The data storage market appears to be getting hit harder than expected by the sharp economic downturn, according to a number of recent analyst reports.
IDC said earlier this week that it expects worldwide external disk storage systems sales to decline 3.1 percent this year and capacity to grow 44 percent, both well below the industry's robust growth rates of recent years. Still, the analyst firm said it expects long-term growth to remain relatively healthy, led by iSCSI SAN sales.
Analysts from R.W. Baird said today that their survey of value-added resellers (VAR) suggests that the first quarter might have been worse than expected but they said the quarter could mark the low point for the year.
Baird analysts Jayson Noland, Joel Inman and Sonya Banerjee said they see server virtualization and data deduplication as strong areas, with VMware (NYSE: VMW), Data Domain (NASDAQ: DDUP), NetApp (NASDAQ: NTAP), EMC (NYSE: EMC) and IBM (NYSE: IBM) the biggest beneficiaries. Still, they lowered first-quarter estimates on Data Domain based on the survey, but maintained a positive longer-term outlook on the dedupe pioneer.https://o1.qnsr.com/log/p.gif?;n=203;c=204660765;s=10655;x=7936;f=201812281308090;u=j;z=TIMESTAMP;a=20400368;e=i
The Baird analysts also said that VARs seem willing to resell Cisco's (NASDAQ: CSCO) new server.
Wedbush Morgan analyst Kaushik Roy agreed that IT spending is weak, but said that storage sales are performing somewhat better than the overall market. "Keep in mind that the seasonality on storage spending is skewed towards the second half of the year," he told Enterprise Storage Forum. "In other words, spending on storage in Q1 is as bad as the overall IT spending."
Roy said that "smaller, cheaper vendors selling niche solutions are doing relatively better than the larger full-service systems vendors at this time." Cheaper products with less functionality are also doing better because they're easier to get approved in the current spending environment.
Roy said EMC's Celerra NS unified storage arrays are continuing to do well, creating tougher competition for NetApp.
Roy reiterated his buy rating on Brocade (NASDAQ: BRCD) today, saying the company may unveil FCoE products at next week's Storage Networking World conference and that IBM may OEM the company's Ethernet products.
Enterprise Strategy Group analyst Mark Peters sees technologies that offer greater efficiency doing best, such as virtualization, thin provisioning, dedupe, cloud computing and tiering, and he said users are demanding greater ease of use and management too.
Solid state storage (SSDs) is gaining favor in part because it's an efficiency play, said Peters. "One of the immediate benefits of SSD can be to reduce or preclude such pragmatic-yet-inefficient practices such as short-stroking," he said.
"'Vanilla' storage simple capacity without added value is not the best market for a vendor to be in these days," said Peters.
EMC, the biggest storage hardware and software vendor, will report its quarterly earnings on April 22 and hold its annual shareholder meeting two weeks later.