Worldwide Disk Storage Systems Market Ends 2004 on Positive Note But Fourth Quarter Results Weaker Than Expected, IDC Says

FRAMINGHAM, MA – MARCH 4, 2005 – Worldwide external disk storage systems factory revenues grew slightly in the fourth quarter of 2004 (4Q04), posting just 1% growth over the same quarter one year ago to $3.8 billion, according to IDC's Worldwide Quarterly Disk Storage Systems Tracker. The total disk storage systems market grew at a slightly higher year-over-year rate of 1.8% in the fourth quarter, as internal storage revenues grew faster than external storage. Demand for disk storage systems capacity picked up considerably in the fourth quarter, however, resulting in 57.7% year-over-year growth in external disk storage systems petabytes. For the full year 2004, the external disk storage systems market posted 4.7% revenue growth over 2003 to $14.2 billion.

"The fourth quarter was the only quarter showing positive growth for internal disk storage systems during the year, largely due to strong server sales at the end of the year," said Brad Nisbet, program manager in IDC's Storage Systems Program. "However, it is encouraging to see continued acceleration in the annual growth rate for external disk storage systems petabytes, which grew 63% in 2004. With revenue accelerating, but at a slower pace, average pricing remains competitive during the ongoing influx of higher-capacity drives and applications."

Total External Disk Storage Systems

EMC maintained its lead in the external disk storage systems market with 22.0% revenue share, followed by HP and IBM with 19.4% and 13.1% revenue share, respectively. Hitachi and Dell rounded out the top 5 with 8.2% and 7.2%, respectively. Among the top 5 suppliers, EMC and Dell posted the strongest year-over-year revenue growth during 4Q04, with 15.2% and 13.4% growth, respectively.

For the full year 2004, EMC took the number 1 position, previously held by HP, with 21.1% revenue share. HP and IBM followed with 18.7% and 12.6% share, respectively.

Network Disk Storage Systems

The total network storage market (NAS combined with Open and iSCSI SAN) posted 11.6% year-over-year growth in the fourth quarter to more than $2.4 billion, the highest quarterly revenue recorded. EMC continues to maintain its leadership in the total network storage market with 29.0% revenue share, followed by HP and IBM with 23.7% and 11.2% revenue share, respectively. Network Appliance and Dell posted the strongest year-over-year revenue growth for the quarter, with 29.7% and 22.9% growth, respectively.

Similar to 3Q04, the number 1 position in the Open/iSCSI SAN market continues to be hotly contested. HP and EMC, each with roughly 28% revenue share, were again locked in a statistical tie for the top ranking in the market with just a 0.7% difference in market share. The Open/iSCSI SAN market grew 10.9% year over year.

In the NAS market, which grew 14.7% year over year, Network Appliance led with 36.9% revenue share, followed by EMC with 32.8% share. The iSCSI SAN market continues to show strong momentum, posting nearly 32% revenue growth compared to the previous quarter (3Q04). Network Appliance continues to lead the market with 38.9% share, followed by EMC with 25.6% share.

"In 2004, the market for iSCSI SAN grew beyond the $100 million barrier, led mostly by the adoption of midrange systems priced between $15,000 and $149,999," said Natalya Yezhkova, senior research analyst, IDC Storage Systems. "Open SAN and NAS also experienced a shift of revenue from high-end to lower pricebands, driven by the continuing drop in prices on disk storage systems and more competitive product offerings. During 2004, all the major vendors added new entry-level and midrange products to their portfolios, often accompanied by more sophisticated software offerings previously available only on high-end systems."

Total Disk Storage Systems Market – Internal plus External

In the total worldwide disk storage systems market, HP maintained its lead with 24.2% revenue share followed by IBM with 22.5% share. EMC maintained the third position with 14.5% revenue share. Dell and EMC posted the largest year-over-year revenue growth among the top 5 vendors during the quarter, with 15.8% and 13.4% points gained respectively.

For the full year 2004, the total disk storage systems market posted 3.2% growth to $20.9 billion. HP maintained its leadership with 23.6% revenue share, followed by IBM and EMC with 20.6% and 14.3% revenue share, respectively.

Top 5 Vendors, Worldwide External Disk Storage Systems Factory

Revenue, Fourth Quarter 2004

(Revenues are in Millions)

Vendor Q4 2004 Revenue Market Share Q4 2003 Revenue Market Share Revenue Growth

Q4 2004/ Q4 2003

EMC $ 844 22.0% $ 745 19.6% 13.4%

HP $ 745 19.4% $ 806 21.2% -7.5%

IBM $ 504 13.1% $ 633 16.6% -20.3%

Hitachi $ 315 8.2% $ 317 8.3% -0.5%

Dell $ 276 7.2% $ 240 6.3% 15.2%

Others $1,157 30.1% $1,068 28.1% 8.3%

All Vendors $3,842 100.0% $3,808 100.0% 0.9%

Source: IDC, March 4, 2005

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

Quarter 2004

(Revenues are in Millions)

Vendor Q4 2004 Revenue Market Share Q4 2003 Revenue Market Share Revenue Growth Q4 2004/Q4 2003

HP $1,411 24.2% $1,433 25.0% -1.5%

IBM $1,312 22.5% $1,437 25.1% -8.7%

EMC $ 844 14.5% $ 745 13.0% 13.4%

Dell $ 425 7.3% $ 367 6.4% 15.8%

Hitachi $ 324 5.6% $ 327 5.7% -1.0%

Sun Microsystems $ 304 5.2% $ 312 5.4% -2.4%

Others $1,218 20.9% $1,114 19.4% 9.4%

All Vendors $5,839 100.0% $ 5,734 100.0% 1.8%

Source: IDC, March 4, 2005

Top 5 Vendors, Worldwide External Disk Storage Systems Factory

Revenue, Full Year 2004

(Revenues are in Millions)

Vendor 2004 Revenue Market Share 2003 Revenue Market Share Revenue Growth 2004/2003