Storage market thrives in down economy

Customer buying fueled by digital information growth, efficiency needs

The storage market is thriving despite a tough economy, as exploding digital information growth has forced customers to add more capacity and upgrade to newer storage systems that are faster and more efficient, analysts say.

"It's a lot easier for customers to put off the purchases of servers, some software and applications, and even desktops than it is to put off storage purchases," says Charles King of the Pund-IT analyst firm. "Once a company moves into the digital world ... information just piles up. You've got to have some place to put it."

Worldwide disk storage shipments will double in capacity every two years through 2012, the analyst firm IDC predicts. Spending on disk storage is expected to top US$34 billion four years from now. The most important force behind this growth is "the emergence of content-rich business applications in areas such as telecommunications, media/entertainment, and Web 2.0," IDC reports.

EMC has profited from this spending spree, reporting 20 consecutive quarters of double-digit revenue growth. Storage vendors Brocade and NetApp each reported double-digit revenue growth in their most recent quarterly earnings.

Customers are finding new storage systems hard to resist partly because read/write performance has improved significantly more than microprocessor performance has for several years, King says. "Customers can really get great bang for their buck in buying new storage systems," he says.

Still, IDC analyst Richard Villars says he doesn't like to call any industry recession-proof. One potential weak point in the market is its reliance on storage-hungry social networking sites like MySpace, YouTube and Flickr. If the social networking market were to suddenly dry up, storage vendors would lose some revenue, he says.

But storage vendors have done a good job diversifying their offerings, and there are several factors fueling growth in the storage market, he notes. Customers are shifting from tape to disk-based backup, in order to gain faster recovery times. Plus digital information growth affects many industries. Hospitals are storing X-rays and other medical information digitally, while media companies convert music and movies to digital format, he notes. The need for increasingly powerful data analytics is helping storage vendors too, he says.

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Jon Brodkin

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