How the 'Down' Macroeconomy Will Impact the Data Storage Sector - Page 2

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 J. Preimesberger

Chris J. Preimesberger is Editor of Features & Analysis at eWEEK, responsible in large part for the publication's coverage areas. In his 12 years and more than 3,900 stories at eWEEK, he...