Strong demand for drives propels storage revenue

Disk-based storage revenue grew during the first quarter of 2008, with companies like Dell cashing in on the increased demand for storage

Despite a slowdown in server shipments, disk-based storage revenue grew during the first quarter of 2008, with companies like Dell cashing in on the increased demand for storage.

Revenues from disk-based storage systems totaled US$6.7 billion during the quarter, an 8.4 percent year-over-year growth, IDC said in a survey released Friday.

The growth in disk-based storage revenue was healthy despite the slow growth in server shipments, Nisbet said. The growth will continue to be healthy through 2008 as more data is generated, said Brad Nisbet, research manager at IDC.

"Customers are making a statement that even in these times of cautious spending, they really need to invest in devices that store business data," Nisbet said.

The capacity of disk-based storage reached 1,642 petabytes during the quarter, growing 51.8 percent over last year, IDC said.

Dell's increased focus on storage over the last two years paid dividends, with the company's 15.5 percent disk-based storage revenue growth in the first quarter of 2008 out-muscling rivals Hewlett-Packard and IBM.

HP was in the top spot, with US$1.3 billion in revenue, growing 6.9 percent year-over-year and boasting a 19.4 percent market. IBM was in second place, recorded a 4.9 percent revenue drop to $1.05 billion. EMC's revenue grew 14 percent to take third place, while Dell's disk-based storage revenues was $679 million.

The strong growth in Dell's disk-based storage sales came from the revitalization of its PowerVault storage line and the addition of the EqualLogic product line, Nisbet said.

Dell bought network storage company EqualLogic for US$1.4 billion last year after sensing that stored data would grow 600 percent to 1 zettabyte by 2011.

"In one fell swoop, Dell added US$34 million in revenue with EqualLogic. There's more to come," Nisbet said.

Dell also made a significant effort to revitalize its own PowerVault storage line to meet more simple storage needs. Dell also resells EMC's mid-range Clariion line but those sales have flattened, Nisbet said.

As Dell flourishes, poor execution are slowing growth of disk-based storage revenue for HP and IBM, Nisbet said.

"HP has a lot of great technology ... but they are so large and there's so much going on, they get in their own way in terms of execution," Nisbet said.

"Sometimes I wonder if their desire to integrate a large range of product lines is disabling their ability to execute," Nisbet said.

Disk-storage revenue includes revenue from three or more internal and external disk drives deployed on systems, including network-attached storage and storage-attached networks.

Revenue for disk-based storage will not be immediately impacted by arrival of flash-based solid-state drives (SSDs), Nisbet said. There's a lot of excitement around SSDs, but for now it will only appeal to customers who need performance and are willing to pay a premium for it.

"We don't believe it's storage for the masses, but Sun's approach for putting [SSDs] out there and letting the market dictate adoption could push it deeper into a broader set of opportunities," Nisbet said.

Sun earlier this week announced that it will offer SSDs later this year as a replacement for spinning disk drives on servers.

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