Recession finally hits storage

The recession appears to have caught up with the storage market, which in the fourth quarter of 2008 finally started to show signs of slowing down.

According to IDC’s Worldwide Quarterly Storage Software Tracker, global storage software revenues in Q4 increased 3.6 per cent to $3.03bn (£2.16bn) over the same quarter a year ago. However, most vendors showed signs of slowed growth.

Meanwhile, IDC’s Worldwide Disk Storage Systems Quarterly Tracker revealed that factory revenues of disk storage systems declined 0.5 per cent year on year with revenues totalling $5.3bn in Q4 2008.

Aad Dekkers, chief marketing officer at system integrator MTI, fears that IDC’s assessment is spot on.

“The total disk storage systems numbers are affected by factors such as market conditions, increased competition, an increase in the number of external disk storage systems sold, and the decline in deployment of high-end monolithic storage systems which are being replaced by modular, less expensive models,” he said.

Ian Lock, storage practice lead at consultancy GlassHouse, agreed. “The findings of the report are certainly surprising and illustrate just how badly the global recession is affecting even the most resilient of IT market sectors,” he said.

“Projects are being cancelled, delayed or scaled back. This means storage assets being sweated for longer and IT departments being forced to
cut storage.”

Sign-off slowdown

Mark Klarzynski, chief executive of ID7, a new storage vendor to join the UK scene, said the storage market has definitely decreased over the last two quarters, due to businesses prolonging investment sign-off.

“Some feedback within the report even suggests this is a good thing ­ the hold back on organic purchasing has resulted in IT departments assessing their overall storage future,” he said.

Nick Broadbent, UK managing director of DataCore Software, agreed that managers are more reluctant to sign off what were previously considered organic IT spends.

“This used to simply involve throwing in more external disk to combat data growth on the network,” said Broadbent.

“Virtualisation and hence consolidation has transformed all that with IT managers able to meet the business data growth needs by re-utilising external storage solutions already in their network.”

Poor performance

The external disk storage sector was particularly weak in Q4, according to IDC. Revenues were $7.3bn, a decline of 5.9 per cent from the prior year’s fourth quarter driven by weakness in server systems sales.

Dekkers said external disk storage systems numbers are influenced by factors such as market conditions, increased competition, and the impact of storage efficiency technologies such as data duplication, thin provisioning and compression.

Sean Haffey, storage product manager at FSC, said there is no doubt that the external disk market is slowing.

“When things were booming 18 months ago it was a question of how fast you could go to market,” he said. “Now it is a case of how efficiently you can run.

“FSC has had success working with partners like Symantec to help people make their systems run more efficiently.”

Pierre Aguerreberry, head of Europe for i365.com, a Seagate company, said: “The traditional backup and recovery software market is dramatically shifting. We are experiencing an increase in the number of companies looking to move from tape-based technology to true disk-to-disk software and software-as-a-service (SaaS) solutions.

“As a result, many of the traditional disk-to-disk-to-tape vendors may have experienced slower than expected growth.”

Despite the slowdown, many resellers believe that the market still offers plenty of sales opportunities.

Ron Macleod, sales director at RAID controller vendor AMCC 3ware agreed that while growth in the market is slowing, it is not stopping.

“Now is an important time for system integrators and resellers to hone their service and support offerings,” he said.

Ray Quattromini, managing director of reseller Fortuna Data Systems, said: “We are seeing increased interest away from tier-one solutions that offer a far better ROI and are primarily open-sourced products.

“We are also seeing increased market awareness for tiered storage solutions.”

Andy Hardy, managing director for international sales at Compellent, said: “Resellers need to ramp up their knowledge of intelligent tiered storage as quickly as possible and ensure that it is a central platform for their customer’s future storage strategy.”