The storage market hasn’t been immune to signs of slowdown in the broader economy, if recent industry statistics are any indication.
Reports in the last week from IDC and Gartner show that data storage software and hardware sales slowed to a mid single-digit growth rate in the fourth quarter of 2006, down from the double-digit growth rates the industry has enjoyed in recent years.
The storage software market grew 3.1 percent to $2.6 billion in the fourth quarter, IDC reported today. It was the sector’s 13th consecutive quarter of year-over-year growth, but a sharp deceleration from the third quarter’s 10.7 percent growth rate. For the full year, sales grew 8.3 percent to $9.8 billion.
Archiving, replication, file system and management software were behind the growth, said Laura DuBois, Storage Software research director at IDC. “Over the last 18 months, we have seen firms adopt solutions that can improve availability, recovery and information access across heterogeneous environments,” said DuBois.
Storage replication, one of the largest storage software markets, grew 14.4 percent year over year in the fourth quarter. The smaller but fast-growing archive and HSM market posted a 25.5 percent year-over-year growth rate.
EMC led the overall market with a 27.9 percent revenue share, growing sales 1.8 percent in the fourth quarter. Symantec took second with an 18 percent market share, but sales declined 5.3 percent. IBM grew sales 10.3 percent in the quarter, good for a 12.1 percent share, while Network Appliance’s stellar 49.3 percent growth rate was good for a 9.6 percent market share. CA and HP were tied for fifth at roughly 5 percent. CA grew sales 14.9 percent in the quarter, while HP’s sales declined 10.3 percent.
DuBois said IBM and NetApp both benefited from customers’ desire to improve recovery time and recovery point objectives (RTO and RPO). NetApp has been strong in replication for the last 18 months, DuBois said, and MultiStore and SnapDrive sales have been strong too. IBM has benefited from Tivoli Storage Manager’s array-based point in time disk copies, allowing recovery from disk images, and Tivoli CDP for Files has also done well.
Storage Hardware Sales Decelerate
Gartner, meanwhile, reported last week that worldwide external controller-based (ECB) disk storage revenue totaled $4.3 billion in the fourth quarter, up 3.8 percent from the year-ago quarter.
EMC was once again on top, with a 24.4 percent revenue share in the fourth quarter and 8.1 percent sales growth. IBM was second with a 19.4 percent share and 17.3 percent growth rate, buoyed by strong NAS and midrange sales. HP was third with a 12 percent share on a 12.5 percent year-over-year sales decline. HDS’ sales growth of 15.8 percent was good for a 9.6 percent share. Dell’s 38 percent sales decline bumped it back to fifth place, ahead of NetApp and Sun, which grew sales by 36.6 percent and 29.7 percent, respectively.
Consolidation continues to reshape the storage market, Gartner reported. In 2006, the top seven vendors accounted for 84.2 percent of worldwide ECB revenue, up from 81.5 percent of total sales in 2005.
“Inorganic growth via vendor acquisitions was a hallmark of storage activity in 2006,” stated Donna Taylor, principal analyst for Gartner’s global Storage Quarterly Statistics program. “Private equity investment in the storage industry also offered alternative financing with which to fund them.”
IDC, which tracks the external storage systems market a little differently than Gartner, reported a 6 percent growth rate for the fourth quarter to $4.8 billion, down from the third quarter’s 9.9 percent growth rate. For the full year, external storage sales rose 8 percent to $17 billion.
NAS and iSCSI sales were strong in the fourth quarter, according to Brad Nisbet, manager of IDC’s Storage Systems Program.
For the first time, network storage systems priced between $15,000 and $149,999 outsold higher-priced systems in 2006, said Natalya Yezhkova, research manager of IDC’s Storage Systems Program. The increased adoption of network storage by mid-sized businesses and the growing demand for less expensive, capacity-oriented storage aimed at more non-transactional applications such as digital content, e-mail archives and replicated data were behind the trend.
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