Pricing pressures, vendor competition and cautious buying decisions will limit storage revenue growth to single-digit percentages from 2005 through 2007, according to Gartner Dataquest's Global RAID Disk Storage Forecast, 2004-2007.
Gartner lowered its 2005-2006 external controller-based disk storage forecast from last August after "concerns about a soft second half of 2004 proved to be accurate," report author Roger Cox wrote.
"The fourth quarter of 2004 was particularly weak," Cox wrote. "HP continued to struggle on a year-over-year basis. IBM's inability to deliver the new DS8000 and DS6000 systems completely disrupted its traditional fourth-quarter surge. Hitachi/HDS and its partners — HP and Sun — are experiencing elongated selling cycles as users attempt to sort out the benefits of the TagmaStore's virtualization features. Only Dell, EMC, Network Appliance and StorageTek came through with results that mirrored the traditional fourth-quarter surge."
RAID vendors are also facing competition from server vendors, who are increasingly integrating host-based RAID technology into their base offerings.
Advancements in technology, the health of the global economy and the expanded use of storage management best practice methodologies are among the factors that will influence the 2005 storage market, Cox said. Other wild cards include an anticipated shortage of enterprise-class disk drives, whether HP can regain its momentum in the disk array market, and IBM's and HDS's ability to deliver on their commitments. HP's anticipated EVA and MSA refresh will likely push revenue into the second half of 2005, Cox wrote.
Any hard disk drive shortage could also have a bright side, with higher costs per gigabyte balancing any reduction in disk array shipments, Cox said.
While technology, management, compliance and recovery will help storage budgets "grow at a modest but consistent rate," Gartner said it "does not expect a killer application or industry to emerge that would cause the overall RAID-based disk storage market to exhibit vendor revenue growth beyond a low single-digit percentage."
"It is clear that chief-level executives are limiting storage infrastructure purchases to projects that lower operational costs and align IT with business requirements and government mandates," Cox wrote.
Gartner also released its 2004 revenue and market share estimates for the external controller-based disk storage market, following up on last week's IDC numbers (see table below).