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June 10, 2014

External Disk Storage Sees Massive Q1 Revenue Drop for 2014

Brands selling external disk storage devices are finding themselves in a dangerous situation, according to research from data analysts International Data Corporation (IDC (News - Alert)). According to a report by IDC, global revenues for external disk storage systems dropped massively in the first quarter of 2014.

The IDC report shows that manufacturers of external disk storage systems have seen a decrease of 5.2 percent from last year’s Q1 revenues, equivalent $5.6 billion. Disk storage, internal or external, isn't doing too well in the market either, with a 6.9 percent decrease from Q1 in 2013, and a 17 percent drop from the last quarter of 2013.

"The poor results of the first quarter were driven by several factors, the most important of which was a -25 percent decline in high-end storage spending," said Eric Shephard, Research Director, IDC Storage. "Other important contributors to the market decline include the mainstream adoption of storage optimization technologies, a general trend towards keeping systems longer, economic uncertainty, and the ability of customers to address capacity needs on a micro and short-term basis through public cloud offerings."

The drop in revenue for vendors has been seen across the top companies. EMC (News - Alert) has dominated the market, claiming 29.2 percent of the global external disk storage market. While seemingly insignificant, this is a 1 percent drop for the company's share of the market. EMC saw a drop of 8.8 percent in revenues in Q1, going from $1.798 billion last year to $1.64 billion. The second largest company, controlling 15.1 percent was NetApp. NetApp's drop was not nearly as hard as EMC's, with only a 2.8 percent decrease.

Tied for third place with approximately 8.8 percent were HP, IBM (News - Alert) and Hitachi. HP's revenue drop was a tiny 0.7 percent, and they did go up in market share from 8.4 percent. Hitachi saw a 6.8 percent loss. The company hit the hardest seems to be IBM. At the end of Q1 last year, IBM had 10.8 percent of the market share, and made $642 million. A year later, IBM dropped by 2 percent in its market share, and only made $497 million, a drop of 22.5 percent.

Other companies, while not nearly pulling in as much as the top 5, did not suffer, with IDC reporting a 3.7 percent increase in revenues for “Others”.

The drop in overall sales is the highest the market has seen since 2009, and begs the question as to whether there is a future for external data storage, at least on a consumer level. The proliferation of cloud computing services and new technologies may serve as a major threat to the market. 



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