External Disk Storage System Marketplace Trends


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During 2003, storage services surpassed disk systems as the dominant overall market segment. Services inched ahead with a 40 percent share, according to figures released by International Data Corporation (IDC) of Framingham, MA. Disk systems followed at 39 percent, then software (11 percent), tape automation (6 percent), and Fibre Channel (FC) infrastructure (4 percent). The improvement in services also bodes well for the storage industry overall.

"We saw a 13 percent increase over quarter in storage spending in Q3 03," reports Steve Duplessie, an analyst with Enterprise Storage Group.

After reigning supreme for many years, the slowdown in disk systems spending has been apparent for a decade. According to IDC, between 1994 and 2000, the combined annual growth rate (CAGR) of disk systems was four percent. The disk systems market peaked in 2000 with revenues reaching $31 billion. It crashed to $20 billion in 2002 and was slightly down again last year.

Further growth for disk storage systems is predicted over the next three years, says John McArthur, a storage analyst with IDC, "though at a modest 0.8 percent annual rate."

Although growth of disk systems is stunted, the size of hard drives continues to explode. Enterprise hard disk drives have grown from an average of less than 4GB in 1996 to 40GB at the end of 2002, according to McArthur. But enterprise disks are no longer larger than their desktop counterparts. IDC reports desktop disks are ahead, as OEMs are fitting PCs with bigger drives.

The disk drive market is strongest in the $12 billion desktop category, defined as mainly Intel-based single-user devices. Entry-level servers are next, defined as those selling for less than $25,000, with NAS and DAS RAID subsystems included in the category. Growth in the desktop and entry-level sever segments, however, remains very slow — 0.2 percent and 1.2 percent, respectively.

Where a significant increase can be seen, though, is in the workstation and mid-range/high-end server system markets. The mid-range and high-end storage/server systems segment (defined by IDC as systems selling for more than $25,000) is currently a $1.82 billion market, with an annual growth rate of 12%. Traditional workstations (primarily RISC-based systems running UNIX for graphics and technical applications) had a staggering 22.6% rate of growth, though its dollar value is only $87 million, per IDC numbers.

Page 2: Disruptive Influence

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