Storage software continues to thrive

By Zachary Shess

It's a good time to be a storage software vendor. Buoyed by Internet-driven data growth and an overall IT personnel shortage, 1999 worldwide revenues from storage software licenses rose 47% over 1998, from $2.9 billion to $4.2 billion, according to a recent report from Dataquest. The San Jose-based market research firm predicts that the storage management software market will reach $14.7 billion by 2004.

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Currently, the largest and most mature market segment is data management products, which includes backup/recovery, hierarchical storage management (HSM) and other archive tools. This is because the proliferation of data-intensive applications, including multimedia files and e-mail, are driving administrators to purchase more backup and recovery software, according to Carolyn DiCenzo, the report's author and chief analyst at Dataquest.

The report also notes that vendors are paying closer attention to consolidating management tools to help smaller IT staffs handle as many tasks as possible. However, DiCenzo believes that many IT administrators are buying storage software more out of desperation of trying to get a handle on exploding data growth than for empowerment from the collective functionality the tools provide.

To help create interoperable software, DiCenzo anticipates consolidation in the industry and a trend toward larger vendors taking more equity stakes in smaller companies in lieu of traditional partnerships. "At some point you'll see more consolidation in the market, because to be truly integrated you have to own the technology," she adds.

Recent examples of such equity stakes and acquisitions include Compaq's stake in HighGround Systems and IBM/Tivoli's acquisition of Mercury Computer.

This article was originally published on June 01, 2000