History 2004: Strong Pockets of Growth for Storage Software

The market for new license sales of storage management software (SRM) was $5 billion in 2003 and is forecast to reach $7.1 billion in 2008, a 7.3% CAGR, according to a new report from Gartner entitled Forecast: Storage Management Software, Worldwide, 2001-2008 ($195).

After its first-ever down year in 2002, the market recovered some of its lost ground and finished 2003 just slightly above 2001 levels. Assuming a somewhat stable geopolitical environment and improving economic climate, the market is expected to continue to see steady growth through 2008. 

SRM was the 2nd smallest segment in 2003, but is expected to record fast growth as enterprises look to better manage storage capacity use and begin to automate some of the management functions. It is expected to grow at a CAGR of 16.5%, taking the segment from $509 million in 2003 to $1.1 billion in 2008.

HSM and archiving will be the fastest-growing segment, driven by the need to take advantage of lower-priced storage options as data ages and to respond to data retention requirements while better managing total cost of ownership. It will grow at a CAGR of 27.3%, increasing from $234 million in 2003 to $781 million in 2008. 

Data replication is expected to grow at a CAGR of 9.4% as compliance requirements are added to recovery initiatives. This market is expected to grow from $1.1 billion in 2003 to $1.8 billion by 2008, with array-based replication products still the most significant contributor. 

Backup and recovery products will see only slight growth, with a forecast CAGR of 1.7%, taking the segment from $1.7 billion in 2003 to $1.8 billion in 2008. As the market matures, new customer sales will target the SMB market with lower price points and fewer high-priced options. The move to capacity pricing for disk backup options will help stem some of the revenue erosion. 

Device resource management will also see limited growth with a CAGR of 2.5%, taking the segment from $600 million in 2003 to $680 million by 2008. Device vendors will continue to improve their device management offerings, expanding them to include a wider set of vendor devices. Expect them also to package device resource management with vendor SRM tools to encourage customers to buy the wider portfolio of offerings. 

Core storage software remains the segment that includes various storage infrastructure technologies, such as volume management, file systems, access control and security products, as well as various disk management utilities. This segment is expected to report a CAGR of 2.8%, taking the segment from $886 million in 2003 to $1 billion by 2008. File system and volume management technology will be included in appliances and switches and will be embedded in other management products. Vendors will continue to merge the multiple point products into sets of products and into products reported in other segments to simplify the process and to deliver a total solution rather than components.