EMC, Veritas Battle For Lead In Storage Software

Storage management software vendors increased revenue to $5.6 billion last year, up 12.3 percent from $5 billion the prior year, Gartner reported.

Much of the growth came from storage resource management category, which grew 31 percent to $612 million, said Carolyn DiCenzo, research vice president at Gartner.

As it did last year, EMC was No. 1 on the list. It grew its storage software revenue 21.2 percent to $1.7 billion. "EMC really knows how to add software onto hardware and software sales and integrate it," DiCenzo said.

Earlier this month, Mark Lewis, executive vice president of EMC, told CRN his company expects to complete the integration of all its software products with consoles offering the same look and feel in the next 12 to 18 months.

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DiCenzo said it's an aggressive goal that customers want. "Clients hope the integration will exist," she said. "Maybe they don't want a single cockpit, but they want commonality to ease training."

Veritas Software was No. 2 on the list with sales of $1 billion. It remained the 800-pound gorilla in the backup software market with the No. 1 and No. 2 backup applications.

Symantec was No. 9 with $89 million in sales, mostly from its LiveState application. DiCenzo said when Veritas and Symantec combine into a single company, it will not make too much difference in the rankings, but she expects the merger will have a positive impact on Veritas' channel partners, despite worries by some VARs. "VARs get edgy with changes, and Veritas has been changing often so their VARs are always edgy," she said.

IBM was No. 3 with sales of $688 million, up 11.7 percent. DiCenzo said about 53 percent of that comes from the mainframe market, leaving just $300 million from distributed systems, mainly from its Tivoli Storage Manager offering and a small but fast-growing presence from its SAN Volume Controller virtualization appliance.

Computer Associates International, at No. 5 with $297 million in storage software sales, saw its revenue slip 9.5 percent in 2004. Like IBM, CA depends on the mainframe market for the bulk of its sales. About 95 percent of the remaining $125 million in storage software revenue comes from its ARCserve business, with a tiny portion coming from storage resource management, she said.

The fastest-growing of the top 10 vendors was Network Appliance. Its storage software sales grew 73.5 percent to $293 million, thanks to the strength of its hardware business.

Rounding out the top 10 were Hewlett-Packard, Hitachi and StorageTek.

The merger of Symantec and Veritas will leave room for a new No. 10 next year, and that will likely be CommVault Systems, DiCenzo said. The company grew its software business 61 percent in 2004 over the prior year.

DiCenzo said the picture changes significantly when excluding hardware-dependent software sales. In this case, Veritas was the runaway leader as all its revenue was hardware independent. EMC was next at $600 million, CA third at $297 million and NetApp fourth at $295 million.

Gartner counted NetApp's sales as hardware independent, despite how closely its software depends on hardware for sales because NetApp depends on non-array-based hardware, she said.

This year, DiCenzo said she expects to see a convergence between data backup, data replication and continuous data protection applications as customers look for better ways to recover data from disks.

"Replication will be used to increase the recovery time objective so that backed-up files can be recovered faster," she said. "They will use continuous data protection for their recovery point objectives, letting them recover files from a specific point in time."

DiCenzo said EMC and NetApp have done a good job building indirect channels, while Veritas and CA continue to struggle. "It's something they know they are weak in," she said. "CA has a new channel manager every year. But now they are putting in channel teams, which will help. And for Veritas, Symantec will be a big help."