IDC Says Storage Software Sales Driven by Replication

Published: September 21, 2006

by Timothy Prickett Morgan

The revenues in the disk array storage business might be driven by the hardware that provides the capacity that companies crave, but the profits in this business--as is the case with servers--are to be found in the software.

According to IDC, in the second quarter of this year, various vendors sold $2.5 billion worth of storage software--clustered file systems, data replication tools, and other add-ons to disk arrays that are commonly purchased by companies.

"With customers buying and installing record amounts of storage hardware capacity, the need for storage software has never been greater," explained Rhoda Phillips, research manager for IDC's storage software. "Among the larger sub-segments, the storage replication market has shown consistently strong growth over the past several quarters and is expected to continue growing for the next several years." Phillips said that storage replication software sales grew by 13.2 percent, and that sales of archive and hierarchical storage management software, which is a smaller market, grew by 32 percent since last year. "Buyers are particularly interested in replication software to help ensure that their disaster recovery and business continuity plans are viable, in planning for recovery from any unwelcome and unpredictable events that might occur," Phillips said.

EMC, which is the largest supplier of external disk array hardware, is also the leading supplier in storage software, with $654 million in sales in the quarter. But EMC's sales actually declined by 3.2 percent compared to the second quarter of 2005--in a market that grew 8.6 percent. So EMC is clearly under pressure. Symantec, which bought its way into this market through last year's acquisition of Veritas, a maker of file systems and volume managers, was the number two vendor in the storage software market, with $468 million in sales. And Symantec also saw its sales decline in the quarter, down by 1.8 percent. IBM, the number three player, saw its sales grow by 34.9 percent to $311 million--someone is getting bonuses at Big Blue. And Network Appliance, which makes sophisticated network-attached storage, saw sales rocket up 57.5 percent in its software business, hitting $222 million in the quarter. Hewlett-Packard sold $141 million in storage software in the second quarter, declining by 2.7 percent, while CA sold $140 million in such wares, an increase of 29.5 percent. All other vendors combined accounted for $543 million in sales, up 7.2 percent and making up just under 22 percent of the total storage software market globally.