The Asia-Pacific disk storage market continues to grow and rather than waging price wars, vendors are value-adding to remain competitive, according to new research.
Revenue from disk storage systems in Asia-Pacific (excluding Japan) increased by 7.9 per cent from US$511.6 million last quarter to US$552 million this quarter, the report said.
There was a 26 per cent drop in average cost per GB of capacity from US$28.70 in June 2003 to US$21.23 in June 2004. This was attributed to the ongoing transition to modular disk storage systems and increasing shipments of lower cost ATA disks in some storage systems.
However, the lower costs were not being directly transferred to the customer.
"The price declines that were noted in previous quarters moderated somewhat in Q2 2004," the report said. "Rather than waging price wars, suppliers are turning to higher-value software, services and application integration to gain competitive advantage."
IDC research director for storage Asia-Pacific, Graham Penn, said the disk storage market was likely to continue its growth as the size of data forced businesses to migrate from internal storage to external disk systems.
"Organisations are increasingly networking their storage resource to better manage the ever-increasing amounts of data that are required for today's business operations as well as enable a more scalable and flexible IT infrastructure," Penn said.
"We have not seen any players in the disk storage market consistently lose market share. EMC had a bad year in 2002, but they have come back strongly.
"Sun has been going along steadily."
Penn said CRM and ERP were major drivers for the disk storage market, as well as compliance regulations.
"It will be interesting to see how organisations cope with additional storage requirements," he said. "Processes will need to become increasingly automated, and so there will always be a strong market demand for software and services wrapped around storage."
HP's director of network storage solutions, Andrew Manners, said the company was trying to gain market edge by focusing on consultation and integration of services.
"We want to continue to integrate our various roles as storage vendor, networking vendor, security vendor and supplier of services together," he said.
"But consultation and support is our number one priority."
HP focuses on offering scalability to customers, Manners said.
"ILM in its totality is not deliverable today," he said. "Some vendors are saying they can deliver it, but they are fibbing. I don't see it as being a complete reality to 2008, 2010.
"But we want to work with customers so that decisions they make today will enable them to implement ILM when it happens, and to give them scalability to suit changing business needs."
To illustrate this point Manners said there were 3500 people working in HP services in Australia.
Business unit executive for storage at IBM, Wayne Glynne, said IBM was also focusing on services and software wrapped around storage. "We also help customers along the path of information lifecycle management," Glynne said.
Marketing manager for EMC, Mark Heers, said that intelligent deployment was becoming more important to businesses.
"Customers are increasingly looking at the value of their data and then looking for an appropriate storage platform for it, so looking at secondary platforms instead of storing everything in one high end main frame," Heers said. "That's why more than half our Clarions go out with normal and cheap ATA disk."
Penn said that it was important for companies in Asia-Pacific to target the SMB market.
"The SMB market in Asia-Pacific is individually small but collectively it's very large," he said.
"Just because a company has a small number of employees does not mean they are not big users of IT. It depends a lot on vertical markets."
Vendors in the Asia-Pacific needed to foster strong relationships with channel partners in order to reach into the SMB market, he said.
EMC, for its part, seemed to be cottoning on to this.
"EMC has come from a high end enterprise background, but over the last three years we have introduced a number of products geared towards the medium to low end of the market," Heers said.
"This mid-tier is definitely where our strongest growth is now, especially in Australia and New Zealand," he said.
HP and IBM have also been making large footprints in the mid-tier storage market. IBM recently announced two new entry-level storage arrays- the DS300 with iSCSI and the DS400 with FC, and last month HP released a Enterprise Virtual Array bundle for SMB's.
The IDC report claimed IBM was the market leader, having displaced HP in the total disk storage system market for Asia-Pacific excluding Japan. "HP has led this segment of the market since its acquisition of Compaq," said Penn.
He did not, however, place much significance on this.
"The market always has its swings and roundabouts," he said. "It is dangerous to place too much significance on one quarter."
While Manners agreed with Penn that HP's displacement was of little significance, Glynne begged to differ.
"IBM displacing HP marks a significance in that the Asia Pacific has typically been characterised by low end storage and distribution channels play a key role in this," he said. "HP's storage market was substantially boosted by its acquisition of Compaq as it had its own strong distribution channel.
"But distributors don't want to rely on just one vendor so they are increasingly turning to others. It will be interesting to see the next quarter, because this could very well be a turning point."