History 2002: WW Storage Services Market to Reach $41 Billion by 2005

Storage capacity demand, BC requirements and managed storage opportunities will drive the WW storage services market.

The market struggled in 2001 with revenue of $25 billion, but WW storage services revenue is expected to start to recover this year and grow from $26 billion in 2002 to $41 billion in 2005, according to a new report Storage Services Worldwide Forecast, 2000-2005, from Dataquest/Gartner.

Hardware support accounted for the largest component of the storage services market in 2001, and will continue to be the largest component through 2005. It will continue to be the largest segment of storage services due in part to customers extending the life of their storage infrastructures as they try to hold off on new hardware purchases.

Although software support revenue is only a small percentage of overall storage services external spending, Dataquest anticipates that it will grow as customers buy more storage management software. This will not only affect software support revenue, but hardware support as well, as storage management and virtualization software can help users increase their per-device utilization rates allowing them to hold onto storage hardware longer.

“Improving storage use rates has been the mantra of most storage MSPs,” said Adam Couture, senior analyst for Dataquest’s IT services program. “One of the primary MSP value statements is that they can help their customers save money by increasing storage device utilization rate thus temporarily avoiding new storage hardware purchases. MSPs also tout more traditional outsourcing benefits, such as freeing up IT staffs from the mundane storage tasks of daily backups or delivering critical skills that individual IT departments may have difficulty bringing aboard either because of a market shortage of skilled professionals or internal hiring restrictions.“

Market forces will largely determine the growth of storage services opportunities. However, MSPs can have a considerable direct impact on shaping those forces and establishing themselves as market leaders.

“Storage service vendors must align their service portfolios and service delivery organizations according to the dynamics in the storage services market,” Couture said. “This means that many implementation, consulting and education and training opportunities will remain relatively flat, while storage management and hardware and software support opportunities will have more potential.”

“Many storage service providers are reporting strong growth in server and database backup services as well. In light of September 11, enterprises are putting more emphasis on their BC strategies than ever before,” he said. “Success with backup and recovery services can help storage MSPs and other storage service providers to demonstrate the value of storage outsourcing and ultimately lead to attaining the level of trust many clients will need before turning primary data responsibilities over to an outsider.“

This article is an abstract of news published on issue 170 on March 2002 from the former paper version of Computer Data Storage Newsletter.