that position anytime soon.

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