Report Results Cause Stir

Storage vendors raced to put their spin on preliminary market share numbers expected to be released by IDC this week, with Compaq Computer Corp. (NYSE: CPQ) and EMC Corp. (NYSE: EMC) leading the pack.

As they've done with previous market research reports (see Who's on First?), both companies put out press releases claiming undisputed leadership” in the storage market, based on IDC's figures. (See EMC: "We're No. 1" and Compaq: "We're No. 1".)

This is not quite how IDC's report, titled "Worldwide Disk Storage Systems Market Forecast, 1995 – 2005," puts it.

According to IDC's results, EMC’s time at the top of the entire storage market (counting both internal and external disk storage) was fleeting. The company rose to the number one position in 2000 to surpass Compaq as the top disk systems vendor.

In 2001, the story changed. EMC continues to suffer from pricing pressures brought on by the difficult economy and competitors such as IBM Corp. (NYSE: IBM) and Hitachi Data Systems (HDS), according to IDC.The research firm forecasts that while EMC just edged out Compaq in revenue for 2000, Compaq is expected to regain the top slot by about $400 million in 2001. The forecast leaves EMC, with 15.6 percent market share, trailing Compaq's 18.2 percent.

Sun Microsystems Inc. (Nasdaq: SUNW) and Hewlett-Packard Co. (NYSE: HWP) are also expected to see drops in revenue in the overall disk storage market in 2001. IBM Corp. (NYSE: IBM) will remain in the third position and will be the only company in the top five to see growth in 2001, the report says.

It’s not all doom and gloom for EMC, however. The storage giant remains the top supplier of external storage systems (those that connect to any computer operating system), capturing over 25.3 percent of the market. Compaq is second on 14.7 percent.

Nevertheless, IDC expects the external storage systems market to be down overall by 18.1 percent in 2001.

Overall, IDC predicts a robust market for internal and external disk storage over the next few years, with several key growth segments tagged to the integration of disk storage onto networks. But over the next five years, value will be concentrated not in the disk hardware itself but in the following areas: