IDC: AP external storage market ended 2005 on a high

Strong demand for storage capacity across the Asia-Pacific region help the top three vendors HP, EMC and IBM increase their market shares.
Written by Jeanne Lim, Contributor

External disk systems vendors experienced a strong finish in 2005, shipping more units and raking in more revenues, according to a new IDC report.

The research company reported that revenue for external disk systems in 2005 increased by 22.4 percent over the previous year in the Asia-Pacific, excluding Japan, (APEJ) region, from US$1.57 billion to US$1.93 million

The October-December quarter was also the fastest-growing quarter for 2005, based on end-user revenue. Compared to the third quarter, which posted a growth rate of 15.8 percent, the fourth quarter grew by 25.4 percent over the same period in 2004.

The latest findings are in stark contrast with a December 2005 Gartner report, which noted a drop in the external disk storage revenue in the third quarter over the second quarter that year.

IDC also noted that demand for new external storage capacity increased dramatically in 2005, growing by 93.8 percent over the previous year. Total shipments of new external storage capacity in the region for 2005 increased to 147,955 terabytes, from 76,351TB in 2004.

In addition to new applications and storage-intensive data types, the availability and greater acceptance of larger capacity ATA disk drives, as well as a steady fall in the dollar price per gigabyte for fiber channel (FC) disks contributed to the spurt in demand, said IDC.

Graham Penn, associate vice president at the research firm's storage research division, said in a statement: "IDC expects to see continued strong demand for additional capacity in 2006, with growth in most countries across the region, especially in the mid-range market."

IDC reported that China dominated the region in terms of storage demand. External disk storage revenue in the mainland was US$551.8 million in 2005, accounting for 23.3 percent of the total APEJ market. Australia, with 14.7 percent share, and Korea, with 13.5 percent share, remained among the top three countries in the region.

IDC also noted that high growth rates for external disk storage systems in 2005 over 2004 came from the relatively small markets, including Indonesia, which recorded 51.9 percent growth; New Zealand, with 48.1 percent growth; and Thailand, which had 41.1 percent growth.

In terms of vendor share, Hewlett-Packard continued to dominate the storage market, while both EMC and IBM enjoyed strong growth rates in 2005.

Second-placed EMC achieved a 29 percent revenue growth to record 22.5 percent market share in 2005. IBM's share also increased, from 16.2 percent in 2004 to 19 percent in 2005, as a result of a 43.4 percent increase in revenue.

According to IDC, the timing of new product introductions by these major vendors had an impact on year-on-year growth rates and annual market share. Each of the major vendors gained strong sales from recently-introduced products, indicating high user acceptance of the new models.

Penn added that there is a growing trend for organizations to look into network storage solutions to expand capacity and add flexibility to existing storage installations, in order to increase asset utilization.

IDC's findings indicate strong continued demand for storage capacity in all countries across the Asia-Pacific, excluding Japan, region.

The research company noted in the report that organizations are continually working towards setting up disk storage systems to cope with the ever-increasing amounts of business and reference data.

Demand is also driven by the availability of affordable systems to support multiple tiers of storage that address data protection and business continuity requirements, as well as end-user demand for longer-term online active archives, said IDC.

A key 2005 trend for the storage market that is expected to continue in 2006 is the growing deployment of mid-range modular disk storage systems, coupled with the increased adoption of entry and mid-range networked storage systems.

According to IDC, users reported improved flexibility and cost effectiveness through the deployment of these systems, particularly in mid-sized and smaller organizations, and in many departments within larger organizations.

Networked storage continues to form the foundation for today’s business operations as it provides a scalable and flexible IT infrastructure. IDC’s latest findings show that external disk storage systems connected to servers via a Storage Area Network accounted for 71.7% of disk storage systems revenue in 2005. In contrast, Network Attached Storage (NAS) accounted for 9.6% of the total market and storage directly attached to a server accounted for 18.7% of customer revenue in 2005.

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