Tech is as vulnerable as any other industry to the purchasing behavior of its customers. According to this article, IT hardware sales are “poised for modest growth in 2010″ following one of the worst years companies have seen. Server revenues dropped 17% last year, and “external storage subsystems” dropped by 10% — if you believe IDC Woo’s woo. He is projecting 4% growth in 2010 for the entire industry.
I read elsewhere that IBM is the big beneficiary of the server sales slowdown and is expected to emerge on top of the market, well ahead of Dell, when all is said and done. I see that Woo shares this prognosis, though he sees IBM and HP in a neck and neck race.
On the storage front, EMC posted earnings that eclipse the rest of the industry. totalling $1.1 Billion, which is close to the combined 2009 storage revenues of IBM + HP (the next two in the pie chart). That’s if you believe the earnings data presented by Hopkinton: I am not sure about that one, given past distortions.
The thing that really tickled me was the assertion that server virtualization and storage thin provisioning were helping to drive server and storage sales to their knees. Maybe I’ve been too hard on VMware/Microsoft/Citrix and 3PAR, et al. Collectively, they may have the value of decimating the coffers of the big server and array names, inadvertently opening us up to innovative newcomers. A recession is a terrible thing to waste.
What the article doesn’t say is that consumers appear to be getting a bit smarter. They know that there are deals to be made for hardware. Joe Marion at ASCDI reports that secondary market broker/dealers and aftermarket tech support companies are seeing their fortunes made during this economic cycle. Marion, whose video interview I will post shortly on the C-4 Project, says that companies are increasingly willing to dump expensive service and support from three-letter companies and to go with much less expensive service contracts with competent third party providers — many of whom used to work for the OEMs anyway and have been released during downsizing. Moreover, he makes a pretty good case for why used gear can be used to handle capacity expansion requirements — at up to 80% less than what new gear would cost.
Hmm. Cult leader of cheap storage that I am, I encourage everyone to visit ASCDI’s website at ASCDI.com and while you are there, take a look at something they have that SNIA and other industry mouthpieces lack: a Code of Ethics.
The mighty have fallen pretty hard. Let’s see how they fare in the long slog forward.
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The above-referenced website for the ASCDI is actually ascdi.com not ascdi.org. Interesting article.
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