Favorable Climate for Storage Spending Drives Continued Growth in Worldwide Disk Storage Systems Market, IDC Finds

FRAMINGHAM, MA – June 3, 2005 – According to IDC's Worldwide Disk Storage Systems Tracker, factory revenue in the worldwide external disk storage systems market grew 6.7% year over year to $3.8 billion in the first quarter of 2005, marking the eighth consecutive quarter of positive overall growth. The total disk storage systems market grew at a slightly lower year-over-year rate of 6.0% in the first quarter. Capacity continues to outpace overall revenue growth with external disk storage systems petabytes growing 58.6% year over year to 409 petabytes for the first quarter.

The breadth of growth shows that demand for disk storage systems is on the rise, although seasonal variations caused first-quarter revenues to be less than fourth-quarter revenues. "Storage spending is clearly trending upward as organizations strive to stay ahead of their information storage demands," said Brad Nisbet, program manager in IDC's Storage Systems Program. "After nearly two years of positive momentum, spending on storage systems, particularly those priced less than $300,000, continues to be a top priority in the ongoing efforts to expand and rebuild IT infrastructure."

Total External Disk Storage Systems

EMC maintained its lead in the external disk storage systems market with 21.4% revenue share, followed by HP and IBM with 17.7% and 11.5% revenue share, respectively. Hitachi edged out Dell for the fourth position with 9.1% revenue share while Dell ended the quarter with 7.7%. Among the top 5 suppliers, Dell and EMC posted the strongest year-over-year revenue growth during 1Q05, with 29.2% and 12.2% growth, respectively.

"An analysis of top storage systems vendors performance over the past several quarters suggest that partnerships are becoming an important component of their market strategies," said Natalya Yezhkova, senior research analyst in IDC's Storage Systems. "This mutually beneficial approach allows each partner to offer more complete solutions for its customers and often opens a door to new market segments and leads to growth in revenue and market shares."

Network Disk Storage Systems

The total network storage market (NAS combined with Open and iSCSI SAN) posted 16.7% year-over-year growth in the first quarter to more than $2.3 billion. EMC continues to maintain its leadership in the total network storage market with 29.0% revenue share, followed by HP with 20.4%. Dell and Network Appliance posted the strongest year-over-year revenue growth for the quarter among the top 5 vendors, with 47.1% and 29.7% growth, respectively.

In the Open/iSCSI SAN, EMC became the clear leader in the first quarter with 26.7% revenue share, ending four consecutive quarters of sharing the number 1 position with HP. HP ended the quarter with 23.9% revenue share. Dell and IBM posted the strongest revenue share gain among the top 5 vendors, with 2.4 and 0.6 year-over-year share point gain, respectively. The Open/iSCSI SAN market grew 16.6% year over year, reaching nearly $1.9 billion.

In the NAS market, which grew 17.0% year over year, EMC led with 37.9% revenue share, followed by Network Appliance with 34.2% share.* (see Taxonomy Notes below) The iSCSI SAN market continues to show strong momentum, posting nearly 22% revenue growth compared to the previous quarter (4Q04). Network Appliance continues to lead the market with 43.3% share, followed by EMC with 28.6% share.

Top 5 Vendors, Worldwide External Disk Storage Systems Factory

Revenue, First Quarter 2004

(Revenues are in Millions)

Vendor Q1 2005 Revenue Market Share Q1 2004 Revenue Market Share Revenue Growth

Q1 2005/Q1 2004

EMC $808 21.4% $720 20.4% 12.2%

HP $668 17.7% $629 17.8% 6.2%

IBM $435 11.5% $398 11.3% 9.2%

Hitachi $345 9.7% $338 9.6% 1.9%

Dell $291 7.7% $225 3.4% 29.2%

Others $1,223 32.4% $1,224 34.6% -0.1%

All Vendors $3,770 100.0% $3,535 100.0% 6.7%

Source: IDC, June 3, 2005

Total Disk Storage Systems Market – Internal plus External

In the total worldwide disk storage systems market, HP maintained its lead with 22.5% revenue share followed by IBM with 18.6% share. EMC maintained the third position with 14.8% revenue share. Dell and EMC posted the largest year-over-year revenue growth among the top 5 vendors during the quarter, with 26.2% and 12.2% points gained, respectively.

Top 5 Vendors, Worldwide Total Disk Storage Systems Factory Revenue,

First Quarter 2005

(Revenues are in Millions)

Vendor Q1 2005 Revenue Market Share Q1 2004 Revenue Market Share Revenue Growth

Q1 2005/Q1 2004

EMC $1,230 22.5% $1,181 22.9% 22.9%

HP $1,020 18.6% $981 19.0% 19.0%

IBM $808 14.8% $720 14.0% 14.0%

Hitachi $444 8.1% $352 6.8% 6.8%

Dell $355 6.5% $348 6.7% 6.7%

Others $1,611 29.5% $1,577 30.6% 30.6%

All Vendors $5,468 100.0% $5,159 100.0% 6.0%

Source: IDC, June 3, 2005

Taxonomy Notes:

* IDC adjusted historical estimates of EMC performance in the NAS market by $115 million over the period Q3-2002 to Q4-2004. Previous IDC estimates of EMC's performance failed to include the base operating system required in EMC's Centera product, which IDC categorizes as NAS. All prior estimates of other NAS products tracked by IDC did contain the base operating system by definition. This adjustment ensures consistency of methodology across NAS products which IDC tracks.

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.

IDC's Worldwide Disk Storage Systems Quarterly Tracker is a quantitative tool for analyzing the global disk storage market on a quarterly basis. The Tracker includes quarterly shipments and revenues (both customer and factory), Terabytes, $/Gigabyte, Gigabyte/Unit, and Average Selling Value. Each criteria can be segmented by location, installation base, operating system, vendor, family, model, and region.