Disk storage vendors hit by sales drop

First-quarter sales slump 18 percent to $5.6 billion, with the pain spread among the likes of IBM, HP, and Dell. Total disk capacity at businesses, however, is up.

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.

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