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Storage Market Remains Robust

For the most part, the storage market is continuing a healthy growth trend, according to IDC's recent Worldwide Quarterly Disk Storage Systems Tracker study. The big picture looks like this. According to IDC, the storage systems market grew at the fastest clip in 2 years. The factory revenues for the overall worldwide disk storage market--which includes external and internal disk storage systems--grew 9.9 percent in second quarter 2005, recording revenues of $5.6 billion overall. In second quarter 2004, the overall disk storage system market grew 5.0 percent.

The external storage systems market also grew a healthy 8.6 percent, reaching the $3.8 billion mark in the second quarter. In comparison, it grew 8.0 percent in second quarter 2004. Total storage capacity shipped also continued to explode. Total disk storage system petabytes shipped skyrocketed 59.3 percent to 457 petabytes in the second quarter. Last year, storage capacity shipped grew 41.2 percent to 275 petabytes. As has been the case basically forever, as the cost per petabyte continues to plunge, the demand for storage capacity continues to soar. Fortunately for the major storage vendors, the cost isn't falling quite as fast as the demand is growing.

Market positions among the storage systems leaders also changed little. In the external storage systems market, which includes NAS, and open and iSCSI SAN, EMC continued to hold its lead, growing its market share a scant .2 percent from 21 percent to 21.2 percent. EMC also had the second weakest growth rate among the top five vendors, with a 9.6 percent gain.

Among the top five vendors in the external storage market, Hitachi Data Systems turned in the worst performance, with revenues shrinking 1.1 percent. In contrast, Dell made the largest gains, with revenues jumping 27.1 percent. As a result, Dell vaulted past Hitachi in market share, claiming an 8.3 percent market share compared with Hitachi's 7.3 percent share. In second quarter 2004, Hitachi controlled 8 percent of the market, while Dell had a 7.1 percent share.

HP, which is number two in this market, saw a 13.7 percent increase in sales and grew its market share from 18 percent to 18.8 percent, while number-three IBM increased sales by 13.4 percent and grew its share to 13.8 percent from 13.2 percent.

In the NAS market alone, which grew 9.5 percent, EMC was the leader, with 40.2 percent of the revenue, followed by Network Appliance, with a 35.3 percent share. The iSCSI SAN market recorded a 140 percent revenue growth rate year over year. In that market segment, EMC and Network Appliance reversed positions. Network Appliance now leads with a 41.6 percent share, and EMC follows with 26 percent of the market.

The picture was relatively stable in the overall storage system market as well. In this category, HP held onto the top spot, increasing revenue 13.9 percent in second quarter 2005 and increasing its market share from 22.6 percent to 23.5 percent. IBM's revenues climbed 13.2 percent, and its market share expanded from 19.9 percent to 20.6 percent. EMC held the third spot, with revenue gain of 9.6 percent, which translated into a slight drop in market share from 14.5 percent to 14.4 percent. And once again, number-four Dell turned in the most robust performance with revenues soaring 26.7 percent. Dell grew its market share from 7.2 percent to 8.3 percent.

Perhaps the most notable number, however, was turned in by Sun Microsystems. Sun's revenues dropped 10.4 percent, and its market share shrank from 7.4 percent to 6.1 percent. These numbers should turn around, however, when Sun's acquisition of StorageTek begins to make itself felt.

Overall, the top five vendors have increased their total market share. They now control about 70 percent of the total market compared with 68 percent in second quarter 2004. Finally, the real strength of the market, IDC analysts noted, was in midrange systems.

Some people argue that these numbers reflect a maturing or even mature market. And that may be so. But the numbers also reflect that that EMC has weathered the challenge posed it last year when IBM and Hitachi Data Systems introduced dynamic new high-end storage systems. Moreover, HP has successfully climbed back from its weak performance 1 year ago.

And although the enterprise storage systems market might appear relatively mature and stable, the companies that comprise the market are rapidly remaking themselves to address the increased need not just for more storage but smarter storage systems as well.

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