IT spending strengthened across the board last year, but the storage software market positively exploded. According to IDC's Worldwide Quarterly Storage Software Tracker, the global storage software market climbed 17.7 percent in terms of revenue in fourth quarter 2003 compared to fourth quarter 2002. For the year, storage software revenues jumped 8 percent, reaching nearly $6.3 billion.

IDC's report reveals several major trends that are underway in the industry. The most obvious is vendor consolidation. With EMC leading the way by virtue of its acquisition of LEGATO Systems (now LEGATO Software), the big storage software vendors are getting bigger, leaving a smaller piece of the pie for other players. The overall market share of the top five vendors grew from 72.5 percent in 2002 to 77.8 percent in 2003. Figures for fourth quarter 2003 show the top five vendors holding nearly 80 percent of the overall market.

For the year, market leader EMC's share climbed from 27.6 percent to 30.7 percent. According to IDC, EMC held 31.7 percent of the market in fourth quarter 2003. VERITAS Software and HP also gained market share, while IBM's share remained flat. HP, whose numbers include revenues from Compaq, had the fastest growth of any of the top players, with revenues climbing 28 percent. Computer Associates (CA), which holds the number three position after EMC and VERITAS, lost 0.5 percent of the market share during 2003.

Consolidation is only part of the story, however. Over the course of the year, companies began to focus their attention--and their funds--on backup and archiving technology. Although Storage Resource Management (SRM) applications and storage replication software were the best performers in the first half of 2003, revenues generated by backup and archiving jumped a healthy 17.6 percent year over year in the fourth quarter. In the same period, SRM software climbed 16.2 percent and storage replication software increased 14.7 percent. For 2003 as a whole, SRM turned in the best performance with an 11.3 percent gain, followed by storage replication software with an increase of 9.5 percent.

But IDC's report doesn't reveal the most significant trend underway in storage software. The big story is that the lines between storage management and data management, including data protection, are blurring. Storing large volumes of data cost effectively is only one part of the challenge storage administrators now face. Data protection and regulatory compliance are equally important. Two major announcements within the past 2 weeks underscore this trend.

First, at the end of March, VERITAS announced the general availability of Data Lifecycle Manager 5.0, which is geared to helping companies meet global regulatory requirements from data creation to data deletion across all storage media. Although storage software products play a central role in data lifecycle management, VERITAS also announced an API and developer's kit to help partners integrate their applications into the data lifecycle management framework. Twelve companies--ranging from Autonomy, which provides advanced pattern-recognition software for concept-based retrieval of email and other attachments, to Princeton Softech, which offers active archiving for database information--are participating in the program.

Second, IBM recently unveiled three new products aimed at ensuring regulatory compliance. IDC reports that regulatory compliance is the number one IT investment focus for organizations in 2004, and AMR Research forecasts that more than $5 billion will be spent on compliance-related activities and IT purchases this year alone.

What does all this activity mean? According to Anders Lofgren, vice president of BrightStor storage solutions marketing at CA, delivering a complete storage management strategy goes far beyond data movers and archiving tools. Even dealing with compliance and lifecycle management isn't enough, he said. Instead, storage strategies must address the broad range of IT challenges, including security, asset management, and application management.

Lofgren is right. Although using the storage infrastructure efficiently remains a pressing concern, storage administrators now have to be deeply involved with every piece of the IT puzzle. And although many solutions for data lifecycle management and compliance seem to be geared to large companies, all companies have to come up with plans to ensure that they can retrieve their mission-critical data in an appropriate form and within a reasonable timeframe. That need should fuel healthy growth for storage software solutions for the foreseeable future.

On another note, I received some feedback on my March 29 commentary about how the use of Exchange Server 2003 can spur storage infrastructure upgrades, particularly in small businesses. A reader pointed out that iSCSI can be used to create a SAN of sorts. Even small companies that never before considered a SAN can now consider an iSCSI-based storage network.

IT spending strengthened across the board last year, but the storage software market positively exploded. According to IDC's Worldwide Quarterly Storage Software Tracker, the global storage software market climbed 17.7 percent in terms of revenue in fourth quarter 2003 compared to fourth quarter 2002. For the year, storage software revenues jumped 8 percent, reaching nearly $6.3 billion.

IDC's report reveals several major trends that are underway in the industry. The most obvious is vendor consolidation. With EMC leading the way by virtue of its acquisition of LEGATO Systems (now LEGATO Software), the big storage software vendors are getting bigger, leaving a smaller piece of the pie for other players. The overall market share of the top five vendors grew from 72.5 percent in 2002 to 77.8 percent in 2003. Figures for fourth quarter 2003 show the top five vendors holding nearly 80 percent of the overall market.

For the year, market leader EMC's share climbed from 27.6 percent to 30.7 percent. According to IDC, EMC held 31.7 percent of the market in fourth quarter 2003. VERITAS Software and HP also gained market share, while IBM's share remained flat. HP, whose numbers include revenues from Compaq, had the fastest growth of any of the top players, with revenues climbing 28 percent. Computer Associates (CA), which holds the number three position after EMC and VERITAS, lost 0.5 percent of the market share during 2003.

Consolidation is only part of the story, however. Over the course of the year, companies began to focus their attention--and their funds--on backup and archiving technology. Although Storage Resource Management (SRM) applications and storage replication software were the best performers in the first half of 2003, revenues generated by backup and archiving jumped a healthy 17.6 percent year over year in the fourth quarter. In the same period, SRM software climbed 16.2 percent and storage replication software increased 14.7 percent. For 2003 as a whole, SRM turned in the best performance with an 11.3 percent gain, followed by storage replication software with an increase of 9.5 percent.

But IDC's report doesn't reveal the most significant trend underway in storage software. The big story is that the lines between storage management and data management, including data protection, are blurring. Storing large volumes of data cost effectively is only one part of the challenge storage administrators now face. Data protection and regulatory compliance are equally important. Two major announcements within the past 2 weeks underscore this trend.

First, at the end of March, VERITAS announced the general availability of Data Lifecycle Manager 5.0, which is geared to helping companies meet global regulatory requirements from data creation to data deletion across all storage media. Although storage software products play a central role in data lifecycle management, VERITAS also announced an API and developer's kit to help partners integrate their applications into the data lifecycle management framework. Twelve companies--ranging from Autonomy, which provides advanced pattern-recognition software for concept-based retrieval of email and other attachments, to Princeton Softech, which offers active archiving for database information--are participating in the program.

Second, IBM recently unveiled three new products aimed at ensuring regulatory compliance. IDC reports that regulatory compliance is the number one IT investment focus for organizations in 2004, and AMR Research forecasts that more than $5 billion will be spent on compliance-related activities and IT purchases this year alone.

What does all this activity mean? According to Anders Lofgren, vice president of BrightStor storage solutions marketing at CA, delivering a complete storage management strategy goes far beyond data movers and archiving tools. Even dealing with compliance and lifecycle management isn't enough, he said. Instead, storage strategies must address the broad range of IT challenges, including security, asset management, and application management.

Lofgren is right. Although using the storage infrastructure efficiently remains a pressing concern, storage administrators now have to be deeply involved with every piece of the IT puzzle. And although many solutions for data lifecycle management and compliance seem to be geared to large companies, all companies have to come up with plans to ensure that they can retrieve their mission-critical data in an appropriate form and within a reasonable timeframe. That need should fuel healthy growth for storage software solutions for the foreseeable future.

On another note, I received some feedback on my March 29 commentary about how the use of Exchange Server 2003 can spur storage infrastructure upgrades, particularly in small businesses. A reader pointed out that iSCSI can be used to create a SAN of sorts. Even small companies that never before considered a SAN can now consider an iSCSI-based storage network.