Bright Spot In Gloomy Storage Biz: Sub-$5,000 SOHO NAS

Despite a general plummet in storage hardware sales, the SOHO NAS market is actually booming, according to recent Gartner data.

Total revenue from the sales of sub-$5,000 NAS appliances for the SOHO market in 2008 were up 64 percent over the revenue booked in 2007, said Pushan Rinnen, research director at Gartner.

And, unlike most of the rest of the storage hardware market, sales of the low-cost appliances are expected to continue to grow in 2009 over 2008, although at a more moderate 6.4 percent, Rinnen said.

Total storage hardware revenue for all of 2008 grew at an anemic 3 percent, according to IDC, with sales falling 5 percent in the fourth quarter.

Overall storage hardware sales plunged in the first quarter of 2009, falling 18.2 percent compared to the same period in 2008, IDC said.

Rinnin said that the growth in the sub-$5,000 SOHO NAS market in 2008 was a lot more than Gartner expected.

However, she did admit there was somewhat of an apples-to-oranges comparison between 2008 and 2007. "Some vendors we didn't capture [data from] in 2007, but we later found out did well, like QNAP in Taiwan, which sells mainly to Europe," she said.

In 2008, Netgear was the largest seller of sub-$5,000 SOHO NAS appliances, with sales of $98.7 million, up 128 percent over 2007. That gave the company a 28 percent share of the market, Gartner said.

It was followed by Buffalo Technology with sales of $44 million, down 47.2 percent; EMC's Iomega with sales of $38 million, up 69 percent; Hewlett-Packard with sales of $30 million, up 13 percent; and LaCie with sales of $25 million (percent change unavailable), according to Gartner.

In terms of units, Buffalo Technology led the market despite a 34.4-percent drop in shipments to 62,950 units, giving it a market share of 19 percent.

It was followed by Netgear with 52,255 units, LaCie with 50,000 units, QNAP with 32,900 units and EMC's Iomega with 19,392 units, Gartner said.

Netgear's rise to the top came as a result of its acquisition of Infrant Technologies in 2007, Rinnen said.

Buffalo Tech's drop in sales does not indicate that the company is slipping as a storage vendor, Rinnen said. "Instead, it's more focused on the consumer side of the market," she said. "Its 2007 SOHO NAS numbers might have been overestimated. For some products, there's not such a clear cut between consumer and business use."

The consumer side of the NAS market also did very well in 2008, and that bodes well for growth in the SOHO NAS sector, Rinnen said.

"Growth in the home market comes from consumers getting more digital content," she said. "Putting in network-based storage in the home for use by multiple PCs or as a central backup is a reality now. And vendors are making it easier than ever to use. And as these kind of consumers become familiar with the product, they'll start to use it for their home-based offices as well."

Drew Meyer, director of product marketing for SMB storage at Netgear, said SOHO NAS vendors are some of the biggest storage companies people have never heard of before.

Netgear, for instance, in addition to being the largest sub-$5,000 SOHO NAS vendor in terms of revenue, also is the sixth-largest vendor of unified NAS-iSCSI storage appliances, Meyer said, quoting Gartner numbers. However, once either EMC or NetApp acquires Data Domain, Netgear will rise to No. 5, he said.

Netgear also is the No. 3 vendor of sub-$25,000 NAS in terms of revenue and No. 2 in terms of shipments, Meyer said.

"Nobody thinks of Netgear as a major player in the sub-$25,000 storage space," he said. "Maybe they do in the sub-$5,000 space. So this will give VARs a reason to look at Netgear."

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