Storage in the Year 2000, Part 1

The year 2000 was extraordinary for storage companies. The Y2K scare might have led companies to invest in technology projects, but once Y2K was over, companies began still more major IT projects, spending much of their resources in the storage sector.

Every year, Gartner Dataquest publishes the storage market hardware and software numbers. Dataquest generates these numbers by interviewing the vendors and crosschecking their assertions. Dataquest analyst Roger Cox, who tracks hardware results, presented his report at a recent Gartner Storage 2001 symposium. Cox's presentation, "Storage: The New IT Gorilla," addressed RAID-based server disk storage.

From 1999 to 2000, the overall RAID-based disk market grew from $25.7 billion to $30.0 billion—a Compound Annual Growth Rate(CAGR) of 35.8 percent. By comparison, the server market grew from $48.4 billion to $53.8 billion. Cox projects that in 2001, storage will grow by 39.0 percent to $34.2 billion, while server growth diminishes to $53.1 billion because of the current recession. From 2000 to 2005, the storage market will grow 21.6 percent while the server market grows only 5.0 percent. Sales of storage and servers should reach a rough equity in 2004.

Cox reported that in 2000, Internal RAID (captive disk) was estimated to be 23.6 percent of the $30.0 billion storage market ($7.1 billion). Compaq dominates this category with 30.9 percent, followed by IBM, 22.2 percent; Dell, 12.3 percent; Sun, 7.6 percent; Hewlett Packard (HP), 7.1 percent; white boxes, 8.7 percent; and others, 11.6 percent. Breaking down this category by platform gives Intel architecture 75.2 percent; RISC/UNIX, 14.4 percent; and proprietary platforms, 10.4 percent.

According to Cox, the worldwide internal RAID captive-disk market is expected to peak in 2001 and decline through 2005, while the external host-attached RAID storage will continue to decline steadily. The annual Direct Attached Storage (DAS) revenue is steady, with small declines expected through 2005. Fabric-attached storage numbers are expected to be larger than DAS numbers by the year 2005.

Host-attached external RAID comprised 14.9 percent of the storage market ($4.5 billion). In this category, RISC/UNIX accounted for 52.7 percent and Intel systems for 47.3 percent. Sun led at 31.6 percent, followed by Compaq at 27.3 percent; IBM, 17.6 percent; HP, 13.5 percent; Dell, 5.8 percent; others, 4.0 percent; and white boxes, 0.2 percent.

Cox calls the largest category in networked storage "external hardware RAID, controller-based storage." This category commands a 56.7 percent share of the market ($17 billion). EMC dominates with 34.6 percent, followed by Compaq, 10.8 percent; IBM, 8.1 percent; HP, 7.7 percent; Sun, 7.3 percent; Hitachi, 5.3 percent; Fujitsu, 4.9 percent; HDS, 3.4 percent; NEC, 1.9 percent; and Dell, 1.0 percent. Cox noted that in this category, Dell made its first top-10 appearance, and only Hitachi, HDS, and NEC failed to grow. EMC's lead grew by 4.4 percent. By architecture, external-hardware RAID accounted for 71.3 percent of the DAS market ($12.1 billion), and Storage Area Networks (SANs) accounted for 28.7 percent ($4.9 billion).

According to Cox's report, the worldwide Network Attached Storage (NAS) market comprised 4.8 percent of the storage market ($1.4 billion). Network Appliance accounted for $750 million, with EMC close at $530 million. Together, the two vendors had 86.2 percent of the overall market. According to EMC's Greg Eden, EMC's first quarter 2001 performance in the NAS market surpassed Network Appliance's total share.

EMC and Compaq both had very strong years. In terms of the number of systems attached to SANs, EMC claimed the lead on several platforms, including Windows, Solaris, HP-UX, and Linux. (EMC recently cut its projected 2001 growth figures from 35 percent to 20 percent, with its direct storage sales revenue increasing 25 percent.) Compaq claimed the lead in number of SANs shipped and was particularly strong in Windows-based SANs. Gary Wright, director of enterprise storage for Compaq's enterprise storage group, declined to speculate about Compaq's future performance, and Compaq's first-quarter earnings report doesn't break down the numbers into functional areas.

Although the storage market probably won't see another year like 2000 for a while, storage will continue to perform much better than most other IT segments in the current economy.