Worldwide spending growth on storage services – comprising consulting, integration, management, and support services – will achieve a moderate growth rate of 6.1 percent through 2005, a new study by IDC reveals. The U.S. economic recession, a general slowdown in IT spending by customer organizations, slower than predicted growth in the storage product market, and continued commodization of storage hardware are all factors that have impacted the growth in the storage services market in the past year.

The fastest growing segments in the storage services market will be storage implementation and integration, driven specifically by customer requirements for outside help in building and integrating storage area networks (SANs). Networked storage-related services in general will become an increasingly larger part of the total storage services market through 2005, with spending for services on direct-attached storage continuing to decline as a percentage of the total during this period.

“Moving forward, we see the market for storage services showing low, single- digit growth across all regions for the next 12 to 18 months,” says Doug Chandler, director of IDC’s storage and data management services research program. “We expect to see accelerated growth again in the 2003 time period, as organizations begin to spend on IT at a pace comparable to that found in the ‘pre-dot-com bubble’ period of the late 1990s.”

The storage service provider (SSP) market, which was viewed as a serious threat to traditional storage suppliers and servicers last year, has shriveled up in 2001 to the point where only a handful of pure-play SSPs remain standing, the IDC study shows. The model has instead been adopted by large outsourcers such as EDS and IBM Global Services, as well as telecommunications firms that see storage-on-demand as "managed service" they can add to their portfolios.

From a worldwide perspective, Japan, Europe, and Asia/Pacific are the fastest-growing regions regarding storage services spending. The United States continues to be the largest segment based on total spending, with over $13 billion forecast for U.S. spending on storage services in 2005.

“Although storage hardware will continue to be commoditized and capacity will be cheaper to add to existing storage implementations, the rigors of building and managing a networked storage environment will not be overcome in the near future,” Chandler says.

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