US disk storage market slumps in 2001

In its first decline since 1998, the disk storage systems hardware market in the U.S. fell by US$5.7 billion, or 18.2 per cent, in 2001, according to a study from International Data Corp. (IDC).

The U.S. economic recession and the decline of dot-com companies, plus price competition in the U.S., sent the disk storage market into a slump that will continue to ripple throughout the worldwide market, IDC said in its report 2001 Disk Storage Systems Forecast and Analysis, 2000-2005, published Wednesday.

The consolidation of storage and server technologies, while creating efficiencies, has also driven down demand for hardware, IDC said in a statement.

Although the report predicts that the U.S. disk storage market will begin to show signs of recovery in the last six months of 2002, the market worldwide is expected to fall by 1.7 per cent in 2002, IDC said.

By 2003, the disk storage systems hardware market will again see worldwide growth of 5.2 per cent, the report forecasted.

Despite the general downturn in the market, IDC did point to pockets of growth in 2001, in particular in sales of networked storage systems which experienced gains of 8.3 per cent in 2001. Revenue for that sector of the disk storage market should reach about US$8.5 billion in 2001, IDC said.

Specifically, NAS (network attached storage) and SAN (storage area network) technologies are showing signs of growth within the networked storage systems sector, due to the benefits of storage consolidation and the need for efficient management of storage infrastructure resources, IDC said.

The IDC report echoes a study published earlier in January by Merrill Lynch & Co. Inc. forecasting that one of the top priorities in 2002 spending for IT departments will be storage, along with security, ERP (enterprise resource planning) software, disaster recovery, Web development and Windows 2000 from Microsoft Corp.

(IDC is a division of International Data Group Inc., the parent company of IDG News Service.)

IDC Canada in Toronto is at