Professional Services Firms Surpass Discrete Manufacturers as Largest Consumer in the U.S. Storage and Server Markets, Says IDC

FRAMINGHAM, MA – August 30, 2005 – IDC expects the U.S. professional services industry to surpass the discrete manufacturing sector as the largest overall consumer of storage and server technology by 2009, both in terms of dollars spent and spending growth rate. As a whole, the U.S. server market is estimated to reach $23.9 billion by 2009, with a 4.8% compound annual growth rate (CAGR) over the next five years, while spending on external storage systems within the U.S. will grow to $7.6 billion by 2009 with a 6.48% CAGR over the forecast period.

Driven by extensive infrastructure needs, hosted services, and application development in 2004, the professional services industry spent over $590 million on storage systems, and accounted for 13.5% of server sales within the United States. Professional services will continue to represent an attractive opportunity for server vendors due to its consistently high consumption of enterprise server equipment. "This assessment is not only based on the sheer volume of spending, but also from the sustained growth that this market will account for over the forecast period, especially in Linux and Windows," explained Dan Corsetti, senior analyst, IDC Vertical Market Research. "Similarly, sustained storage growth, especially in high growth areas such as SAN and NAS, leads us to predict that overall storage spending within the professional services industry will grow at a 7.9% CAGR by 2009."

One of the main drivers that will influence spending on storage and server equipment within the professional services industry will be the need to effectively manage an increasingly global workforce. Corsetti noted, "Given the people-intensive business of the professional services industry, top business issues center around empowering and connecting a disparate workforce. Achieving this goal has become more challenging as services companies seek to integrate offshore business centers."

In addition to the professional services sector, this pair of IDC studies reveals that spending within the discrete manufacturing sector will remain a close second in terms of overall spending on both the storage and servers. Healthcare is also cited as a high-growth, mid-size market opportunity for external storage vendors, with medical imaging needs and increased regulations requiring securely retained medical records functioning as the primary catalysts for growth. Likewise, the server market can expect to see an increase in spending from both the government and financial services sectors over the next five years.

IDC's U.S. Disk Storage Systems Market 2005-2009 Forecast by Vertical Market (IDC #33749) and U.S. Enterprise Server 2005-2009 Forecast by Vertical Market (IDC #33717) examine the U.S. market opportunity for external disk storage systems and enterprise servers by 16 vertical industries. Each study provides market size and growth over the five-year forecast period by industry, a discussion of current trends, and an indication of which trends will drive enterprise server adoption in the future.

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