IBM surpasses HP in storage hardware sales

IBM earns bragging rights for surpassing Hewlett-Packard in 2006 storage hardware sales, though it still trails industry leader EMC, according to an industry report published Tuesday.

IBM's market share in the global external-controller disk storage market, based on revenue, grew to 15.8 percent in 2006, from 14.5 percent in 2005, while HP's share dropped to 13.1 percent from 14.7 percent. That elevates IBM to second place behind storage market share leader EMC Corp., which grew its market share to 24.8 percent last year from 23.4 percent in 2005.

"I think the records will reflect that it's been about 10 years since we passed HP," said Andy Monshaw, general manager of IBM storage. As recently as five years ago, HP had a 15-point storage market share lead over IBM.

Monshaw credited a refreshed product line, a focus on selling systems rather than individual products and increased selling to the small-to-medium business market for IBM's results.

HP Chairman, CEO, and President Mark Hurd acknowledged the weakness in his company's storage business during a presentation at a Morgan Stanley Technology Conference Monday.

HP's storage revenue grew only 3 percent in its fiscal first quarter, ended Jan. 31, which Hurd attributed to the fact that much of its product line is tape storage, a declining business. However, sales of its EVA line of disk storage products grew 18 percent in the quarter.

Hurd also said during the company's quarterly earnings report Feb. 20, that HP needs to expand its storage sales force. "We just don't cover enough accounts," Hurd said.

The rest of the storage sellers in the Gartner report, ranked by 2006 market share, are the following: Hitachi Data Systems, 9.6 percent; Dell, 7.6 percent; Network Appliance, 7.2 percent; and Sun Microsystems, 6.1 percent.

Gartner noted that the storage market is increasingly dominated by the top players and is driven by industry consolidation, more effective marketing and strong channel partnerships. The top seven storage vendors accounted for 84.2 percent of the market in 2006, up from 81. 5 percent in 2006.