Disk storage systems revenue slipped slightly in the third quarter amid soft demand, but there's hope in sight, according to a report from research firm IDC.
In a study released Friday, IDC said worldwide disk storage system revenue totalled US$4.8 billion in the third quarter, down 0.3 percent compared with the third quarter of 2002. But price declines have remained below 30 percent, year over year, for the last two quarters, said IDC analyst John McArthur.
"We're clearly seeing signs of the bottom here," he said.
The 0.3 percent year-over-year drop marks an improvement from the second quarter of this year, when total disk storage systems revenue fell 3.9 percent, year over year, to US$4.7 billion, according to IDC.
Rather than waging price wars, storage system suppliers are turning to higher-value software, services and application integration to gain competitive advantage, McArthur said.
The total disk storage system capacity shipped in the quarter grew a "modest" 36 percent, year over year, to 197 petabytes (197 quadrillion bytes), IDC said. The rate of capacity growth has declined in each of the last four quarters, according to IDC.
In the total external disk storage system market, revenue increased 1.5 percent year over year in the third quarter, to US$3.2 billion.
Hewlett-Packard kept the top position, with a 21.8 percent revenue share, despite losing 0.7 percent of year-over-year market share. Second-place EMC narrowed the gap, with its market share increasing from 16.2 percent to 19.2 percent. IBM stayed in third place, with its market share creeping up from 13.5 percent to 13.6 percent.
Hitachi remained in fourth place, with its market share slipping from 8.3 percent to 8.2 percent. Dell overtook Sun Microsystems for fifth place. Dell's market share rose from 4.9 percent to 6.6 percent, while Sun's dropped from 6 percent to 5.9 percent--good enough for sixth place.
In the total disk storage system market--which includes external systems and storage systems located within computer server cabinets--HP again continued to lead the pack in the third quarter, with a 26.4 percent revenue share. IBM was second, with 21.1 percent, and EMC was third, with 12.9 percent. Dell moved into fourth place.
Among the top five suppliers in total disk storage systems, Dell and EMC posted the strongest year-over-year revenue growth during the quarter, with 22.9 percent and 20.5 percent gains, respectively, IDC said. Dell's figures include storage products manufactured through a partnership with EMC.
EMC made a strong showing in the network-attached storage (NAS) market, according to IDC. NAS refers to storage equipment connected to an Internet Protocol network that serves up files to computer users.
EMC's market share rose from 30.5 percent in the third quarter of 2002 to 35.4 percent in the most recent quarter. Its revenue rose 17.2 percent to US$130 million. The company remained in second place in NAS but gained ground on first-place rival Network Appliance. NetApp's market share slipped from 37.6 percent to 37.0 percent, IDC said.
HP expanded its lead in equipment for storage area networks (SANs). SANs are specialised networks for accessing blocks of data, commonly using the Fibre Channel protocol. HP's market share rose from 30.6 percent to 31.2 percent as its revenue jumped 18 percent, to US$427 million. Second-place EMC and third-place IBM also increased their market share.
Computer server suppliers are an important route to market for external disk storage systems, according to IDC. HP, IBM, Dell and Sun captured almost 48 percent of the external storage market, up slightly from the third quarter of 2002.
Those server companies don't always design and make the storage systems they sell. For example, HP and Sun use technology from Hitachi Data Systems in the high-end storage products they sell.
McArthur said the server companies' momentum corresponds to customers' desire to deal with fewer vendors. "Right now, companies are looking for simplicity," he said. "Part of simplicity is reducing the number of suppliers."
