External Disk Storage Systems Posts Sixth Consecutive Quarter of Year-Over-Year Growth, According to IDC

FRAMINGHAM, MA – December 3, 2004 – According to IDC Worldwide Quarterly Disk Storage Systems Tracker, worldwide external disk storage systems factory revenues grew 3.5% year over year to $3.4 billion in the third quarter of 2004 (3Q04), marking the sixth consecutive quarter of year-over-year revenue growth. Similarly, the total disk storage systems market continued to see positive overall trends, growing at 2.1% year over year, while storage capacity grew 50.5% year over year to 310 petabytes, achieving the largest growth rate posted over the last seven quarters.

"We are encouraged to see continued growth in disk storage systems, despite the lower rate when compared to previous quarters," said Brad Nisbet, program manager at IDC. "Conversely, we saw an increase in the growth of petabytes shipped, which is yielding the largest dollar per gigabyte pricing decline in seven quarters, and points to a growing share of higher-capacity, lower-cost disk drive deployments and a broader variety of products offered by the major vendors."

Total External Disk Storage Systems

EMC led the external disk storage systems market with 21.2% revenue share, driven by 17.4% year-over-year revenue growth for the quarter. HP, with a revenue decline of 7.5% year over year, came in second with 19.0% revenue share followed by IBM with 13.1% share. Network Appliance posted the strongest year-over-year revenue growth among the top vendors during the third quarter of 2004 with 24.6% growth, while EMC had the largest share point gains from the previous year, gaining 2.5 point of revenue share.

Networked Disk Storage Systems

The networked disk storage systems market (NAS combined with Open/iSCSI SAN) grew 17.1% year over year and surpassed the $2 billion mark for the second consecutive quarter. EMC continues to maintain its leadership in the total networked storage market with 28.9% revenue share, followed by HP and IBM with 23.3% and 11.5% revenue share respectively.

Similar to last quarter, the number 1 position in the Open/iSCSI SAN market continues to be hotly contested. HP and EMC were again locked in a statistical tie (with a 0.2 point share difference) for the top ranking in the market, which grew 17.8% year over year.

In the NAS market, which grew 14.3% year over year, Network Appliance led with 36.3% revenue share, followed by EMC with 34.8% share. Once again, HP posted the strongest year-over-year revenue growth among the vendors tracked by IDC, with 55.9% growth during third quarter of 2004.

The iSCSI SAN market again experienced sequential growth acceleration, posting nearly 44% revenue growth compared to the previous quarter. Network Appliance continues to lead the market with 43.1% share, followed by EMC with 22.1% share.

"Increased adoption of entry- and midrange networked storage (priced below $150,000 per system) drove the market for external disk storage systems up on an annual basis, compensating for a decline in high-end systems sales," says Natalya Yezhkova, senior research analyst, Storage Systems at IDC. "During the third quarter, the top vendors intensified their efforts to penetrate the midrange market through the introduction of new external storage systems and solutions targeted to specific customer and application segments. As a result of these efforts midrange networked storage posted both annual and sequential growth for the second consecutive quarter."

Top 5 Vendors, Worldwide External Disk Storage Systems Factory

Revenue, Third Quarter 2004

(Revenues are in Millions)

Vendor 3Q04 Revenue Market Share 3Q03 Revenue Market Share Revenue Growth 3Q04/3Q03

EMC $724 21.2% $617 18.7% 17.4%

HP $647 19.0% $699 21.2% -7.5%

IBM $448 13.1% $450 13.7% -0.6%

Hitachi $289 8.5% $296 9.0% -2.3%

Dell $237 6.9% $212 6.4% 11.9%

Others $1,066 31.3% $1,021 31.0% 4.4%

All Vendors $3,410 100.0% $3,295 100.0% 3.5%

Source: IDC Worldwide Quarterly Disk Storage Systems Tracker,

December 2004

Total Disk Storage Systems Market – Internal plus External

In the total worldwide disk storage systems market, HP maintained its lead with 23.6% revenue share followed by IBM with 20.6% share. EMC maintained the third position with 14.5% revenue share. EMC and Dell posted the largest year-over-year revenue growth among the top 5 vendors during the quarter, with 17.4% and 11.3% points gained respectively.

Top 5 Vendors, Total Worldwide Disk Storage Systems Factory

Revenue, Third Quarter 2004

(Revenues are in Millions)

Vendor 3Q04 Revenue Market Share 3Q03 Revenue Market Share Revenue Growth 3Q04/3Q03

HP $1,180 23.6% $1,262 25.8% -6.5%

IBM $1,025 20.6% $1,019 20.9% 0.5%

EMC $724 14.5% $617 12.6% 17.4%

Dell $358 7.2% $322 6.6% 11.3%

Hitachi $298 6.0% $309 6.3% -3.5%

Others $1,402 28.1% $1,354 27.7% 3.6%

All Vendors $4,988 100.0% $4,883 100.0% 2.1%

Source: IDC Worldwide Quarterly Disk Storage Systems Tracker,

December 2004

Taxonomy Notes:

IDC defines a Disk Storage System as a set of storage elements, including controllers, cables, and host bus adapters, associated with three or more disks. A system may be located outside of or within a server cabinet and the average cost of the disk storage systems does not include infrastructure storage hardware (i.e. switches) and non-bundled storage software.

The information in this quantitative study is based on a branded view of the disk storage systems sale. Revenue associated with the products to the end user is attributed to the seller (brand) of the product, not the manufacturer. Original equipment manufacturer (OEM) sales are not included in this study. In this study, Hitachi Data Systems (HDS) sales do not reflect their OEM sales to Sun Microsystems and Hewlett-Packard.