External Disk Storage Systems Growth Continues on the Strength of Network Storage Systems, IDC Finds

Business Wire, Sept 2, 2005

FRAMINGHAM, Mass. -- According to IDC's Worldwide Disk Storage Systems Tracker, factory revenue in the external disk storage systems market grew 8.6% year over year to $3.8 billion in the second quarter of 2005. The total worldwide disk storage systems market grew at a slightly higher year-over-year rate of 9.9% to $5.6 billion in the second quarter of 2005, marking the highest year-over-year growth in the last 8 quarters. Capacity continues to outpace overall revenue growth with total disk storage systems petabytes growing 59.3% year over year to 457 petabytes for the second quarter.

"The high growth for external systems represents continued investment in networked storage, while the growth in internal storage indicates richer configurations and increased sales of servers with 3 or more hard disk drives," said Brad Nisbet, program manager in IDC's Storage Systems program. "Storage continues to be an area filled with opportunity as many organizations become increasingly dependent upon the value of their business information."

Total External Disk Storage Systems

EMC maintained its lead in the external disk storage systems market with 21.2% revenue share, followed by HP and IBM with 18.8% and 13.8% revenue share, respectively. Dell edged out Hitachi for the fourth position with 8.3% revenue share while Hitachi ended the quarter with 7.3%. Three of the top 5 vendors had double-digit growth during the second quarter with Dell leading the way with 27.1% year-over-year growth followed by HP and IBM, each with more than 13% year-over-year growth. HP's strong year-over-year performance was due in part to an easy comparison, with an unusually weak second quarter in 2004.

"The top five vendors accounted for almost 70% of the external disk storage systems market - up from 68% a year ago, confirming the maturity of the market," said Natalya Yezhkova, senior research analyst, IDC Storage Systems. "Four of the top five vendors gained market share benefiting from the success of their midrange products."

Network Disk Storage Systems

The total network storage market (NAS combined with Open and iSCSI SAN) posted 16.1% year-over-year growth in the second quarter to nearly $2.5 billion. EMC continues to maintain its leadership in the total network storage market with 27.9% revenue share, followed by HP with 21.3%. Dell and IBM posted the strongest year-over-year revenue growth for the quarter among the top 5 vendors, with 33.2% and 22.9% growth, respectively.

The Open/iSCSI SAN market grew 17.8% year over year, surpassing $2.0 billion in revenues for the first time. Unlike the first quarter of 2005, there was no clear leader: EMC and HP were in a statistical tie for the first place position. EMC had 25.0% revenue share and HP had 24.8% revenue share for the second quarter. Dell and IBM posted the strongest revenue share gain among the top 5 vendors, with 1.6 and 0.6 year-over-year share point gain, respectively.

In the NAS market, which grew 9.5% year over year, EMC led with 40.2% revenue share, followed by Network Appliance with 35.2% share. The iSCSI SAN market posted nearly 140% revenue growth year-over-year. Network Appliance continues to lead the market with 41.6% share, followed by EMC with 26.0% share.

Top 5 Vendors, Worldwide External Disk Storage Systems Factory
                     Revenue, Second Quarter 2005
                      (Revenues are in Millions)

                Q2 2005    Market    Q2 2004   Market     Revenue
                                                           Growth
     Vendor     Revenue    Share     Revenue    Share    2Q05/2Q04
--------------------------------------------------------------------

EMC              $807      21.2%      $736     21.0%         9.6%
HP               $717      18.8%      $631     18.0%        13.7%
IBM              $527      13.8%      $465     13.2%        13.4%
Dell             $315       8.3%      $248      7.1%        27.1%
Hitachi          $278       7.3%      $281      8.0%        -1.1%
Others         $1,169      30.7%    $1,151     32.8%         1.6%

All Vendors    $3,813     100.0%    $3,512    100.0%         8.6%
Source: IDC, September 2, 2005

Total Disk Storage Systems Market - Internal plus External

In the total worldwide disk storage systems market, HP maintained its lead with 23.5% revenue share followed by IBM with 20.5% share. EMC maintained the third position with 14.4% revenue share. Similar to the external disk storage systems market, three of the top 5 vendors (Dell, HP, and IBM) outperformed the market in the second quarter.

Top 5 Vendors, Worldwide Total Disk Storage Systems Factory
                     Revenue, Second Quarter 2005
                      (Revenues are in Millions)

                  Q2 2005    Market    Q2 2004   Market     Revenue
                                                             Growth
     Vendor       Revenue    Share     Revenue    Share    2Q05/2Q04
----------------------------------------------------------------------

HP                  $1,313      23.5%    $1,152     22.6%      13.9%
IBM                 $1,146      20.5%    $1,013     19.9%      13.2%
EMC                   $807      14.4%      $736     14.5%       9.6%
Dell                  $463       8.3%      $365      7.2%      26.7%
Sun Microsystems      $339       6.1%      $378      7.4%     -10.4%
Others              $1,529      27.3%    $1,445     28.4%       5.8%

All Vendors         $5,596     100.0%    $5,090    100.0%       9.9%
Source: IDC, September 2, 2005