While disk array sales might have been slammed in the fourth quarter of 2008, IDC reckons that the very profitable business of selling software add-ons for storage devices managed to show some growth despite the economic slowdown.
Every quarter, IDC makes estimates of internal disk arrays bundled inside of servers as well as for external disk arrays that are shared by multiple servers. The company calculates that total disk storage sales fell by 5.9 per cent to $7.26bn in Q4, with external array sales down 0.5 per cent to $5.32bn and internal array sales, in sympathy with rapidly declining server shipments in the quarter, falling by 18.1 per cent to $1.94bn.
As has been the case in IT for many years, it is better and more profitable to sell software than hardware, and the companies that sell add-ons for storage arrays did comparatively better than their captive hardware units (if they have them). IDC believes that the storage software market posted its 21st consecutive quarter of growth in Q4, with sales up 3.6 per cent to $3.03bn. But there are some signs that even this market is starting to cool.
"The storage software market is starting to exhibit more of an impact from the economic trouble," explained Michael Margossian, a research analyst for storage software at IDC in a statement accompanying the quarterly sales stats. "Even with the usually strong fourth quarter, most vendors showed signs of slowing down, and in some cases declining year over year."
External disk array juggernaut EMC continues to rule this storage software roost, with $787m in sales in the quarter according to IDC, up 4.2 per cent. Symantec, thanks to its acquisition of Veritas, comes in at number two in Q4, with $556m in storage software sales, up 6.9 per cent. And while IBM was hammered in the storage hardware side of the biz, with sales down 22.7 per cent to $1.31bn, in the quarter, the company boosted storage software sales by 10.1 per cent to $401m. (Clearly, Big Blue is more focused on profits than on winning deals right now; it has also been severely impacted by the slowdown in its System x and entry Power Systems lines, which tend to use internal disk arrays among SMB customers.)
NetApp saw its sales for storage software drop by 5.7 per cent in the quarter, to $227m, and Hewlett-Packard saw a 5.2 per cent decline, to $135m. CA rounded out the top five storage software vendors, with $111m in sales, down 4.7 per cent. Other vendors, including a fairly large number of companies selling innovative storage arrays with sophisticated software for thin provisioning, snapshotting, replication, and other high availability, collectively accounted for $851m, up 3.5 per cent.
"On a yearly basis, storage-based software showed continuing growth when comparing like quarters year over year," says James Baker, IDC's research manager for storage software. "Particularly strong were the data protection and recovery, file system software, and archiving segments. However, same year Q3-to-Q4 comparisons are negative or neutral, reflecting the downward pressure from the worldwide economic crisis.
"The two largest segments - data protection and recovery software and storage replication software - dropped just slightly between Q3 and Q4." ®