EMC-HP storage race heats up

IDC says companies are in a 'statistical tie' for second quarter results

Number two storage systems maker Hewlett-Packard Co. (HP) has closed the gap between it and number one EMC Corp. to what research company IDC calls "a statistical tie."

But EMC argues its lead over HP is greater if co-branded Dell-EMC storage devices are counted as EMC sales instead of as Dell Inc. sales.

According to IDC's Worldwide Quarterly Disk Storage Tracker, EMC Corp. held an industry-leading 20 percent market share for external disk storage systems in the second quarter of 2006, followed by HP with a 19.3 percent share. EMC had a 21 percent share to HP's 18.9 percent in the second quarter of 2005.

In the latest results, IBM Corp earned third place with a 13.2 percent share, while Hitachi Data Systems Corp., Dell Inc. and Sun Microsystems Inc. recorded market share of between 7 percent and 8 percent, which IDC labeled a three-way tie.

IDC considers companies to be tied for market share if the difference between them is less than 1 percentage point, said Brad Nisbet, program manager for IDC Storage Systems.

The second quarter figures show a tight race between EMC and HP, but EMC spokesman Greg Eden said EMC is further ahead than those numbers suggest. The market share numbers don't count storage devices that EMC manufactures for Dell. They are co-branded as Dell/EMC storage but counted as Dell sales revenue, he said.

If Dell/EMC sales were counted as EMC revenue, the company's second quarter market share would be 26.1 percent, Eden said. IDC confirmed that number.

However, EMC stumbled in the second quarter when inventory problems prevented it from fulfilling orders for some of its Symmetrix DMX3 high-end and Clarion CX3 midrange storage models.

"We had double-digit growth in our bookings for our storage," Eden said, but customers wanted the newer models and were not content to buy the older ones.

Manufacturers with the strongest second-quarter percentage growth from a year earlier were Sun Microsystems Inc. (19.1 percent), Hitachi (17 percent) and HP (10.3 percent.).

"HP has been executing well under new management," Nisbet said, referring to President and Chief Executive Officer Mark Hurd, who replaced Carly Fiorina in March 2005. HP's storage revenue grew by 22 percent in Western Europe in the quarter, he said.

Sun reported the strongest quarterly jump due in part to its acquisition of storage vendor StorageTek in 2005 and the development of the first StorageTek disk storage products, Nisbet said, while Hitachi recorded strong sales of its high-end storage products.

IDC said the second quarter, which ended June 30, was the 13th consecutive quarter of revenue growth for the external disk storage sector. Revenue rose 8.5 percent to US$4.2 billion, from $3.8 billion a year earlier. Storage demand is growing as enterprises generate more data they have to manage and archive, he said.

"Storage continues to be an integral component of a full (IT) solution," Nisbet said.