It’s the best of times for storage buyers

In a tougher-than-usual climate for enterprise storage vendors it may never be a better time for IT managers to open their purse strings.

The past few weeks have seen media pages peppered with profit warnings, impending job losses and tales of lower-than-expected sales as major storage vendors prepare their results for the third fiscal quarter in the U.S.

The third quarter in the Northern Hemisphere has traditionally been a tough quarter, according to Channel Tracker, the latest quarterly survey of U.S.- and U.K.-based resellers, systems integrators and distributors put out by Global Touch. But this time around it was tougher than expected as the profit momentum of enterprise storage market continues to tumble, the researcher said. The reasons given are a familiar refrain: customer delays, cuts over capital expenditure and stretched technology lifecycles.

When issuing a profit warning for EMC Corp.’s third-quarter results, chief Joe Tucci described IT spending as “brutal” and said he doesn’t see this changing in the near future.

In these tough times, analysts agree that it’s a “buyer’s market”, adding that IT managers take heed and not buy more than they need.

Gartner principal analyst for hardware platforms, Matthew Boon said that across the Asia-Pacific region Gartner is still seeing utilization of storage devices at 50 per cent.

“(At the moment) prices could be as low they can go,” Boon said.

Boon recommended IT managers that are negotiating deals “maintain a high level of competition and bring other players into the picture. Now is not the time to stay loyal to one vendor but engage with more than one (to bring prices down).”

Meta Group program director of server infrastructure strategies, Kevin McIsaac, said, “We never recommend buying more storage than you need or software licenses ahead of time as hardware and storage capacity (costs) declines over the year.”

Interestingly, but perhaps not surprisingly, one of the key findings of the latest Global Touch survey is that times are so tough vendors are competing with their own resellers in the drive to hit targets. Global Touch predicts an industry shake out.

“Without any sustained upturn before 2004, which we think is unlikely, radical changes may begin to occur in the IT market within six months. Why? Financial buffers from profits earned in the late 1990s ‘gold rush’ are long gone. What could we expect? Initially, look for waves of consolidation on the heels of liquidity challenges and opportunistic corporate IT projects or services buying into the first half of 2004,” the researcher reports.

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Jim Love, Chief Content Officer, IT World Canada

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