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Gartner predicts storage mergers but channel not so sure

Gartner predicts storage mergers but channel not so sure

Market analyst Gartner is predicting major mergers in the storage sector will be part of an “inevitable shake-out” in the hardware market for 2003, but experienced channel players have a different point-of-view.

Principal Gartner analyst of hardware platforms, Matthew Boon, said an explosion in storage user requirements during recent years had increased infrastructure levels and the number of market players but he suggested consolidation would follow as profitability pressures increased.

“Prices are being forced down by the competitive environment and [storage] vendors are competing for insignificant increases in overall expenditure while still spending money on research and development,” he said. “This makes it more difficult for them to get a return on any investment.

“The storage market hasn’t seen any major players go away but we anticipate the continuing squeeze on revenues — as storage gets cheaper — will see some looking for opportunities to combine efforts with other vendors. It’s anybody’s guess which companies will be involved but we expect there will be consolidation.”

Boon picked EMC, Network Appliance and StorageTek as the major “pure players” in the storage hardware segment with HP, IBM, Sun Microsystems and Dell as the broader vendors with their own offerings.

A director of the Secure Data Group, David Solski, said industry heavyweights had already started working together but he was not convinced that mergers would take place.

“Dell has already signed an OEM agreement to resell the EMC Clarion product and, in the US, Hitachi Data Systems has signed with Network Appliance,” Solski said. “There have been rumours of IBM acquiring EMC, that is a possibility, but it will depend on how IBM sees the storage industry going forward.”

CEO of XSI Data Solutions, Max Goldsmith, completely disagreed with merger talk and predicted 2003 would be a good year for smaller, niche companies: “The big guys are under enormous pressure because they are not hitting targets and I think they will come back to the field.

“Customers are saying they have a small percentage of data that is mission critical, that they want to leave on EMC or Hitachi, but there is up to 80 per cent that is less important and can be stored with a less expensive supplier. Companies are rationalising because it is really expensive to have everything stored with the major players.

“We have had a horrendous market — my sales team has been screaming to get out. Then we had our best first six months ever after 18 years in the business. That tells me people are looking around for smaller, niche players.”


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