Strong 4Q Buoys Storage Market

Worldwide sales of disk storage systems hit $5.4 billion in the fourth quarter, up 12 percent from third-quarter sales, according to a storage market report from research firm IDC. As a result, revenue for the full year ended up at $20 billion, down roughly 15 percent year over year but less than the 21 percent decline that IDC had initially forecast.

Kevin Reith, manager of strategic technology at Info Systems, a Wilmington, Del.-based solution provider, said he saw storage business pick up in the fourth quarter, and so far in 2003 sales have been "fast and furious."

There's a lot of pent-up storage demand left over from 2002, Reith said. "We have had more storage activity than expected. In fact, we are looking to hire two new storage engineers now. These are new positions," he said.

This year, sales have moved faster than engineers' abilities to keep up with their scope of work (aka statement of work) plans, Reith said. A scope of work details the services that a solution provider will provide, and the plan is typically prepared before the deal is closed.

"We're starting to see deals closed before the scope of work is produced. I don't advocate doing this; it's scary. But it's indicative of a strong run for a couple of years in storage. It's a leading indicator that business is improving," Reith said. "It's like in the 1990s, when salespeople would write on a sales order, 'quantity one, install network,' or 'quantity one, install everything.' That's a commentary on the times, when customers purchased just because [they could]."

In fourth-quarter 2002, the top storage vendor was Hewlett-Packard, with total revenue of $1.4 billion, up 6 percent over the previous quarter, according to IDC. IBM was No. 2 at $1.3 billion, up 34 percent from the third quarter; EMC came in at No. 3 with sales of $614 million, a 22 percent gain over third-quarter results; and Sun Microsystems was No. 4 with revenue of $297 million, up 17 percent from the prior quarter. Dell Computer finished fifth in the market with revenue of $287 million, up 3 percent from the third quarter, while Hitachi saw its sales fall 7 percent to $258 million during that period.

The SAN market had a 14 percent sequential gain in the fourth quarter, IDC reported. HP was the leading vendor with a 28 percent market share, followed by EMC with a 26 percent share. In the NAS space, Network Appliance was No. 1 with a 36 percent market share, followed by EMC with a 33 percent share.