The technology industry may have an insatiable appetite for bits and bytes, but the storage services market is not fulfilling its anticipated growth, according to industry research firm Gartner. In "Market Share: Storage Service Market Leaders, 2007," a report authored by analyst Adam Couture, Gartner has revised its expectations for the storage services market, thanks to overall financial weakness in the United States.
"Overall, the worldwide storage market is softening, largely as a consequence of a weak U.S. dollar and a slumping U.S. economy," Couture writes. Last June, Gartner predicted that the external controller-based disk storage market would reach $22 billion by 2011. The research firm is now bringing that projection down to between $17 billion and $18 billion, but the long-term prospects for the overall sector are unchanged: Gartner still maintains its worldwide growth forecast of $35 billion in all storage-services revenue by 2011.
The report, which comprises only companies with more than $100 million in annual revenue, breaks out 2007's top three providers of storage services as follows:
- IBM (21 percent market share, retaining the top spot for another year);
- EMC (9 percent); and
- Hewlett-Packard (8 percent).
IBM may still be the world's top provider of storage services -- with a larger slice of the pie than the next two players combined -- but the battle for runner-up couldn't be more heated. "For two years in a row, EMC eclipsed HP for the number-two slot and was expanding its lead over the third-place rival," Couture says. "However, with the acquisition of EDS, HP will eclipse EMC in 2008 and establish a strong second-place position." Couture adds that the EDS acquisition should add $2 billion to HP's storage-services revenue in 2008. Meanwhile, Sun Microsystems has made moves, thanks to its 2005 acquisition of StorageTek, but not enough to overtake the top three vendors. Beyond that, the field gets splintered among several contenders: Nearly half (46 percent) of the storage services market falls in the category of "other," which includes smaller vendors, outsourcers, resellers, and third-party providers.
Aside from overall market share, the report also looks at speed of growth, with NetApp getting the nod as the fastest-growing provider of storage services. (Symantec and EMC also experienced steadfast growth within the past year.) Market segmentation for the sector includes maintenance and support services for hardware as well as software. "Storage service providers are selling into a large revenue opportunity," Couture writes.
The report points to the fact that vendors are aligning with service providers deemed most recognizable and stable. Although IBM enjoys a commanding lead in terms of market share, Couture writes, "[v]endors positioning themselves against market giants, such as IBM, should point out that IBM's leadership position is a product of its outsourcing and managed hosting operations. Without these, its storage service revenue share would align with its external controller-based array market share." He adds that, for hardware providers, strategic alliances and partnerships with managed service providers will be crucial.