Analysts expect 2005 to be a banner year for storage vendors, thanks in part to data protection and retention regulations.
Analysts from Robert W. Baird and Info-Tech Research Group released reports today detailing expectations for strong storage spending this year.
The Baird analysts — Daniel Renouard, Frank Timons and Joel Inman — released a survey of more than 60 enterprise resellers that found the overwhelming majority expect a positive year for storage spending.
In the near-term, Baird said the resellers expect a "mixed but largely on track" first quarter. EMC, Network Appliance and IBM are strong, StorageTek is seeing mixed results, and the near-term prospects are weak for HP, Veritas and Sun.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
After dollar weighting each VAR according to size, 13% of respondents indicated that 2005 revenue would be "much higher" than 2004 (up more than 15%), while 74% expect revenues to be "higher" (up 5% to 15%). Baird said the results are in line with the firm's end user study.
One positive for storage vendors is that pricing has stabilized, with more than 85% of resellers saying that the current pricing environment is stable compared to three to six months ago. And despite the shortage of enterprise disk drives, only 20% of resellers expected a negative affect on revenue from the shortage.
"Although we believe the shortage is impacting EMC more than other vendors, we do not think the issue is causing a major impact to sales or EMC's ability to compete," the Baird analysts wrote.
While IBM's overall score was positive, "results were not as positive as in previous surveys, possibly reflecting the lateness of the company's new storage products amid focused competition," the report said. "Overall, we see IBM continuing to gain share versus HP and Sun on the server side, partly offset by losses to EMC and NTAP in storage. New products could win some storage share back to IBM in 2H05."
HP's channel feedback has improved from mid-2004, but remains negative. "HP's new CEO has his work cut out for him: low morale, loss of technical leadership, market share losses, weak field/execution, etc., which will likely persist through 2005," Baird said. "Meaningful improvements are possible during 2006."
Interest in iSCSI remains "modest," while rapid adoption of virtualization technologies "appears to be modestly helping the FC SAN industry by shifting low-end servers to larger servers connected to a FC SAN."
Midrange Could Be Hot
Info-Tech expects the mid-range data storage market to grow by 35% this year. The firm found that data storage is the top priority for mid-sized enterprises that plan to "invest heavily" in 2005.
Spending on data storage will outpace spending on servers, telephony and even security software, according to the results of a survey of more than 1,400 IT decision makers. Respondents cited regulatory pressures (Sarbanes-Oxley, HIPAA), continuity planning and the popularity of multimedia for their spending focus.
Storage area networks (SANs) are the hottest segment of the mid-range storage market; Info-Tech predicted 40% growth in the SAN market in 2005.
"As prices continue their sharp decline and SAN products become more commoditized, this important storage technology becomes increasingly accessible to mid-sized companies," stated Curtis Gittens, an Info-Tech senior research analyst. "Leading storage vendors such as IBM, HP and EMC, as well as strong innovative new entrants such as LeftHand Networks, Compellent Technologies and Intransa, are leading the charge into the mid-sized market. We expect the demand for SANs to increase sharply as vendors move down-market from their current Fortune 1,000 focus."