The disk storage systems market in the Asia-Pacific (excluding Japan) region in 2002 is estimated to be valued at $2,319.4 million. This was a slight growth over the 2001 market revenue of $2,257.9 million. In terms of capacity, this represented shipments of 57,757 TBs for 2002, an increase of 66.7% from 2001.

The three largest country markets in 2002-China, Korea, and Australia, remain the same as in 2001. However, China has since overtaken Korea to be the largest market in terms of revenue. Combined, the three countries accounted for 69.7% of the total Asia/Pacific (excluding Japan) disk storage systems market revenue in 2002.

The top six vendors in the overall Asia/Pacific (excluding Japan) disk storage systems market in 2002 accounted for more than 80% of the market revenue. Overall, HP was the market leader with 27.2% of disk storage systems revenue and 34.6% of TBs shipped. IBM was second with 23.5% of market revenue. It is interesting to note that the major server vendors, namely HP, IBM, Sun, and Dell were among the leading vendors for storage, benefiting from significant cross-selling opportunities in an adjacent product area. In comparison, the unique selling point of server-independent storage vendors, such as EMC and HDS, is their independence from the server platform.

Storage software and services are complementing storage hardware as a major value source. Major vendors are now focusing more resources on storage management software and services to differentiate from the competition, and to an extent, offset declining margins in storage hardware. Price per GB of storage continues to fall by more than 30% annually. The move is also boosted by demand from user organizations to network their storage resource to gain maximum business benefit.

Key observations of the market in 2002:

• Cost of disk storage continues to decline, driven by increased per unit drive capacities without corresponding price increases, as well as competitive pressures.

• Impact of the economic slowdown is still being felt. IT budgets have been tightened due to economic uncertainties, and companies have adopted a more cautious approach towards IT expenditure. In the Asia-Pacific region, the negative impact is expected to continue into 2003, partly due to the fallout effects of the war in Iraq, but more due to the outbreak of the severe acute respiratory syndrome (SARS) in the region.

• Server and storage consolidation marketing efforts have helped lift demand for storage solutions. Increasingly, sales strategies for storage solutions have also been focused around maximizing ROI.

• The influx of storage arrays using ATA drives has provided a cheaper alternative for user organizations that do not require the high levels of performance offered by Fiber Channel or SCSI drives. While marketed as a near-line storage offering, ever improving performance of ATA drives mean that they may be good enough for organizations seeking a low-cost storage solution.

• Partnerships and collaborative efforts continue to be a feature of the market as vendors seek to reduce time-to-market and to gain critical mass in order to offset high product and market development costs. Examples of co-branding and/or OEM arrangements include—HDS and Sun for the StorEdge 9900 series, HDS and HP, EMC and Dell, IBM and LSI Logic for IBM’s FAStT product line and StorageTek and LSI Logic.

• There is growing recognition that storage management is a critical element in the storage solution. IDC notes increasing interest in storage software in most Asia-Pacific countries as organizations struggle to manage and rationalize usage of existing storage capacity. In efforts to build up their storage software portfolios, major storage players have made strategic acquisitions of software companies. Recent examples include Sun’s acquisition of Pirus Networks and Terraspring, EMC’s acquisition of Prisa Networks, and IBM’s acquisition of TrelliSoft.

• Demand for storage is fuelled by the growth in storage-intensive applications such as email and collaborative applications, ERP and CRM, OLTP, data warehousing and data mining, as well as life science and geo-science. In addition, the increasing use of media types such as audio and video place additional demands on storage resources.

• The bulk of disk storage systems purchased is still directly attached to servers. However, IDC notes that there is a gradual but clear shift towards networked storage as awareness of its associated benefits has increased amongst user organizations.

IDC Report