Despite quadrupling earnings in the last quarter, Hewlett Packard's storage business grew by just one per cent.
The company's CEO Mark Hurd blamed declining profits in the tape market.
Overall revenue for HP topped $US1.7 billion but Hurd expressed disappointment when it came to the company's storage products.
"Our growth profile of our storage business is negatively impacted by our mix toward the declining tape market," Hurd said.
"We are not happy with our storage growth in the fourth quarter and we need to do a better job of driving top line momentum in the coming year."
However, users are benefitting, at the expense of vendors, when it comes to tape storage technology.
IDC senior storage analyst Grahame Penn said users are getting more bang for their buck.
"[Tape storage] users are really getting a great deal because despite massive developments in capacity, the price remains at a plateau," Penn said..
Second tier storage technologies are providing the real benefits. For example, customers can get 750 gigs for the same price 500 gigs cost last year.
"Squeezing a mere 4 to 5 percent increase in revenue out of this technology means increasing terabyte capacity by up to 50 percent," Penn said.
But it is not all doom and gloom for tape vendors. According to Penn, companies such as HP and IBM, which he says profit 20 percent from tape storage technologies, are profiting from the shift to storage management.
"The costs have shifted from technology to labour where some companies need dedicated staff to handle a portion of back-up, recovery and archiving," he said.
HP have tapped into this with the release of its e-vaulting service this week which offers automatic continuous back-up of data variations while using encryption and compression to maintain security and minimise bandwidth costs.
HP data world wide manager for continuity services Shaun McCaughan said the service is charged on storage space requirements, with an indicative cost of about $7000 per month for two terabytes.
"It takes about two to three weeks to get up and running which includes client hardware, software which removes duplicate data, installation and training and support," McCaughan said, adding that four "corporate clients" have already signed up.
While Penn said this type of technology will become increasingly prevalent, companies will continue to use tape storage for archiving.
"While tape is far too slow to use for backup and recovery, disk storage is expensive and impractical for archiving - users won't just pick up a disk array and move it around," he said.
"For vendors, it is a matter of balancing low to negative growth in tape storage with positive growth in disk storage."
HP has e-vaulting sites in Sydney and Melbourne, with multiple vaults across the United Kingdom the Netherlands, North America, and Belgium.