History (1999): Vast and Profitable Opportunities in NAS Market

Opportunity in the market for NAS is poised to explode.

This is the message of a special report newly released from IDC titled 1999 Worldwide Disk-Based NAS Market Opportunity.

According to the research company, revenues in this market will skyrocket from $540 million in 1998 to an astounding $5.1 billion by 2003 – growth of almost 54% per year.

“Recent buzz has focused on SANs and NAS has been almost entirely overlooked. However, NAS is equally compelling,” said Robert Gray, research director for IDC’s WW storage systems research. “The forces for NAS – the size of the desktop data explosion, the value of client data, and the demand for data security in the client LAN space – are equal to the data center forces fueling SANs.”

Market development will accelerate in late 1999 as first-tier server, disk drive, and networking suppliers enter the NAS market.

IDC divides the overall NAS market into 5 price bands: less than $1,000, $1,000-$5,999, $6,000-$24,999, $25,000-$100,000, and more than $100,000.

The fastest revenue growth will occur in the $6,000-$24,999 segment in the forecast period. This segment’s revenue growth will be almost 2x as fast as that of the overall market.

Despite the NAS market’s strong revenue growth in 1998, all vendors did not fare well. In fact, several were forced out of the market.

“Low-end NAS system suppliers struggled with product, volume, and access to market issues,” Gray said. “The strong revenue growth in 1998 was for products with average sales value above $25,000.”

Network Appliance, Inc. dominated the market with 41% of total revenues in 1998.

“Network Appliance has been very successful with end users in the Internet service provider industry, specifically with America Online,” Gray said. “The company has also rapidly developed a position in the transparent Web caching market with its dedicated WebCache Appliance product.“

Network Appliance’s nearest competitor was Auspex, with 21% of the market revenue share.

This article is an abstract of news published on issue 139 on August 1999 from the former paper version of Computer Data Storage Newsletter.