EMC Dethrones HP As External Storage System Market Leader

Dell, EMC and Network Appliance were the fastest-growing suppliers of disk-based storage systems worldwide last year, while HP and Sun posted the most noteworthy declines, according to a report released by market researcher IDC on Friday.

For the previous year, HP experienced the sharpest decline in the overall disk-storage market, contracting 5.6 percent in 2004. HP's overall storage systems revenue for the year was $4.9 billion, down from $5.2 billion in 2003. While still the market-share leader, HP's piece of the pie is down to 23.6 percent from 25.8 percent in 2003.

Among other things, HP has felt the effects of its botched implementation of a new SAP order-management system, cutting supplies of servers and storage systems to the channel. And on the high end, Hitachi Data Systems was late in rolling out its new TagmaStore system, which also didn't help HP or Sun, IDC analyst Brad Nisbet said.

"We had some challenges over the past year, and that's why the year-over-year comparisons don't look favorable," said Patrick Eitenbichler, director of marketing for HP's StorageWorks line. "[But] we are definitely moving in the right direction."

An imminent refresh of HP's line of storage products, and the addition of new channel sales and support personnel should lead to an improved year, Eitenbichler said. "We feel confident that the changes we are working on will help us gain momentum moving forward," he said.

The largest beneficiaries of HP's decline were EMC and NetApp, with growth rates of 18.4 percent and 26.8 percent, respectively, though the latter was based on total revenue of $726 million last year. EMC's increase, though substantial, was based on slightly under $3 billion for the year.

EMC also saw its market share jump from 12.5 percent in 2003 to 14.3 percent last year. The longtime leader in external RAID systems (all of its disks are RAID-based), EMC's growth, combined with HP's decline, made it the leader in overall external disk-storage systems. In overall external disk-based systems, EMC posted an 18.4 percent growth rate, compared to HP's decline of 6.3 percent. It is the first time HP lost its lead in external storage system sales since its acquisition of Compaq in 2002, IDC's Nisbet noted. "EMC is definitely executing well on many fronts," Nisbet said.

For example, EMC's new offering in the virtual tape and backup market with the Clariion Disk Library has been a huge success for the vendor, said Tom Joyce, vice president of EMC's platforms business. "Our objective was clearly to come out in the top spot in external storage revenue and maintain and grow our position in external RAID revenues," Joyce said, adding he's confident EMC will be able to hold onto the top spot.

EMC's own growth doesn't even include systems co-branded by Dell, which grew its total storage systems by 17.3 percent, accounting for $1.5 billion. Those sales were primarily Clariion systems, Nisbet said.

Sun, whose revenue was $1.2 billion, declined 4.7 percent while Hitachi Data Systems was relatively flat with a .4 percent increase of $1.3 billion, though its market share declined slightly to 6 percent from 6.2 percent year-over year. IBM, whose year-over-year growth of overall systems was 1.3 percent, though its share of external disk-storage systems dropped 4.3 percent, which Nisbet attributed to its delayed shipment of its new high-end systems, the DS-6000 and DS-8000.

The total storage system market grew just 3.2 percent, just shy of $21 billion. For the current year, IDC is forecasting storage system growth of about 4.5 percent.