More global demand for networked storage

The worldwide market for storage systems accessed over a network grew in the second quarter of 2003, despite a drop in storage revenue overall, according to market researcher IDC.

In a report released on Friday, IDC said global revenue from storage systems accessed over a network grew 7.5 per cent to $1.78bn. The overall storage market shrank 3.9 per cent to $4.73bn, down from $4.8bn in the same quarter in 2002.

Typically, storage is attached directly to a server but the computing industry is moving gradually to networked storage that can be shared by more computers. The shared approach gives companies quick access to a larger fraction of the available storage capacity. It also permits them to take advantage of sophisticated data-protection features - for example, they can mirror data from a primary storage system on a secondary one miles away.

Networked storage falls into two broad categories: network attached storage (NAS) systems (which function like separate network elements that can store files) and storage area network (SAN) systems (which use a network but appear to a computer to be just another hard drive built into the computer itself). The worldwide NAS market shrank 8 per cent to $360m for the second quarter of 2003, while the SAN market grew 12.2 per cent to $1.42bn, according to IDC.

While the overall market shrank, sales in North America grew for the second consecutive quarter, IDC said. The growth indicates a turnaround in the region's market but the trend doesn't appear to be widespread, according to IDC researchers.

"We saw significant declines in Asia, particularly in Japan," John McArthur, group vice president of storage research at IDC, said in a statement. "The results are decidedly mixed, providing no indication of a near-term, global recovery in the disk storage systems market."

Other analysts have noted signs of strength in the storage industry. Investment firm RBC Capital Assets last month said that the factors at play include an increase in the amount of data to be stored, cost reductions in network storage offerings, and the drive by corporations to reduce data centre costs by consolidating servers and storage.

In the overall storage market, Hewlett-Packard was number one for the quarter, with sales of $1.26bn, or 26.7 per cent of the total market. Its share stayed about the same compared with the same period a year earlier.

In second place was IBM, with $967m in global sales. Big Blue's revenue grew 10.2 per cent, largely on the basis of 46.3 per cent sales growth to $198m in the SAN market, according to IDC.

Third-place EMC's sales fell by 6.9 per cent to $602m. EMC held on to the top rank in the networked storage segment, despite experiencing a 9 per cent drop in sales to $489m.

Worldwide storage revenue fell despite 36 per cent year-over-year growth in storage capacity to 181.6 petabytes shipped during the second quarter. (One petabyte is equal to a million gigabytes.) The disparity shows that the price for a given amount of storage capacity continues to drop.

IDC's study covered storage systems that had at least three disks, the hardware to control them and the cabling to connect them.

Stephen Shankland writes for CNET News.com. Dinesh C Sharma contributed to this report.