Storage’s Ascent in Importance Sparks Lucrative Opportunities for Service Providers, IDC Says

FRAMINGHAM, MA – MAY 9, 2000 – Storage has a new role in many organizations. No longer is it thought of as a tactical, add-on technology. It has gained importance and is now often considered a critical strategic issue. As a result of its increased prominence, storage is creating lucrative opportunities for vendors that provide storage services, including consulting, integration, management, and support. IDC forecasts worldwide storage services spending will exceed $40 billion in 2003. In 1999, it was a bit more than $21 billion.

"As IT implementations have become more distributed and dispersed within organizations – often across regional boundaries – IT managers have become less in touch with their organizations' storage needs," said Doug Chandler, program manager for IDC's System Support Services research. "Their unfamiliarity, combined with the increasing strategic importance of storage, is propelling demand for outside providers of storage services."

According to IDC, Internet-based applications such as ecommerce and customer relationship management are contributing to storage's elevating role because they require quick access to large amounts of data.

In the United States, IBM is benefiting the most from the provision of storage services. It was the top storage services U.S. vendor with an estimated $3.6 billion of the market's revenues in 1999. Hewlett-Packard placed second with 1999 revenues of $1 billion.

Storage consulting will be the fastest-growing services category through 2003, increasing at a 1999-2003 compound annual growth rate (CAGR) of 32.6%, compared with the overall market's CAGR of 19%. Storage management or outsourcing will be a close second with a CAGR of 31.8%. Storage support services, however, will remain the largest segment of the market through 2003, according to IDC.

The storage area network and the storage utility segments will be particularly hot throughout IDC's forecast. "Along with the increasingly strategic importance of storage in general, the advent of storage area networks (SANs) is a key driver behind the growth in the storage services market today," Chandler said. "At the same time, the storage utility or storage-on-demand model could potentially transform the business of delivering storage capacity and associated services."

IDC's new report, Storage Services: An Analysis of Market Opportunities and the Competitive Landscape (IDC #B21862), analyzes the market for services that relate directly to storage devices. Analysis of storage area network and the storage utility outsourcing model is included. The report forecasts companies' spending on storage services through 2003 and provides historical data back to 1997. The forecast is segmented by four categories: storage consulting, storage implementation, storage management or outsourcing, and storage support, with special forecast extractions provided for SAN services and the storage utility market. The report examines market drivers, inhibitors, and other key trends. Vendor profiles are included as is IDC's Leadership Grid, which rates vendors based on their ability to gain share and opportunity alignment. Top U.S. storage services vendors' 1999 revenues are shown. To order a copy of the report, contact Cheryl Toffel at 1-800-343-4952, ext. 4389 or at ctoffel@idc.com.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of International Data Group, the world's leading IT media, research, and exposition company.

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