Storage growth spins upward

As demand for storage continues to increase, the storage industry is showing some signs of consolidation even as innovative new companies continue to sprout.

According to IDC's Worldwide Disk Storage Systems Tracker, factory revenue in the worldwide external disk storage systems market grew 6.7 percent year over year to $3.8 billion in the first quarter of this year. That makes eight consecutive quarters of growth.

The total disk storage system market grew at a slightly lower year-over-year rate of 6 percent in the first quarter, according to the report.

"Storage spending is clearly trending upward as organizations strive to stay ahead of their information storage demands,” said Brad Nisbet, program manager in IDC's Storage Systems Program. "After nearly two years of positive momentum, spending on storage systems, particularly those priced less than $300,000, continues to be a top priority in the ongoing efforts to expand and rebuild IT infrastructure," he said.

EMC continued to lead in the external disk storage systems market with a 21.4 percent revenue share, followed by Hewlett-Packard with 17.7 percent and IBM with 11.5 percent.

Hitachi, which recently refreshed its product line, held the fourth position with 9.1 percent revenue share, while Dell ended the quarter with 7.7 percent in the fifth position.

"An analysis of top storage systems vendors performance over the past several quarters suggests that partnerships are becoming an important component of their market strategies," said Natalya Yezhkova, senior research analyst in IDC's Storage Systems. "This mutually beneficial approach allows each partner to offer more complete solutions for its customers and often opens a door to new market segments and leads to growth in revenue and market shares."

Among the recent partnerships were IBM and Network Appliance. The two companies announced an agreement calling for IBM to resell NetApp's NAS systems. Just last week, Sun has announced plans to purchase StorageTek for $4.1 billion to increase its presence in the growing storage market.

While many analysts, particularly from Wall Street, questioned Sun's purchase, Tony Asaro, storage analyst at the Enterprise Strategy Group, said he understands why Sun made the purchase. "There are a lot of reasons they did. They wanted the additional revenue and sales force, and they get a pretty substantial service business," he said. For StorageTek, the deal represents a way to get into the disk storage market. "They've made moves into that market, but going with Sun gives them some instant credibility in that market," he said.

Asaro has some questions about the deal however. "You have to question any merger, because so many don't work out," he said.

StorageTek this week unveiled its IntelliStore Intelligent Archive Solution, a new storage appliance aimed at the same compliance, archiving and regulatory market as EMC's Centera.

IntelliStore is a Linux-based appliance that captures business data as it is archived or migrated and automatically migrates that data based on security, data protection, and regulatory requirements, said Russ Kennedy, director of software product management at StorageTek's Information Lifecycle Management Solutions group.