IDC sees storage software surging

The storage-software market jumped by 18 per cent in the fourth quarter of 2003, thanks partly to efforts by companies to meet data-handling regulations and prepare for disasters.

Research firm IDC plans to release on Monday a study showing that the worldwide market for software designed for such things as backing up data grew to $1.78bn in the last three months of last year, up from $1.51bn in the fourth quarter of 2002. For the entire year, storage software revenue rose 8 per cent year over year, to $6.29bn.

EMC led the storage software market in the fourth quarter with 31.7 per cent revenue share, IDC said. EMC's figure reflects the combined results of EMC and Legato Systems, which EMC acquired last October. Veritas Software was in second place with 21.9 per cent market share, followed by Computer Associates with 9.8 per cent.

"As we begin to move away from the most recent downturn, the storage software market is enjoying the positive effects of data centres, which are investing heavily to secure, manage and protect their digital assets," John McArthur, an analyst at IDC, said in a statement.

Spending on storage software remains lower than spending on storage hardware. But software is becoming more central to organisations, as they seek to squeeze more out of their storage gear and cut administration costs.

Another impetus for storage software purchases is organisations' need to comply with new rules related to data retention, including the Sarbanes-Oxley Act, said Bill North, an analyst at IDC.

"The storage resource management market benefited from the wider adoption of more integrated software to manage complex networked storage environments, while the backup and replication markets were propelled by a combination of increased storage hardware spending and the need to support disaster recovery and regulatory compliance initiatives," North said in a statement.

IDC breaks down the storage software market into three main categories. Storage resource management software refers to products designed to ease the handling of storage devices and networks. Backup and archiving software tackles tasks such as copying data sets and recovering information in case of a failure. Replication software includes products that continuously copy, or "mirror," data from one location to another.

Revenue from EMC and Legato in the fourth quarter grew 25.7 per cent year over year to $563m, when looking at the combined results of the companies, according to IDC. Viewed in this fashion, EMC-Legato's market share rose from 29.6 per cent in the fourth quarter of 2002.

North said part of EMC's momentum stems from the fact that potential Legato customers no longer worry, as they used to, that Legato may fold. "They don't have to ask that question so much, now that Legato's part of EMC," he said.

Veritas' fourth-quarter storage software revenue rose 21.3 per cent year-over-year to $389m, and its market share increased 0.7 percentage points, according to IDC.

Computer Associates' fourth-quarter storage software revenue rose 11.4 per cent to $174m, but its market share slid 0.5 percentage points, IDC said.

IBM's storage software sales climbed 9.4 per cent in the fourth quarter to $148m, according to IDC. But its market share dropped from 8.9 per cent in the fourth quarter of 2002 to 8.3 per cent in the fourth quarter of 2003.

Hewlett-Packard, however, gained ground in the storage software market in the fourth quarter, according to IDC. Its revenue grew 28 per cent year over year to $141m, and its market share rose from 7.3 per cent in the fourth quarter of 2002 to 7.9 per cent in the most recent quarter, IDC said.

North said he expected storage software growth to continue this year, with additional fuel coming from data lifecycle management offerings. Information lifecycle management refers to technology and services to keep track of data and store it on the appropriate equipment, as it ages.