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This turmoil has actually helped smaller vendors like Nexsan Technologies, said Bob Woolery, senior vice president of marketing for the Thousand Oaks, Calif.-based company.
Nexsan has not had any layoffs, and is in fact hiring sales people to help push arrays that compete with products costing much more from larger vendors, Woolery said. "We're not just dropping prices," he said. "Anyone can drop prices. We're focused on the financial value of the products."
Hitachi Data Systems is seeing a slowdown in storage hardware and some delays in purchases, especially given the turmoil in the financial market, said Claus Mikkelsen, chief scientist at HDS.
"Software and services are the growth areas," Mikkelsen said. "It's not that hardware is being marginalized. But if you are doing thin provisioning, and the server thinks it has 100 Tbytes when the array only has 20 Tbytes, how much capacity do you really have? Customers are saving money and buying less hardware, but it's a net gain for us because of the thin provisioning and related technologies."
Storage software vendors, on the other hand, have proven to be more resilient to the economic downturn as customers turn to software to improve the efficiency of their existing hardware.
Worldwide disk storage systems revenue rose 1.1 percent in the third quarter compared to the same period one year earlier, IDC reported in December. However, worldwide storage software revenue rose 11.6 percent during the same period, IDC said.
CommVault, the Oceanport, N.J.-based developer of data protection software, reported in early February that revenue for its most recent quarter rose 19 percent over the same period a year ago, with software revenue up 16 percent and services revenue up 23 percent.
Users want to cut storage hardware equipment and delay purchases, something they can do using software features such as deduplication, said Dave West, vice president of marketing and business development at CommVault. "We look at ways to help customers control costs and extend the life of their infrastructures," he said.
Symantec does not break its revenue into separate product lines, but it saw a 7-percent year-over-year increase in storage software sales in its most recent quarter, said Bill Robbins, executive vice president of worldwide sales.
"I'm very optimistic about sales of our storage products as we go into the first quarter and first half of the new year," Robbins said. "Given all the economic conditions, we're seeing very good demand."
Compellent, which sells a storage platform closely tied to its management software, is seeing its business grow thanks to a channel-only sales model, said Brian Bell, vice president of worldwide sales.
For Compellent, the economic downturn is an opportunity. The company has not had to lay people off, and is still hiring in certain geographies, Bell said. "The stronger companies get stronger in a downtime," he said.
Storage virtualization software vendor FalconStor is also hiring, and added nearly 15 people in North America in the fourth quarter of 2008, said Reijane Huai, chairman and CEO.
FalconStor's replication software is cutting the cost of protecting data and preparing for disasters by helping customers move data between data centers regardless of which storage hardware is used, Huai said.
"We help position IT as a profit center, not a cost center," he said. "A lot of IT organizations consume a lot of storage. If we can help them optimize their resources from a hardware and management point of view, and can help them improve the disaster recovery and business continuity, IT will be seen in a different light."
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