The storage business recovered strongly in the first quarter, showing clear signs that enterprises have shaken off the effects of the worldwide recession, at least when it comes to their fast-growing storage needs, IDC said Friday.
Factory revenues for disk storage systems grew 18.8 percent from a year earlier to US$6.7 billion, the research company reported. That figure includes both internal storage -- at least three disks within a server -- and external storage systems. The figure also includes solid-state disks, the flash-based alternative to spinning disks that is being integrated into some storage systems. For external platforms alone, revenue grew about 17 percent to $5 billion.
Even more significant than the year-over-year rise, which was partly caused by very low revenue in the depths of the recession in early 2009, was the change from the previous quarter, said IDC analyst Liz Conner. Typically, storage spending falls by double digits between the final quarter of one calendar year and the first quarter of the next, she said. This time, the dip was only 7.8 percent. Purchases that might have been made late last year happened in early 2010 instead, possibly a sign that companies' coffers were being filled in the first quarter, Conner said.
Storage revenue hit bottom in the second quarter of last year and leveled off in the fourth quarter. Now, Conner doesn't expect it to fall any time soon. Many enterprises are ready to start investing again, she said.
"Especially with storage, they might not have a choice," Conner said. "They're just outgrowing what they have. They need more."
In fact, the capacity of storage systems shipped in the first quarter grew 55.2 percent from a year earlier, totaling 3,397 petabytes, according to IDC. Demand for bytes grew even during the recession, with revenue declines probably caused by users turning to less expensive platforms, Conner said.
"We really did see kind of a shift from the higher-end price bands to more the midrange and entry-level," Conner said. "A lot of the midrange products were quite adequate for their needs."
It's too early to say whether that change represents a permanent change or just purchases of stopgap systems because of economic conditions, Conner said.
First-quarter revenue rose for all major categories of external storage, led by SANs (storage area networks) connected via iSCSI (Internet Small Computer System Interface). Sales of those networks, which can use familiar Ethernet technology, rose 45.7 percent from the previous year. Dell led that fast-growing market with about 37 percent of all revenue, and NetApp was the runner-up with about 14 percent.
But EMC remained the revenue leader in the external storage market as a whole, with nearly 25 percent of all revenue. IBM and NetApp were statistically tied for second place, each with around 11 percent. Third place was also a statistical tie, according to IDC, with Hewlett-Packard and Dell each taking about 10 percent of the market.
All the top five external storage vendors shared the benefits of the turnaround in the quarter, according to IDC. EMC enjoyed growth of almost 38 percent from a year earlier, while NetApp saw its sales rise more than 47 percent. All gained some market share too, except HP, which dropped from about 11 percent to 10 percent of the market. The company partly is suffering through a transition from a high-end product line to one with more midrange offerings, Conner said.