Virtualization, regulations to keep disk storage strong

The disk storage system market is set for continued steady growth over the next four years, IDC said, helped by new technologies and cheap products.

The disk storage systems market is set for continued steady growth over the next four years, according to a report market research company IDC released Thursday. The growth will be fueled by the need to store information to comply with global regulations, the availability of inexpensive, easy to manage tiered storage products and the emergence of new technologies such as storage virtualisation.

The disk storage systems market experienced its second consecutive year of growth in 2004 since the IT industry's downturn of 2001 to 2002, with IDC estimating global revenue of US$22.6 billion, up 4.4 percent compared with 2003. The researcher expects that figure to reach US$23.4 billion this year and rise to US$26.3 billion in 2009, according to Dave Reinsel, director of storage research at IDC and one of the report's authors. While a 3.1 percent compound annual growth rate between 2004 and 2009 might not seem that impressive, he argued it's still evidence of a strong market, given that the cost-per-gigabyte of storage continues to substantially decline while demand for products increases.

"The amount of compliance data is increasing," Reinsel said. "Companies are just storing more and more data, particularly health-care [companies] with MRIs [magnetic resonance imaging]." Government regulations are also requiring some companies to store all their electronic communications for a period of years.

Sales of low-cost capacity-oriented drives in 2004 were stronger than IDC had expected, accounting for 7.5 percent of global storage revenue last year and likely to reach 38 percent come 2009, according to the market researcher.

Looking ahead, a number of new technologies are on the horizon, including storage virtualization, along with new storage protocols -- SAS (serial attached SCSI) and SATA (serial advanced technology attachment) -- which are likely to further lower the cost of tiered storage architectures, according to IDC.

"Virtualization is still in its nascency," said Reinsel. "The complexity needs to be removed. There's definitely a desire [among vendors] to help leverage more hardware performance that way." Storage virtualization is the creation of multiple virtual disks on a single disk or group of disks and is coming into play as a way to allow speedier system rebuilds and improve the utilization of storage capacity. Such capabilities are becoming more vital as enterprises begin to adopt 500G-byte drives and terabyte storage drives become a reality.

There were no surprises in the identities of the top three disk storage systems vendors, with Hewlett-Packard Co. (HP) at number one with 23.1 percent of the market in 2004, followed by IBM with 20.2 percent of global revenue and EMC with 14.4 percent. This trio accounted for 57.7 percent of the overall disk storage market, down from 58.7 percent in 2003 due to both a tough year for HP and strong sales by Dell Inc. and Network Appliance, which ranked fourth and seventh respectively in 2004.

IDC described Dell in the report as one of the fastest growing companies in the disk storage system space. Dell's success is largely due to its partnership with EMC, enabling Dell to resell cobranded Dell/EMC storage systems, together with Dell's efficient supply chain and strong customer relationships with small and medium-sized businesses and the government and education sectors, IDC said.

Both HP and IBM lost market share in 2004 in the overall market and in the external disk storage systems segment due in part to rebranding and repositioning efforts by the companies. Sun Microsystems Inc., in sixth position in the 2004 market, also saw its overall market share erode to 5.8 percent in 2004 as compared to 6.4 percent in 2003, with a weak year of sales for its high-end StorEdge 9900 family of products, IDC said in the report.

"There's an opportunity at the lower end [for new players] to perhaps enter the storage drive market with products aimed towards small and medium-sized businesses," Reinsel said. However, he would caution potential customers about any startup's sustainability in the market.

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