Not so sleepy ‘snorage’ market set to grow again

Storage has long been overshadowed by other, more exciting and dynamic market segments. It has been accused of being boring and even called derogatory names such as “snorage”.

But, all of a sudden, “snorage” is going off. The local storage market is expected to grow faster than the overall IT market during the five-year period 2005 and 2010, says research firm IDC.

The storage solutions market is expected to experience a compound annual growth rate (CAGR) of 5.9% over the period. The market accounted for revenues of $206.7 million in 2005 and this is predicted to reach $274.7 million in 2010.

And the storage services market is the real winner. It will have the strongest growth (CAGR 11.5%), while storage hardware is stagnating, mainly because of the competition and commoditisation of storage hardware components, according to a report by Ullrich Loeffler, information management solutions analyst at IDC New Zealand.

Disk storage is the only hardware component that will have a positive CAGR (1.9%), whereas tape automation, for example, will have a CAGR of -6.3%, IDC predicts.

Loeffler expects the storage software market to increase at a CAGR of 10.5%, mainly driven by demand for remote back-up solutions that align with business continuity requirements, he says.

Key drivers of the overall storage market are data explosion; the dramatic growth of email; regulatory compliance, and business continuity, says Loeffler. On the other hand, some of the strongest market inhibitors include return on investment (ROI) calculations and limited IT budgets.

Storage is seen by many companies as only creating cost and not bringing enough business benefits, he says. This creates an opportunity for storage solution vendors to provide storage consulting services to help customers maximise the ROI of their storage investments, he says.

“You can’t live without storage. [Companies] need to invest in it,” he says. “But, if [companies] find ways to manage and utilise the stored information, I think that ‘operational pain’ can be transformed into ‘strategic gain’.”

Around 38% of New Zealand companies planned to implement storage solutions in 2006, according to IDC’s New Zealand IT services and solutions survey. Storage was second on their lists, only beaten by business intelligence solutions, which close to 45% of surveyed organisations also planned to implement.