Gartner: Storage Hardware Sales Up For Top Vendors

The worldwide external controller-based disk storage market grew in the second quarter of this year compared to the same quarter last year, but the growth was enjoyed by a handful of major vendors at the expense of their smaller peers.

Gartner Dataquest, the Stamford, Conn.-based research firm, on Thursday published a part of its second quarter research results showing the market for external controller-based disk storage, which includes hardware but no software or services, rose 4.3 percent over the same quarter of 2005 to reach a total of $3.6 billion.

However, while the top seven vendors saw growth during the quarter, the rest of the vendors aggregated under the "Other" category saw revenue drop by 4.9 percent over the year.

Donna Taylor, principal analyst for Gartner's global quarterly statistics program, attributed the skewed results to consolidation in the storage industry resulting from increased mergers and acquisitions activity and a push by top-tier vendors to grab market share. "Customers are looking to consolidate their storage, and to get compliance," Taylor said. "Anything the big vendors do to make it easier for customers to buy their storage will result in greater sales."

Of the top seven vendors, Network Appliance saw the fastest growth, with revenue up 22.2 percent over last year to reach $271.0 million, giving it seventh position overall.

One reason NetApp did so well was the growth overall of the NAS market, Taylor said. NetApp and EMC were in a virtual tie for growth in the NAS space, although NetApp's total NAS revenue far exceeded that of EMC, she said.

Overall NAS revenue was up about 30 percent over the second quarter of last year, compared to an overall growth of storage hardware sales of 4.3 percent. "This growth was due to a lot of new products being introduced," Taylor said.

EMC kept its customary lead with revenue of $859.2 million for the quarter, up 4.3 percent. That figure did not include sales of EMC storage through Dell.

IBM and Hewlett-Packard are neck-and-neck for second place, each with revenue of $526.7 million. For IBM that amounts to a 4.0 percent growth over last year compared to 1.5 percent for HP.

HP's growth, the lowest of the top seven vendors, reflects the fact that the other vendors are gaining more traction in the SMB storage space, Taylor said. " Other vendors are gaining more traction in the SMB space," she said. "HP is gaining more in the high-end space."

Hitachi and its Hitachi Data Systems subsidiary saw revenue grow 5.8 percent to $300.9 million, giving it fourth position. That revenue does not include sales via its reseller agreement with Sun Microsystems or its OEM agreement with HP, Taylor said.

Sun popped up to fifth place with growth of 13.8 percent, giving it a total revenue of $275.6 million. However, Taylor said, that growth rate is deceptive as this quarter's figure combines storage sales from Sun and StorageTek, which Sun acquired last year, but compares to Sun-only sales from last year. "It wasn't an apples-to-apples comparison," she said. "Next quarter we will see actual comparisons."

Dell came in at sixth place with revenue of $271.4 million, up 6.2 percent over last year.

With Sun at $275.6 million and Dell at $271.4 million, NetApp's growth of 22 percent to $270.0 million means that the vendor has the potential to shortly hop over the other two to reach fifth place.

However, said Taylor, nothing should be assumed based on one quarter's growth. "Sure, NetApp grew fast," she said. "But it started at the bottom. You can't say the 22 percent growth this quarter will absolutely catapult it into the top five. But its possible."

In the "Others" category, Apple saw both its revenue and its volume grow the fastest of the non-top-tier vendors, Taylor said.