Third-quarter 2003 sales of disk storage systems were down slightly to $4.8 billion compared to last year, but price cuts bode well for the market, research firm IDC said.
Figures point to relatively soft demand with IDC showing a modest 36 percent growth year-over-year to 197 petabytes shipped in Q3, when revenues slipped 0.3 percent.
John McArthur, group vice president of Storage Hardware Research at Framingham, Mass.-based IDC, said there's a silver lining in the findings.
McArthur told internetnews.com price declines have moderated and remained below 30 percent from the previous year for the last two quarters.
"Companies are cutting the prices of storage systems and this is good for manufacturers, end-users and suppliers."
But, McArthur said, HP, IBM, EMC – even and Dell have not resorted to price wars to gain traction. Instead, they have focused on offering customers "higher-value software, services, and application integration to gain competitive advantage."
There has been a barrage of evidence to support McArthur's claim, as the storage market has had its fair share of partnerships, product rollouts and strategy tune-ups to accommodate the growing trend of information lifecycle management (ILM), am increasingly-adopted approach that helps businesses guide content from its inception until its disposal.
With the hardware market largely commoditized, EMC, HP, Hitachi Data Systems (HDS) and others are focusing on this software-oriented plan that combines storage and content management techniques. Still, McArthur said these vendors have been loathe to exit their hardware businesses, which have served them so well.
Disk storage systems consist of components such as controllers, cables, and host bus adapters that are associated with three or more disks drives and are located outside of or within a server cabinet. External storage systems have one to two drives and are outside the storage box.
Again, HP lead the pack with 26.4 percent revenue share. IBM and EMC garnered 21.1 percent and 12.9 percent, respectively. Dell and EMC, who have a partnership in which they sell each other's products, posted the strongest year-over-year factory revenue growth during Q3, with 22.9 percent and 20.5 percent gain, respectively.
EMC also had the largest year-over-year market share gain of 2.2 points. Dell moved into the number 4 position on strong sales of products from EMC and McArthur said the Dell/EMC relationship continues to propel each company. Meanwhile, Sun fell to a tie with HDS for the number 5 position.
In the total external disk storage system market, McArthur said revenue increased 1.5 percent year-over-year in Q3 to $3.2 billion. HP maintained its No. 1 position with 21.8 percent revenue share, with EMC grabbing the second slot with 19.2 percent.
McArthur said no matter who designs and manufactures the disk storage system, server suppliers remain an important route to market. The top four server vendors – HP, IBM, Dell, and Sun – snared close to 48 percent of the external storage pie because they rely on relationships with storage companies such as Hitachi (HP and Sun), EMC (Dell), LSI Logic Storage Systems (IBM), and DotHill (Sun) to help extend their products into the market.
EMC continues to maintain its leadership in the total network storage market (NAS combined with open SAN) with 28.9 percent revenue share, followed by HP and IBM with 25.6 percent and 11.5 percent revenue share, respectively.
HP led the open SAN [define] market, which grew 15.7 percent from a year ago, with 31.2 percent revenue share followed by EMC with 27 percent. Rivals Network Appliance and EMC posted $136 million and $130 million in NAS [define] revenue, respectively.
Looking forward, McArthur said companies still expect to "hold the line" on storage spending as financial executives continue to tell CIOs to rein in costs.
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