Disk storage vendors hit by sales drop
The disk storage market is the latest casualty of the recession. Worldwide sales for storage vendors in the first quarter of 2009 dropped 18.2 percent to $5.6 billion from $6.8 billion a year ago, according to a report from research firm IDC.
The market includes vendors such as IBM, Hewlett-Packard, and Dell, which sell complete disk storage systems to enterprise customers. IDC blamed the decline on the overall downturn in total server sales.
Among the top five vendors, HP fared the worst, hit with a 25.8 percent drop in sales to $975 million from $1.3 billion a year ago. IBM saw its disk storage revenues sink 21.7 percent $811 million from $1 billion. Dell was next on the list with sales of $660 million, 17.2 percent lower than $797 million the previous year.
The news wasn't all bad, noted IDC, since total disk capacity used by companies worldwide shot up 14.8 percent to 2,146 petabytes.
"The disk storage system vendors are really seeing the impact of the global economic downturn in the first quarter revenues," Steve Scully, research manager for enterprise storage at IDC, said in a statement. "However, while total revenues declined year over year, the overall storage capacity shipped continued to grow. These contrasting results are due to a combination of currency implications, lower overall sales, shifts in product mix, and aggressive pricing actions."
Despite the sour economy, companies still need disk storage, notes the report, but are opting for systems in the low and middle price tiers.
"Entry-level price bands ($0K - $14.99K) showed 9.9% year-over-year growth and the midrange price band ($15K - $49.99K) was flat year over year," Liz Conner, an IDC research analyst, said in a statement, "supporting IDC's belief that storage products are still in demand, with customer spending trending towards more modular, price point options."
The disk storage market is in the midst of another battle, with vendors EMC and NetApp fighting to acquire Data Domain. A top supplier of deduplication systems, Data Domain has been one of the few companies in its industry doing well despite the global downturn.
The report was put together by IDC's Worldwide Quarterly Disk Storage Systems Tracker, which analyzes the global disk storage market each quarter.
Lance Whitney wears a few different technology hats--journalist, Web developer, and software trainer. He's a contributing editor for Microsoft TechNet Magazine and writes for other computer publications and Web sites. You can follow Lance on Twitter at @lancewhit. Lance is a member of the CNET Blog Network, and he is not an employee of CNET. 
Less computer sales obviously means less harddrive sales.
Unless people just buy them for the hell of it?
First off, we're talking enterprise-class storage, not consumer storage (as in: I sincerely doubt that Joe Sixpack runs out and buys a NetApp cluster and a couple of racks for his home network).
Second off, over time (assuming you've worked in or around the IT industry), you would have noticed that storage prices have dropped like a rock over the past few years. This drop has been masked by industry growth, but now we can see it raw.
There was once a time when you (almost literally) weren't allowed to buy an EMC rig without training in its use, and if it were anything other than entry-level gear, you weren't allowed to touch it at all (a technician came out and did that for you). You were lucky if you got 768GB (not TB, GB) of storage for less than $100k (and got stuck with a 30k/yr maintenance contract).
Disk storage demand has gone up, naturally... HIPAA, SOX, and ISO (insert number here) , and a boatload of other acronyms that mention mandatory data retention has driven a huge chunk of that... :)
If I can't get the sale price in the store at time of purchase then I do not buy it.
Why are OEM hard drives not sold in boxes VS retail?
OEM drives are cheaper because they are bought by the thousands.
- by magusat999 June 5, 2009 9:55 AM PDT
- Where is Seagate / Western Digital on the chart?
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- by Random_Walk June 5, 2009 10:44 AM PDT
- "Where is Seagate / Western Digital on the chart?"
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(6 Comments)Another aspect to consider is the price of software which means less demand; the availability of media to place on the drive, and restrictions which re getting tighter and tighter (for example DRM protected media, which usually carries a price-tag to go along with it; less available, affordable software, such as PC games and common applications. People simply have less to put on a drive, so of course they are going to stick with the old one, and you can only fill an app with so much fluff before people just reject it out of hand.
Merging software companies also contribute to less reason to buy a new drive. For example, until Autodesk went crazy and purchased both Maya and Softimage, people who were trying to learn skills necessary to enter into the 3D fields had to have 3dsmax, Maya and XSI installed (if they could afford it). Now that the same company has all three, artists would rather choose the best one form that company - we don't trust that Autodesk will continue to support and allow all three products to grow independently. So if you count the application space, plugins, textures, renderers and other 3rd party helper software that adds up to a massive amount of hard drive space that is now available. Why buy another hard drive? This one is still half-empty.
Another thing is that disk storage vendors are stuck. You buy the largest drive you can find, and maybe an external. If it fails on you, you won't buy from them again. So that means you expect long life out of a drive, and you won't upgade unless you absolutely run out of room - which for some means they have to stop selling dvd recordables too, because you burn it off and continue to use the drive. So they cannot do what software companies do - break the app, or let it get out of date and then come out with a new version. What they are doing, though, is raising the prices so high to offset the fact that they do not benefit from constant turnover that it is biting into their unit sales.
My advice to them is to stop trying to dominate the world. Just make and sell what they can, and keep the company small. Stop overspending on things not related to the direct business, and find a way to lower prices so that a drive doesn't cost as much as a whole computer. If they want to make more money, make and sell other products.
Enterprise, not Consumer. Think "SAN" and not "disk".