Storage Technology Market Trends in a Tight Asian Economy

Since the time when semiconductors were invented during the late 1950s, one of the key indicators that signify advances in silicon-based electronic devices are their significant (and in some cases exponential) growth in storage capacities.

The importance that this highly vital element provides in business, commercial or personal computing has made it a prime commodity – a vital element in their industry where serious investments are made. This is to ensure the integrity and security of all data and information vital to the business, organization or professional.

What started out with the inefficient brittle hard drives 20 years ago is now replaced by disk storage systems that can be placed inside a one-inch multi-gigabyte MP3 or multimedia player, or an external hard drive for personal computers which have capacities running in the terabyte region. Enterprises utilize RAID or Redundant disk arrays which allow users to simply purchase additional units and stack it on top of existing systems should the need arise for additional storage.

According to the International Data Corporation, the demand for storage capacities and technologies in the Asia-Pacific arena continues to remain strong.

Such continuous demand for efficient storage systems and capacities in the Asia-Pacific region indicates the in-creasing need to organize and protect larger and more complicated volumes of data used directly in business or as references -- despite the tight economic slowdown that still grips most of Europe and the United States. There are several factors that affect and influence this demand, which includes cheaper disk storage, market competition, storage capacity of hard disk drives, and the move towards modular disk storage.

The following is a look at the market for storage technologies, including past and future trends, as seen from an Asian perspective. This information will provide an insight into these trends – information which could prove highly valuable for entrepreneurs, companies and business ventures contemplating engaging this market.

Historical Trends and Market Performance

In the past, the trend of demand for disk storage systems in both internal and external storage capacities continued to remain strong in the market, with considerable growth indicators as seen from year-on-year comparisons starting from 2003 to 2006. Most of these growth figures were obtained from the entry-level and midrange storage markets, which incidentally coincided with the growth of small and medium business enterprises that were setup in markets and industries that registered the highest growth percentage.

The demand for entry level disk and midrange disk storage systems was brought about in part by the appeal of lower prices as compared to enterprise systems. The emergence and greater acceptance of the cheaper SATAor Serial ATAdrives was also one of the most significant factors that contributed to this steady growth and demand. Despite falling quarterly revenues, most companies continue to press on with their needs for new storage capacities in the form of external drives, with China dominating most of the market at 30.6 percent, followed by Korea at 16 percent and Australia at 15.5n percent.

Global Financial Crisis: It’s Impact on the Storage Technologies Market

The tremendous growth experienced by the storage technologies market from 2003 to 2006 was expected by industry speculators to die down with the advent of the Global Financial Crisis in 2008. But contrary to this fore-cast, the market continued to enjoy increased sales volume in terms of capacity sold as well as in revenues garnered by major players in the industry. This was brought by the increased use of video and other multimedia-based infor-mation, as well as new policies that required enterprises to have better data and information backup systems – resulting in a year-to-year growth of up to 60 percent.

This growth was not only experienced by the total disk storage system market, but also by the external storage market, which grew with an average of 18.8 percent, with Japan taking on the lead at 38.7 percent and the rest of the Asia-Pacific region at 16.6 percent. Other parts of the world like Latin America enjoyed similar growth, reg-istering at a high 25.2 percent, the Middle East / Africa at 22.3 percent and even a 12.7 growth in North America de-spite being hit the hardest by the global financial crisis.

There were some dips though in this seemingly continuous growth, when figures dropped during the first half of 2009. This was due to the cautious and restrained spending on ITmaintained by many corporations in the Asia-Pacific region brought about by the aftermath of the global financial crisis. The rapid adoption of storage technologies in the past years also created a lull in spending and the emergence of virtual solutions promising increased utilization of existing storage facilities also contributed to this slowdown in growth.

Although the decline registered 8.6 percent globally, focused mostly on external disk storage systems affecting Japan, the Middle East, Africa and other regions, the total disk system market eventually made a rebound later during the fourth quarter of the year, which registered a year-over-year growth of 29.7 percent as compared to the previous year. This is due to increased migration to networked storage systems facilities gradually being adopted by major Asia-Pacific enterprises.

Despite the fact that most storage technology enterprises worldwide and in the Asia-Pacific region experienced revenue drops resulting from the smaller growth demand of only 14.8 percent (the smallest since the boom started in 2002), vendors or storage solutions are positive that the market will rebound in 2010, particularly with the move of many small and medium enterprises to start investing in storage solutions for their core businesses.

Market Outlook in a Tight Asian Economy

These forecasts proved true as revenues registered a year-to-year growth of 17.1 percent during the first quarter of 2010, particularly in the external disk storage system market. Overall disk storage system market growth registered 18.8 percent as compared to the same period last year. These figures are seen by experts as an indication of market recovery from the global financial crisis, suggesting that enterprises are once again increasing their IT infrastructure budgets and would renew their pursuit and demand for larger storage solutions for their companies and organizations.

A report by research service provide Frost and Sullivan outlined and identified the drivers that brought about this rebound in the storage technologies market outlook in the Asia-Pacific region, as well as other markets, which include the Middle East. The report focused on storage technology segments focusing on direct attached storage, network attached storage and storage area network solutions.

These regional markets appeared immune to the global economic slowdown as indicated in both revenue and data capacity growth. This is due mainly in fact to the need of Asia-Pacific and Middle Eastern enterprises to establish effective disaster recovery solutions to ensure business continuity by adopting new and emerging storage technologies. Such adoption of technology solutions at various levels was made in a bid to gain a technological edge and reduce operational risk through improved data management and recovery systems.

The report further indicated that based on analyses made by Frost and Sullivan, the market for storage technology solutions in India, South Asia and the Middle East will continue to grow sharply. This continued growth is brought about by continuing demand for data, computing, and business continuity enterprise solutions in this market.

Many of these enterprises are looking towards investing in in-house storage solutions, while others would look towards outsourcing their data back-up needs through networked storage providers. Either way, these enterprises are looking towards improving their company or organization’s capability to recover from any potential data storage disaster. Having such efficient capabilities for disaster recovery would ensure business continuity regardless of any unforeseen events involving their data storage facilities and systems.