Strong growth for SAN and NAS, despite stalled economy

Posted on January 01, 2002

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NAS growth rate outpaces SAN's

BY LISA COLEMAN

Networked storage will account for 67% of disk storage systems by 2005, according to a recent report by International Data Corp. (IDC). However, the report notes that the total disk storage systems market was down about 18% in 2001.

Direct-attached storage (DAS) systems took the brunt of the revenue loss by dropping 27.4% from 2000 to 2001. On the other hand, SAN-attached disk systems revenues grew a modest 5.8% over the same period, while NAS-attached disk systems led the charge with a revenue growth rate of 13.6% in 2001.

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"The economy is certainly affecting the storage market because companies' budgets are tightening," says Brad Nisbet, senior research analyst for IDC Storage Systems. "In 1999 and 2000, the storage industry had incredible growth rates." During that time, all types of companies were investing in the latest networked storage and buying long-term solutions, explains Nisbet. "When the economy started to go south, these companies changed their strategies from deploying sky-is-the-limit type of solutions to cost reduction," he says.

Because of decreased spending, IDC predicts overall revenue for DAS, NAS, and SAN disk subsystems to be down from $25.47 billion in 2001 to $25.04 billion in 2002, but a rebound is expected in 2003, with total market revenue hitting $26.35 billion. By 2005, the market will exceed $29 billion, according to IDC (see chart on cover).

Even with the market faltering in 2001 and 2002, IDC expects that SAN and NAS will grow at the expense of DAS. NAS revenue is predicted to grow at a 32% compound annual growth rate (CAGR) from 2001 to 2005, while SAN disk systems revenue is expected to grow at a 20.2% CAGR. DAS revenues are anticipated to decline at a 12.4% rate.

While the overall trend is toward networked storage, NAS is expected to grow faster than SANs because NAS is less expensive and easier to deploy and manage, says Nisbet. SANs generally involve more staff and more resources because they are more complex.


By 2005, networked storage (SAN and NAS) is expected to account for 67% of the total disk systems market.
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While the economy faces difficult times ahead, IDC remains bullish on NAS even though "NAS is not immune from the effects of this economy," adds Nisbet. "For NAS, growth of 13.6% [from 2000 to 2001] is significantly less than expected a year ago."

IDC anticipates that many companies that were planning to buy SANs will put a hold on those projects during the difficult economic times, whereas companies that were thinking about buying NAS may go ahead with their planned purchases. However, companies will not be replacing SANs with NAS just because NAS is cheaper, says Nisbet.

Another noticeable trend is the drop in revenue for DAS systems, which was $17 billion in 2001 and is forecast to be just below $10 billion in 2005. "The NAS market is somewhat cannibalizing general-purpose servers," Nisbet adds. General-purpose servers may be running e-mail applications, firewalls, security, etc., while also providing file sharing, but once NAS is plugged into the network it becomes the dedicated file-sharing device.

Therefore, DAS will only hold onto 34% of the overall disk storage systems market by 2005, according to IDC. SAN-attached disk systems are expected to stay on top with a 47% market share, or $13.8 billion.


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