Storage spending: the big picture, Storage Soup blog by Randy Kerns

By , Monday, January 10th 2011

Categories: Analyst Blogs

Tags: storage spending; storage vendors,

I’m always interested in reading stories about expectations for spending on storage. There are the continuing prediction stories where it is reported that next’s year’s spending will be x% up or down from last year. Those stories are interesting but not always illuminating. They remind me of an article I read about predicting the weather. In that article, a comparison was done for the last year of the predicted weather versus the actual, and the accuracy of just saying tomorrow’s weather will be just like today’s weather. Obviously, the latter was statistically much more accurate.

For storage spending, the bigger picture economic indicators are more interesting and probably much more helpful to truly understand the market. I found the Jan. 3 Wall Street Journal, “Big Firms Poised to Spend Again,” interesting. The article reported that big companies (Fortune 500 in my estimation) had cleaned up their balance sheets and conserved cash over the last year and were ready to invest again in R & D, expand manaufacturing and sales, and so on. Basically the point of the article was that these companies were ready to spend money to make money.

The article cited several companies that had money to invest, and the numbers were in the billions of dollars. These expenditures will result in requirements in IT infrastructure and certainly in storage. Interestingly, the top three industries that had the greatest amount of cash accumulated to invest were Information Technology, healthcare, and industrials.

From a storage standpoint, the question is “where will the primary areas of spending be?” Given the conservatism that occurred over the last few years when many companies postponed purchases, you can probably figure out where spending will go. It’s likely that companies will look to replace aging or obsolete systems, add new systems to meet expansion and growth demands, and carry out postponed or new projects to improve operations and reduce operational expenditures.

These indicators present opportunities for the storage industry, if the industry is ready to take advantage of those opportunities right now. The products to solve problems and meet customer needs must be there. There won’t be time to take requirements and develop or modify a product. By the time that is done, competitors will have captured the business. The opportunity is about sales and marketing in the near term to deliver products needed when the customer is ready. Vendors will continue to develop new shiny toys but these major firms with money to spend to expand their businesses won’t wait for them.

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