| The
Top 10 Biggest (revenue) STORAGE companies in 2004 |
STORAGEsearch.com
editor's prediction - March 18, 2002
note - these are listed in
alphabetic order. |
| company |
products |
notes............................................................................... |
| Compaq |
storage
systems |
In
November
2001 - Compaq disclosed a market research report by IDC, saying that Compaq
had achieved the number one position in the 2001 global disk storage systems
market (internal and external), pushing ahead of EMC in terms of revenue,
terabytes sold and units shipped. This was reaffirmed in
January 2002
- when Compaq claimed to be the first company to ever ship more than 100
petabytes of disk storage in one year.
Compaq's revenue for the year
ended December 31, 2001, totaled $33.6 billion, a decrease of 21% from the
prior year, with a net loss of $785 million. But that's not far off break even.
If the economy recovers during the first half of 2002 there's little doubt that
Compaq will turn around and doesn't need to merge with HP. If the merger does go
ahead, Compaq, as the world's largest storage reseller, will be under pressure
to terminate many 3rd supply agreements and substitute HP product. That will
probably result in the bankruptcy of some external suppliers such as Exabyte. |
| Dell Computer |
storage
systems |
Adding Dell to
my original top 10 storage companies forecast in January 2001 was criticised by
some readers at first, but events have proved this to be one of my safest
predictions. In
February
2002 Dell confirmed that the company had sold 69% more storage capacity,
during the quarter ended Feb 1, than in the same quarter the year earlier.
External storage systems had increased to 47% of the sales mix. Earlier, in
May
2001 Dell disclosed that the company ranked #6 in storage sales, but #4 in
terms of capacity shipped. During the second half of the year, Dell undoubtedly
improved that position by one or two notches. In
October
2001 EMC announced a deal whereby Dell would become EMC's largest
reseller and work on defining future products. Dell doesn't really need EMC to
get where it's going, but the deal will help Dell get there faster.
My
view is that, of all the server companies, Dell is most likely to gain market
share in the storage market, and least likely to see leakage of storage revenue
from its installed base. The biggest threat to Dell would be some kind of
technical problem, in a storage product, such as
Sun's
cache memory problem in its SPARC servers during 2001. Those kind of
problems can quickly wipe away years of gains. But as long as the Texas company
avoids shooting itself in the foot, and maintains its current business model of
aiming to be the lowest cost producer, it will be a safe bet to assume that
Dell will be a top 10 storage company for a lot longer than this 3 year
forecast. |
| EMC |
RAID, SAN and
NAS storage systems |
How are the mighty fallen.
In January
2002 EMC reported that consolidated revenue for 2001 was $7.09 billion,
20% lower than 2000. Net loss for the year was $508 million. Although
still
ranked #1 in the external RAID market, as reported by Gartner, EMC dropped
10 percentage points down to 25% in 2001, and was overtaken by Compaq and Dell
in total storage revenue and shipments. I expect EMC will continue losing
market share through to 2004. In addition to its rivals at the high end, listed
in this article, there are hundreds of small to medium sized competitors gunning
for it, and many of these can nibble away at point products with better targeted
and lower priced solutions.
EMC did not take this market rebuttal lying
down. In October
2001 it announced a deal whereby Dell Computer would become EMC's largest
reseller. Short term, that will slow down EMC's decline, but long term I expect
that Dell will replace EMC with other tactically sourced products. Although it
would have seemed unbelievable back in January 2001, when the first version of
this list was compiled, EMC's projected revenue ranking in this top 10 list for
2004, is now close to the bottom. |
| Fujitsu |
RAID, flash
memory, hard drives and other diverse storage products |
A new entrant
to this list, Fujitsu is an unmemorable brand, for a big high tech company ($36
billion in annual revenues). But it's involved in a lot of storage product
segments. If you add all those bits together, they easily exceed the entry
level for making this list.
In 2001, IDC reported that Fujitsu had a
4.5% share of the external RAID systems market (giving it a rank of #7) and in
December
2001 Fujitsu quoted research from Gartner, saying it was the #2 supplier of
enterprise disk drives. Fujitsu's flash memory business didn't do so well in
2001, and in November, it closed down its Gresham, Oregon plant in response to
downturns in the cell phone market. But Fujitsu is still one of the world's
biggest suppliers of flash, and they are used in a lot of products in high
growth segments like solid state disks. Fujitsu's flash revenue is expected to
pick up growth again in the timescale of this forecast. |
| HP |
services,
optical storage, RAID, tape, storage software etc |
Despite public
enthusiasm by HP management about the storage market at the start of 2001, and
bold claims that it aimed to become the #1 storage company, HP's storage
revenue actually declined 13% year-over-year in 2001. The combination of the IT
recession and wasted management time involved in planning a merger with Compaq
did not help the company achieve the focus it needed to grow in the storage
segment. IDC rated HP the 3rd largest external RAID supplier in 2001 with 6.9%
market share. We expect that will shrink even more during 2002.
In
February 2001
HP launched its Federated Storage Area Management (FSAM), a software stragey
for managing network storage. In July 2001 - HP announced its acquisition of
SAN software company StorageApps. HP would have made our
top 10 Storage Software
Companies list, if we didn't exclude systems companies. The storage market
has become fast moving and very competitive, and HP is not the market leader in
any of the many storage segments in which it operates. If the Compaq merger goes
ahead, it can throw out competing suppliers like Exabyte (tape) and get
efficiencies of scale which could improve its profitability. But even without
the merger, HP grew its server sales during 2001, and when the recovery occurs,
it will lose less of its captive market to 3rd party storage companies than
other server companies. |
| IBM |
storage
services, RAID, memory, hard disks etc |
Although IBM's
revenue declined in 2001, the company claimed that revenues from its high-end
storage product line - Shark - grew year on year. In 2001 IBM was the second
largest external RAID supplier, but also the #1 in storage services. Having
invented the hard disk drive in 1956, IBM is one of the less than 10% of disk
drive manufacturers still surviving.
In December 2001, camera maker
Nikon announced that its Coolpix 5000 camera was compatible with IBM's
Microdrive. Many companies have speculated that in the long term, these kinds of
applications in consumer devices will be a bigger market for hard drives than
PC's and servers. IBM continues to innovate in other storage areas too. For
example, in
February
2002 - IBM introduced game changing memory technology that can effectively
double memory and increase performance in Intel architecture servers. |
| Intel |
flash memory
and entry level RAID |
Intel was hit
hard by the downturn in the PC market in 2001 and I wondered if belt tightening
would predicate the end of its foray into the RAID market. Not so, according to
our sources. As one of the world's largest suppliers of PC and server
motherboards, Intel has the potential to become the largest vendor of RAID
controllers and systems. Add that to a multi billion dollar flash memory
operation, and Intel has a secure place in this list. |
| Maxtor |
disk drives |
Maxtor started
2001 on an optimistic note. On April 2, 2001, Maxtor completed its merger with
Quantum Corporation's Hard Disk Drive Group, a transaction that created the
world's largest hard disk drive company in terms of units shipped in 2000.
Combined revenues from Maxtor and Quantum HDD were approximately $6 billion in
2000. But 2001 was a very disappointing year for the company. In the 12 months
ending December 29, 2001, the new "enlarged" company reported revenue
of $3.8 billion, and losses of over $646 million. An economic recovery in 2002
could benefit all hard disk vendors, Maxtor included. But if market share goes
to other disk competitors, then Maxtor will drop out of this top 10 list. |
| Seagate Technology |
disk drives |
The world's
largest disk drive company reported revenues of $6 billion in the 12 months
ending September 28, 2001, and was profitable. Seagate's network storage
subsidiary, XIOtech, started making progress of its own during 2001, and was
identified by this publication as one of the fastest growing US storage
companies. Seagate operates at the high performance end of the disk drive
market, and in FY2001 was the only supplier of 15K RPM drives. |
| Sony |
miscellanous
storage |
Sony has long
been a supplier of storage components including CD and DVD drives, tape drives,
tape libraries and memory sticks. As predicted in the January 2001 edition of
this article, Sony entered the NAS market in the 3rd quarter with its
StorStation™ family of products, aimed at bringing network storage
technology within the reach of consumer pricing. As the standards for network
storage systems become more established, the main barrier to market penetration,
systems software, decreases. I expect Sony will move up market with more of
its own branded storage systems. | |
| Companies
which dropped out of last year's top 10 list. |
- Cisco
Systems was one of the most publicly humiliated casualties of the 2001
recession. In the 6 months ending January 26, 2002, Cisco's revenue declined 30%
compared to the previous year. In the year since STORAGEsearch first proposed
Cisco for the top 10 list, revelations about management practises at Cisco
changed the perceptions about this company. It went from being an investors'
darling into being viewed with great suspcion, and 75% was wiped off the share
price.
Why's that important? Cisco has traditionally used its own
shares to buy strategic technologies, by buying other companies. Without the
ability to do that so easily, Cisco would need organic growth to establish
itself as a leader in the storage market. Unfortunately, the company has been
too busy in firefighting and survival tactics to do more than make a few passing
gestures at this important market segment. Many newer storage switch companies
have already passed Cisco in market development terms, and their momentum is
faster. But the newer companies don't have enough revenue yet to put them in our
list, and it may be the 2005 projection before that happens.
One
glimmer of hope for Cisco emerged during 2001. The rapid growth of interest in
iSCSI (in the top
10% of subjects accessed by readers in 2001) suggests a new lease of life for
good old IP switches. So if Cisco can survive in its traditional market, it may
get a revenue boost from this aspect of the storage market. To balance that
optimistic view, it's only fair to say that because of the recession and
emerging technology standards, the iSCSI market is still mostly at the tire
kicking stage with more hype than product. But "where there's hype, there's
hope" as some product marketers might say.
- Microsoft
was included in the Jan 2001 version of the top 10 storage companies list, not
as a software company, but because I expected they would dominate the storage
services market as as the #1 web storage company. Maybe they were reluctant to
spend more time in court, or maybe they're just biding their time, but that's
not the way the dot net concept panned out. So, as far as this list goes,
Microsoft goes back to waiting in the wings.
However, the company has
enough cash assets to acquire any web storage company in the future if it
chooses to do so, and could make a reappearance in this list at short notice.
Incidentally, Microsoft didn't make our reader based
top 10 Storage Software
Companies list in December 2001. So it's not going to come in by that route
without a few marketing miracles of the hearts and minds variety.
How about the storage start ups?.
The
recession in 2001 prevented any of the
VC funded storage startups
appearing clearly enough in my radar for the purposes of this article. But 5
companies in this category have received venture capital investments over $100
million, including 3PARdata,
DataPlay,
GiantLoop Network,
Sanrise and
Yipes. Another 11
storage companies in that list have received investments between $50 million
and $100 million at press time. It may take a few years of high market growth
before any of these companies become serious contenders for this list. But,
unless all the venture capitalists are wrong, it's likely that one of two will
eventually get there.
How about the software companies like VERITAS?
I'm
often asked, after publishing an article like this one, why I left out favorite
storage companies which seem big to our readers, but which don't make the list
because their revenue is too low. So here's a simple answer. Take the case of
VERITAS Software, which
was #1 in our reader researched list
the Top 10 Storage
Software Companies. For the 12-month period ended December 31, 2001, VERITAS
Software had revenue of $1.5 billion, compared with revenue of $1.2 billion, for
the year ended December 31, 2000, a 24% year-over-year increase. That's an
impressive performance, but is still an order of magnitude below the level
required to make this top 10 storage companies list.
Congratulations if your own company has been
listed!
If you're a marketer in one of the companies
listed in this article as the "10 biggest storage companies in 2004".
You can quote this fact and our long range prediction for 12 months from this
publication date.
Please make sure you get the spelling right, there
are lots of
storage portals on the
web, but only one of them is aimed at readers who aren't scared of mice. This
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