How the 'Down' Macroeconomy Will Impact the Data Storage Sector

By Chris Preimesberger  |  Posted 2008-10-16 Print this article Print

title=What Industry People Are Thinking}

What industry people are thinking

IDC storage analyst Benjamin S. Woo has a relatively optimistic outlook.

"Despite the downturn in the macroeconomic conditions, our consensus is that in the short- to medium-term, storage is the most resistant to macroeconomic changes," Woo said.

"While there is no doubt that there will be some form of pullback on storage investment, many of the large financial institutions, especially JPMorgan Chase and Bank of America (but also Wells Fargo and Barclays) will need to commit (or in the case of Chase, maintain) substantial IT and storage investment in the next six to 12 months, for integration of their acquired banks."

JPMorgan Chase took over Washington Mutual ($1.9 billion), BofA is adding Merrill Lynch ($34.9 billion) to its portfolio, Wells Fargo is in the process of acquiring Wachovia ($15 billion), and Barclays is absorbing Lehman Brothers ($1.35 billion).

In the longer term, Woo said, most companies will go into capital conservation mode, which historically has resulted in the use of credit -- mostly in the form of financing and leasing.

"But with the credit market all but dry, there is an opportunity for small business in particular -- but even medium to large companies -- to consider subscription models offered by online storage providers," Woo said.

Average sales pricing is likely to be heavily pressured as end users attempt to stretch what little money they have to spend further, Woo said.

"That said, for this current quarter, we feel that those who still have access to their IT budgets are likely to 'flush' their budgets, since '09 is so uncertain," Woo said. 

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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