Spending on Storage Utility Services Worldwide to Reach More Than $1.2 Billion by 2006, IDC Reveals

FRAMINGHAM, MA – JULY 17, 2002 – Worldwide spending on storage utility services will reach more than $1.2 billion by 2006, representing a compound annual growth rate (CAGR) of 32%, a new report published by IDC reveals. Based on new assumptions taking into account changing market forces, this study shows that much storage-on-demand spending to date has been done as part of other, larger contracts, such as Web hosting.


According to IDC's report, the storage utility or "on demand" model has been adopted by three types of companies: large, established outsourcers (IBM Global Services and EDS); telcos (AT&T, BellSouth, Qwest, and others); and niche players that want to provide storage applications such as digital archiving, backup, and vaulting services over the Internet (LiveVault, eVault, Zantaz, and others).

"Clearly, the parties that will deliver most of the storage capacity as a utility over the next few years will not be small start-up firms, but larger, established services organizations that have already made the investments to deliver 'IT on tap,'" said Doug Chandler, director of IDC's Storage and Data Management Services research program. "In addition, storage-on-demand, as a discrete value proposition, is not strong enough to stand on its own. Service providers will bundle storage as an element in a larger portfolio of infrastructure services, including processing power and network bandwidth — and, in the case of the telcos, voice and network services."

Looking ahead, as the broader IT-as-utility concept becomes more widely adopted on both the supply side and the demand side, storage will be an important element in this business, IDC believes. SSPs that wish to compete successfully must be aware that ultimately they are competing with customers' established strategies and policies around storage and data management. When a storage utility provider can offer a service that is cheaper, more reliable, more scalable, and better managed than customers can accomplish themselves, these services will be purchased as a way of gaining competitive advantage. Until then, SSPs of any stripe will struggle to convince customers that they should turn over management and ownership of their storage infrastructure to a third party.

This report, Worldwide SSP/Storage Utility Services Market Forecast, 2002- 2006, (IDC #26891) focuses on the market that is currently referred to as storage-on-demand, storage utility, or storage service provider (SSP) services. These offerings provide customers with the managed storage capacity that they require, with the provider owning and managing the storage infrastructure. The capacity may consist of on-demand access to primary data storage as well as to storage capacity that is allocated for backed-up, replicated, or archived data.

This report includes a sizing and forecast of end-user organization spending on storage utility services — whether provided by an SSP, outsourcer, telecommunications firm, or other provider — from 2002 to 2006. It also provides market segmentation by types of players in the market and by the functional types of data storage that are being procured (for primary data versus backed-up data, for example). In addition, this report discusses demand-side and supply-side trends that are shaping this market and analyzes the outlook for current players over the next 6-12 months and beyond. This report focuses primarily on market trends in North America but briefly discusses developments in other regions as well.

To purchase this document, call IDC's volume sales hotline at 508-988-7988 or email

For more information about IDC's Storage and Data Management Services research service, please contact Jill Toole at

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in- depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at

IDC is a division of IDG, the world's leading IT media, research and exposition company.

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