State of Technology: Nothin' But Growth In Storage

It's never an easy task to predict which IT vendors or technologies in the fray will flourish, and the storage hardware and software market is certainly no exception.

Last year proved to be a stunning one for acquisitions: Sun acquired StorageTek for $4.1 billion to shore up its data-protection and storage gear; Symantec moved a step closer to its long-term enterprise data-protection vision by finalizing its $13.5 billion Veritas acquisition in July; and Seagate rounded off the year by snapping up Maxtor for $1.9 billion, primarily for Maxtor's manufacturing infrastructure in China.

"No one can predict who will come out on top or whom will be acquired," says Bob Abraham, president of research firm Freeman Reports. "But it's certain that the trend of consolidation will continue."

Another continuing trend for this market is growth. According to IDC, factory revenue for external disk storage grew 8.6 percent year over year to $3.8 billion in Q2 2005. Market share for the top three storage-system providers remained flat to slightly up, year over year, with Hewlett-Packard growing from 22.6 percent in the second quarter of 2004 to 23.5 percent a year later. IBM's position grew from 19.9 percent to 20.5 percent, while EMC slipped slightly from 14.5 percent to 14.4 percent.

"Companies are going to continue jostling for position, and while one may slip for a year or two, this is a long-term race," Abraham says. "For example, Sun may come back strong in storage as a result of the StorageTek acquisition."

According to VARBusiness' State of Technology survey, solution providers are placing their bets on four vendors for sales growth in the storage arena.

About 24 percent of VARs say they'll increase selling Symantec/Veritas storage products, while 26 percent say the same for Microsoft. Twenty-seven percent cited HP, and 27 percent anticipate that their Seagate/Maxtor sales and recommendations will pick up in the coming months.

Some overarching trends in the storage arena include continuous data protection, virtualization, backup to disk, and the encryption of backup and replicated data, analysts say.

When it comes to innovation, analysts suggest keeping an eye on the smaller storage vendors. Take AppIQ, a SAN player that HP acquired and whose technology HP recently rolled into its Storage Essentials 5.0.

Among other smaller storage vendors analysts consider worth watching, there's Revivio, with its block-level continuous data-protection technology, and Sanrad, with its iSCSI network switch that provides network-level intelligence for data migration, replication, virtualization and other storage services.

As for the brand-name players, a survey by Wall Street research firm Robert W. Baird and Co. summed up the field like this: "The current leaders are NetApp, EMC and Hitachi," says analyst Daniel Renouard. "The jury is still deliberating the long-term fate of such heavyweights as Sun, HP and Symantec."