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Compliance and digital-content growth drive content-storage market

In this research note, Yankee Group Senior Analyst Jamie Gruener describes the storage impact of recent compliance legislation such as the Sarbanes-Oxley Act.

Research note: Compliance and digital-content growth drive content-storage market
Published May 20, 2003
The Yankee Group

Over the last several years, the percentage of data considered to be digital content has accelerated, prompting a drive toward handling this data differently by considering its performance, production, access and delivery. At the same time, in response to increasingly stringent federal guidelines and regulations regarding data retention, enterprises have had to develop compliance strategies to properly save documents, files, and correspondence. The result is an emerging storage market segment, which the Yankee Group calls content storage.

Digital content has grown continually over the past five years, accounting for 18 percent of enterprises' total storage capacity in 2002 and growing to 39 percent in 2006. Over the last 18 months, storage-system vendors have begun offering storage systems that tackle different problems within this environment. It is important to note that the addressable market for content storage will remain much larger than the actual storage systems dedicated to this market, given that enterprises store much of their digital content in traditional, general-purpose storage systems, either network-attached storage (NAS) or storage arrays.

So what's different about a content-storage system? Specifically, content-storage systems provide a number of features not usually associated with traditional storage systems, including specialized software to index, archive, or serve up files based on specific requirements.

There are two evolving subcategories:

  1. Content-storage systems focused on meeting the needs of compliance
  2. High-performance storage systems targeting content in production or delivery, where content is changing or moving

More detailed analysis on the content storage market can be found in the Yankee Group Enterprise Computing & Networking report, "Next-generation storage systems target application requirements and efficiency."

Compliance-focused content-storage systems help enterprises preserve content to comply with regulatory rules, including files that must remain unchanged over time to protect data integrity. Examples include:

  • E-mail messages
  • Microsoft Office files
  • Patient medical records
  • Digital x-rays
  • Blueprints
  • Mechanical drawings

This segment, which today represents the lion's share of content-storage system revenue, is accelerating rapidly due to the tremendous pressure on enterprises to establish data-retention policies. In most cases, these systems typically store fixed, read-only data with unique identification mechanisms to determine age and owner.

Exhibit 1: Content-storage systems market

Market Name and Components Content-Storage Systems Market
Market Size (in Revenues) $160 Million in 2002, $1.3 Billion in 2006
Market Growth Rates (Raw and Percentage) 5-Year CAGR of 32% (one of the fastest growing storage system segments)
Market Leaders Network Appliance, EMC
Market Challengers Isilon, StorageTek, Spinnaker Networks and others

Source: The Yankee Group, 2003

Market analysis and predictions

Content storage is part of a much larger enterprise-driven need to comply with regulations that mandate data preservation. The evolving compliance market is growing rapidly into a multibillion-dollar opportunity, given the need for systems, storage-management software, and professional services targeting enterprises' needs to develop and enforce data-retention strategies.

Financial services, healthcare, biotech, and government agencies are likely early adopters of digital content technology because of industry-specific regulations. All public corporations also will be under pressure to preserve more financial data required for financial statement accounting, thanks to the Sarbanes-Oxley Act of 2002.

One cannot ignore the second driver of content storage systems: digital content itself. This includes data such as large video, audio, and other files available over a high-speed connection. This part of the market segment focuses much more heavily on performance, since the data here is not "fixed," it is data in production or delivery that must be made available and accessible very quickly.

Most of the content-storage systems we are focusing on have special features to improve management, scalability, and the speed at which users can access these files, both for delivery and for manipulation by one or more users at the same time.

Market leaders

  1. Network Appliance is the market leader for content storage, generating $85 million revenue in 2002 from its NearStore product line, a consolidated backup appliance that has proven to be an excellent platform for archiving and online backup.
  2. EMC has taken a different approach than Network Appliance, offering an object-based storage system called Centera that accounted $35 million of the overall market revenue in 2002.

Market challengers

  1. StorageTek, a market leader in the tape market, is targeting the content-storage market with its BladeStore system.
  2. Spinnaker Networks, a next-generation NAS vendor, has begun to offer a storage system targeting online backup and archiving, and is likely to get some attention from customers for its solid management tools and growing track record.
  3. Isilon Systems, a new startup focused on digital content storage, will be a market challenger in the second half of 2003 with its network storage system, initially targeted at the media/entertainment markets.

Vendor recommendations

  1. Market leaders will need to offer more than just advanced storage systems in the long term. Customers will need advanced software to assist in data retention and digital-content management, as well as professional services.
  2. Market challengers need to differentiate themselves aggressively to gain a piece of this market. The number of challengers will grow in the second half of 2003 and in 2004 as IBM, HP, and Sun more aggressively target this expanding market.

Enterprise recommendations

  1. Evaluate your data. Determine what your data-retention strategies are and make a list of system features and requirements you need to effectively store.
  2. Consider high-performance digital-content storage systems for specific requirements. Not all data is equal, and enterprises must consider how often they need to access and manipulate data, a growing consideration in the healthcare, entertainment, service provider, and biotech markets.

The above research note was reprinted by permission from The Yankee Group. Copyright 1997-2002, The Yankee Group. (To inquire about other Yankee Group research on the storage market, contact The Yankee Group directly.)

About the author:
Beyond his role at The Yankee Group, Jamie Gruener also answers reader questions and writes a monthly column on storage-related issues for You can also sign up to hear some advice from Jamie in a webcast, available after June 30, 2003, on the topic of handling the new data regulations.

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