Despite the economic slowdown, which led to a contraction of the storage hardware market in 2001, the storage management software market grew during the year, according to a report just released by Gartner Dataquest.
The biggest challenge for the storage market is that customers have lost their appetites for procuring enterprisewide storage infrastructures and are now looking more and more to software for help, said Derek Gamradt, vice president of engineering and CTO of StorNet, an Englewood, Colo.-based storage solution provider.
"The funding [for hardware is not there, the multimillion-dollar opportunities are not there," Gamradt said. "The opportunity is for software to solve specific customer pains, such as backup and recovery, virtualization, and consolidation. And so many of these market opportunities are being solved by start-ups with great technology but poor marketing."
During 2001, new storage management software license revenue hit $4.9 billion, up about 3 percent from the $4.8 billion recorded in 2000.
The study counted as revenue only sales of software sold as a product with a separate part number, said Carolyn DiCenzo, chief analyst for Gartner Dataquest's storage group. "If the customer did not have a choice, it did not count," she said.
The study included vendor revenue for the software rather than end-user revenue and did not include professional services or maintenance, DiCenzo said. Including services or maintenance would have raised the total revenue about 31 percent, she said.
The revenue figures for individual companies included revenue from companies which were acquired in 2001, DiCenzo said. For instance, the Veritas figure included the revenue of The Kernal Group, acquired in 2001, but the Legato figure excluded revenue from OTG Software, which was acquired just this year.
EMC was once again the No. 1 vendor in the storage management software category, with revenue of $1.5 billion, up 10 percent over 2000. Veritas kept its No. 2 position with sales of $977 million, up 13.7 percent from last year.
IBM also remained in the No. 3 spot, with revenue growth in this area at 32.4 percent. "[That growth almost all had to do with software sold with its Shark array," DiCenzo said. "IBM sold Shark in 2000 but did not include all the software customers wanted."
Computer Associates International kept its No. 4 spot despite revenue falling by over 67 percent to $202 million. That drop was due to an accounting change at the company to report using GAAP instead of pro forma rules starting in the fourth quarter of 2000, DiCenzo said. "While CA wants us to do special things with revenue, we recognize GAAP," she said. "However, if things go according to plan for CA, they will see deferred sales revenue begin to show up in its sales figures this year."
Moving from the No. 8 position to the No. 5 space was Compaq, with revenue in 2001 of $198 million. "Compaq has really done a full-court press on software," DiCenzo said. "Their arrays sell well, and software sells with them. Plus, Compaq can go back to its installed base with software."
Legato Systems, BMC Software, Storage Technology, Network Appliance and Hitachi Data Systems round out the top 10. Hitachi, which entered the top 10 list for the first time, is getting good revenue streams from its OEM relationship with Hewlett-Packard and its reseller relationship with Sun Microsystems, DiCenzo said. "Also, Hitachi used to give away its software," she said. "They're just now getting the message that they can sell it. HP figured that out a long time ago."