Storage Software Market Bounces Back

Revenue for 2003 hit $5 billion, up from the $4.6 billion recorded in 2002, said Carolyn DiCenzo, chief analyst at Gartner.

That includes the value of software from vendors that tie it to their array or switch sales, as well as from independent vendors. It is based on the value of the software sold by the actual developer of the software, not by any resellers. For example, Sun Microsystems was not in the top 10 despite storage software sales exceeding $100 million, as the vast majority of that software was made by partners such as Hitachi Data Systems, Legato and Veritas Software, DiCenzo said.

Leading the pack was EMC, with revenue of $1.4 billion, up more than 5 percent from the $1.3 billion sold in 2002. Both figures include sales of software from Legato, which EMC acquired last year.

No. 2 was Veritas, which had revenue of $935 million, up 4.8 percent compared with last year's $892 million. Veritas was followed by IBM, which captured the No. 3 spot with sales of $650 million, up more than 18 percent compared with 2002.

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Hewlett-Packard took the No. 4 position, followed by Computer Associates International, Hitachi, Network Appliance and StorageTek.

Two vendors joined the top 10 list for the first time, said DiCenzo. Symantec came in at No. 9 thanks to its recent acquisition of PowerQuest, while switch vendor Brocade took the No. 10 spot with its fast-growing device resource management tools, she said.

They replace Legato, which disappeared from the top 10 list due to its acquisition by EMC, and BMC, which last year exited the storage management software space, except for some mainframe software business.

Of the $5 billion in storage management software sold in 2003, $3.6 billion was sold by nonarray vendors. In this category, Veritas took the No. 1 position, with a 26.1 percent market share, followed by EMC at 20.9 percent and IBM at 14.2 percent, DiCenzo said.

For 2004, DiCenzo said she expects the market to grow at about the same rate as 2003. "We're back on target for growth," she said.

Part of the reason for the expected flat growth for 2004 is that the majority of growth in 2003 came during the fourth quarter, thanks to pent-up need, said DiCenzo. She also expects the first quarter to be the time of strongest growth this year.

Storage management trends to watch for in 2004 include more tools for managing data as it moves from expensive to less expensive media, as well as tools to block certain types of files, such as downloaded pictures and MP3 files, DiCenzo said. "These are not business-critical files," she said.

Also expect a big uptick in sales of software to manage the archiving of e-mails, especially with large attachments. "Things like PowerPoint slides, those that have not been accessed for some time, can be moved to other media," she said. "Disk space costs too much to store old slides, and every time a company does a backup, it makes more copies of them," she said.