Storage: Demand Up, Profits Down

Arthur Cole

Any thought that a slowdown in the economy would take the pressure off enterprises to continuously beef up their storage capacities is not in sync with reality. In fact, demand for additional storage seems to be increasing while costs, and thus revenues for the storage vendors, continue to slide.

IDC's fourth quarter 2008 report shows a 27.3 percent increase in shipped capacity, topping out at 2.46 petabytes, while revenues took a 5.9 percent hit compared to the same period in 2007.

That puts storage capacity increases in line with the 40 percent to 60 percent per year that we've been seeing for the past decade. Not surprisingly, much of the rise came from a 40 percent surge in external storage sales, more than compensating for the slowdown in internal storage that has accompanied the declining demand in server hardware.

EMC maintained its lead in external disk systems, garnering a 23.3 percent share, followed by IBM (15.7 percent) and HP (13 percent). Dell, Hitachi and NetApp rounded out much of the remainder, although Dell showed a relatively strong 5.8 percent growth.

Fibre Channel systems also saw a slight drop, falling 3.2 percent compared to 4Q 2007.

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