There can be few industries with the kind of dynamics that are currently rocking the storage sector.

The cost of storing data (as measured in $/MB) continues to plummet by as much as 50% a year, according to IDC. Counter-intuitively, the price of storage systems continues to rise, and the cost of running storage – the people costs, the administration costs, the software and so on – is soaring.

There are good reasons for that. The amount of digital data people are creating and want to store is rising at between 50% and 70% a year. At the same time, organisations are under pressure to retain larger quantities of data for longer periods, and to organisation the storage of that data so it is accessible for regulatory checks and to support sound corporate governance.

The upshot is an industry that is in rude health. The worldwide storage products and services market should

generate revenues of $75.6 billion in 2004, up 23% since 2002.

On the product side, by far the largest chunk of that (37%) comes from sales of disk systems. In 2004, spending on disk systems is expected to rise 11% to $27.8 billion, says IDC. But the spend will be by no means evenly spread over the three main classes of products – direct attached storage (DAS), network attached storage (NAS) and storage area networks (SAN). In terms of hardware alone, spending on SAN products will equal that of DAS in 2004, and overtake it in 2005 as DAS loses its place as the mainstay of corporate storage.

NAS systems will not be left out of the picture. By 2005, almost $6 billion will be spent annually on NAS products, compared to around $9 billion on DAS. Look back four years and the ratio was $2 billion to $17 billion.

	Worldwide disk storage revenue SourceL IDC, Horison Information Strategies

	Storage industry revenue Source: IDC, Horison Information Strategies

	Storage networking projections Source: IDC, Horison Information Strategies