Enterprise Storage Revenues to Climb 13% in 2H11

Demand from the enterprise corporate segment for storage products including HDD) and SSDs is expected to rise a strong 13 percent during the second half of this year, with new server-oriented microprocessors contributing to the surge, according to the new IHS iSuppli report entitled: New Microprocessors to Boost Storage Demand in H2 2011 from information and analysis provider IHS.

Revenue in the second half of 2011 for the enterprise storage segment will climb to $4.67 billion, up from $4.13 billion in the first half. HDDs will account for 71 percent of total enterprise revenue during the period, equivalent to $3.31 billion, although HDD growth will be up only a scant 0.9 percent from $3.29 billion in the first half. The smaller – but far more dynamic – portion of enterprise revenue will come from SSDs, up a blistering 61 percent to $1.36 billion from $843 million.

In particular, new server microprocessors are helping to stoke enterprise storage demand. For instance, the Sandy Bridge microprocessor, released by Intel Corp. in January, is expected to be widely adopted in the second half of 2011. Intel also is releasing a next-generation microprocessor called Romley, an eight-core central processing unit, later this year.

Not to be outdone, chief Intel rival Advanced Micro Devices Inc. is readying for release the Bulldozer and Interlagos server chips, due in the third and fourth quarters.

With Intel accounting for 80 percent of the microprocessor market and AMD making up 12 percent, the new chips from both companies are expected to spur demand for server platform refreshes in order to update aging equipment, IHS iSuppli research shows. Apple Inc., for example, is reportedly planning to employ Intel’s Sandy Bridge for use in its Mac Mini Server and Mac Pro Server, while Facebook, Google and other major companies are planning to upgrade servers by the end of this year.

Aside from the release of new server microprocessors, other factors are helping to increase demand in the enterprise storage world. For one, the corporate market continues to push for server and storage virtualization to enable better functionality. Moreover, the thrust to build cloud infrastructure is gaining ground, now that big firms, after pulling in resources because of the recession, are inclined once again to invest in new technology.

Together, the upward momentum of these factors and the launch of new servers will help boost the enterprise storage and server segments in the second half, IHS believes. Compared to the enterprise segment with its greater reserves of company cash for resource outlays, the consumer storage sector has been weak, underscored by a slower storage uptake in personal computing because of a cash-strapped buying public.

An indication of the strength of the enterprise market is that even in the face of declining average selling prices, the enterprise segment will continue to generate revenue for the HDD and SSD storage industries, with positive results likely to carry forward until the first quarter next year.