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Storage Growth Still Hot

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Buoyed by the momentum for products that help enterprises adhere to
new government regulations about record-keeping, the storage software market posted a 17.7 percent growth in the fourth quarter 2003 year-over-year, according to market research firm IDC.

Storage software sales for Q4 2003 totaled $1.78 billion. For the year, revenue grew 8 percent year-over-year in 2003, which was nearly half a billion dollars in new sales in the market.

That sales of storage software have blossomed more than they have in several years should perhaps come as no surprise. New strategies, such as information lifecycle management (ILM), have been created by leading vendors such as EMC and HP to help their customers cope with more stringent demands on record retention in the wake of accounting scandals.

Several acquisitions made in previous quarters are also no doubt bearing fruit, as EMC has integrated data archivist Legato Systems and enterprise content management software player Documentum. HP earlier acquired Persist Technologies to bolster its ILM strategy.

All this is doing is creating more opportunities for storage software makers to move deeper into data centers, as new layers of storage management are becoming defined. IDC analysts see it as a true sign that the market is moving away from the dot-com bubble-bursting downturn.

John McArthur, group vice president of Storage Research at IDC, said as sectors begin to move away from the most recent downturn, the storage software market is enjoying the positive effects of data centers, which are investing heavily to secure, manage, and protect their digital assets.

IDC found that EMC led the market in Q4 with $563 million in sales, good for a 31.7 percent revenue share, while VERITAS Software
secured the second position with 21.9 percent on sales of $389 million. With $174 million, Computer Associates came in at a distant
No. 3, followed by IBM and HP, which
posted $148 million and $141 million in revenues, respectively. However,
HP’s sales growth ballooned 28 percent from Q4 2002 to Q4 2003, good for
most momentum in Q4.

For all of 2003, EMC nearly topped $2 billion in sales, reaching the $1.93
billion mark. VERITAS came in at $1.3 billion.

Specific breakdowns of sub sectors within the storage software market showed
double digit gains across the board in Q4 2003.
The back-up and archive market, where VERITAS and EMC lead, grew 17.6
percent year-over-year while the storage replication software and the
storage resource management markets grew 14.7 percent and 16.2 percent in
the same period, respectively.

Storage resource management market posted the strongest revenue growth of
11.3 percent, followed by the storage replication software market with 9.5
percent annual growth.

Bill North, research director for Storage Software research at IDC, said the
storage resource management market benefited from the adoption of more
integrated software to manage networked storage environments.

North said he expects this growth to continue in 2004 on the strength of ILM
or data lifecycle management solutions.

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