Storage spending jumps 10 percent in the third quarter

Enterprises are reaching deeper into their pockets to add data storage capacity to their computer networks, according to an industry report released Friday.

Worldwide revenue for external disk storage systems rose to US$4.3 billion in the third quarter of 2006, a 9.9 percent increase compared to the same period last year, according to the research firm IDC.

This is the 14th consecutive quarter of storage revenue growth, a trend IDC attributes to more companies buying storage because of the demand to save more data, and to existing customers buying larger capacity systems.

"There is definitely a bump in the quarter on the systems side," said Brad Nisbet, manager of IDC's Storage Systems Program.

Sales growth has been particularly strong for midrange-priced systems while flat for high-end systems, Nisbet said. While the cost per megabyte of storage has continued to decline, the average selling price of systems has continued to rise because enterprises are buying larger and larger capacity storage.

The market share rankings of the top storage vendors were unchanged in the latest report.

EMC Corp. kept the number one spot with a 21.4 percent share on an 18 percent increase in revenue over the year-ago quarter to US$927 million. Hewlett-Packard Co. ranked second with a 17.6 percent share on only a modest 1.8 percent revenue increase to $760 million.

Third place went to IBM Corp., with a 13.7 percent share. Dell Inc., which sells co-branded Dell/EMC storage, ranked fourth with an 8 percent share, and Hitachi Data Systems Corp. was in fifth place with a 7.9 percent share.

The entire disk storage systems market grew 7.9 percent to $6.186 billion. In the overall market, the top five vendors, in order of share, were HP, IBM, EMC, Dell and Hitachi.

Also of note, the market for storage area network (SAN) technology grew 17.3 percent. The SAN market excludes sales of network-attached storage (NAS), in which servers are liked to just one storage appliance. SAN refers to a larger network of multiple storage devices that are grouped together as a single resource.

In particular, storage networks linked together with iSCSI (for Internet Small Computer System Interface) connections showed dramatic growth of 108.4 percent over the third quarter of 2005. IDC attributes that growth to the ease of use and low total cost of ownership of iSCSI-based networks compared Fibre Channel-connected storage.

The IDC report excludes sales of tape storage technology.

The IDG News Service is a Network World affiliate.