Storage Management Strategies for the CIO
IDC this week forecast total disk storage systems spending to decrease 6.7% year over year in 2009, and to only increase approximately 1.5% in 2010. External disk storage sales are expected to decline 3.1% for the year, while overall disk storage capacity worldwide is expected to grow by less than 35% for the year.
At the beginning of this year, IDC's forecast was for 0.5% growth for external storage systems spending in 2009, but a decline of 1.7% for internal and external storage when taken together.
IDC now expects internal disk storage to fare worse than external systems during this decline. The research firm anticipates external disk systems capacity to grow 44% this year, which is below traditional annual growth rates in the 50% to 60% range.
Wall Street analysts' predictions are even more pessimistic. Aaron Rakers, an analyst at Stifel, Nicolaus & Co. Inc., said he saw direct-attached storage (DAS) capacity spending declining even more sharply, falling by double-digit percentages "in the mid- to high teens." Storage-area network (SAN) and network-attached storage (NAS) will still decline in the mid- to high single digits, he added. Kaushik Roy, a research analyst at Los Angeles-based Wedbush Morgan Securities, said he expected external disk storage sales
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to decline "by closer to 5% than [the] 3%" as IDC predicted. data storage capacity by implementing more aggressive tiered storage schemes or repurposing what they already have.
IDC didn't break out high-end vs. low-end disk numbers, but Stifel, Nicolaus & Co.'s Rakers said his market research has shown a similar emphasis on lower tiers of storage.
"The buying mentality is 'just in time and just enough,'" he said.
Overall IT cuts have a ripple effect on storage spending when projects that might have required more storage get deferred. Corporate downsizing also reduces the number of users generating digital content. Last November, IDC projected overall IT spending would increase by less than 1% for 2009.
While some of the slowdown in storage capacity might be related to technologies such as deduplication and thin provisioning that help improve utilization, Roy said "the macro-economy is the biggest factor. Even though things like data deduplication, thin provisioning and virtualization can help users buy less disk, they still have to buy the systems that can do it."
Natalya Yezhkova, research manager with IDC's systems storage program, said because of the current economy, organizations want to get more from the capacity they already own.
"People are starting to look more seriously at what they already have," she said. "Maybe if they bought more storage whenever they hit 60% utilization, they'll live with it for longer this year."
2010 outlook taking shape
Earlier this year, EMC Corp. CEO Joe Tucci and others in the industry said they expected a rebound in storage spending to begin in the second half of this year. But IDC's Yezhkova now said it will take until at least the fourth quarter to see any signs of recovery in the storage market. Storage purchases are usually seasonal, with lower sales in the first and third quarters and higher sales in the second and fourth quarters. She said there will be less fluctuation in spending this year.
"The second quarter will only be slightly higher than the first quarter," Yezhkova said. "We see recovery starting to happen in the second half, but leaning toward the fourth quarter."
Wall Street analysts are forecasting a modest growth to begin next year.
"Right now, we're trying to judge the depth of the valley" of the recession, Rakers said. "The enterprise can usually curtail storage spending from three to as many as six quarters. We expect modest recovery in the mid-single digits beginning in 2010."
Wedbush Morgan Securities' Roy agreed with that forecast, although he emphasized that next year's estimates are still only "guesstimates" that keep changing.
"Last year, OEMs didn't have much visibility beyond two to three weeks—now it's months," he said. "That's better than it was in the beginning of January, but it's still very limited. Any predictions beyond six to nine months are just a wild guess."
However, if International Monetary Fund (IMF) and U.S. Federal Reserve estimates about overall economic trends are accurate, Roy said he also envisions modest single-digit growth beginning next year.
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