The total external storage hardware market has been rising
consistently over the years, growing from 2 billion gigabytes (
) in 2005 to around 8 billion GB in 2008, an annual growth rate
over 50%. The growth rate slowed in 2009 due to the recessionary
economic environment, but we expect the external storage disk
market to bounce back in the years ahead. Rising demand for storage
will likely be sparked by exponential growth in digital information
as well as a greater need for data security.Key players like NetApp
( NASDAQ:NTAP), EMC (
) and HP (
) are likely to benefit from this positive trend.
NetApp's strength in desktop virtualization and its unified
storage strategy under a single OS will help the company boost its
external hardware market share. While we expect the total hardware
storage market to rise to around 165 billion GB over our forecast
period, Trefis members expect the market to inch slightly higher
towards 178 billion GB, implying a 5% upside to our price estimate
for NTAP stock.
We maintain a
price estimate for NetApp stock, well ahead of market price.
Rapid Growth in Digital Information
Digital information created and replicated each year is growing
at a rapid rate. The number of total global Internet users has
risen ~5x from 360 million users in 2000 to 1.9 billion Internet
users in 2010 at a phenomenal CAGR of 444%. As broadband
penetration increases, people are able to exchange larger amounts
of data as well as indulge in heavier data-driven Internet usage
such as watching movies, downloading songs or uploading photos.
This is causing a phenomenal rise in the amount of data generated
Data Protection Will Boost Demand for Storage
We believe that increasing concerns about data security will
also drive the need for external disk storage as digital
information is in constant motion throughout its lifecycle, often
leaving the secured network perimeter by laptop, PDA, e-mail or
backup tapes. Security practices that focus on protecting the
perimeter that surrounds the datacenter through the use of VPNs,
firewalls, and antivirus software are no longer sufficient. There
is a serious need to protect the information itself, wherever it
travels, inside or outside the enterprise. Hence information
security becomes a critical part of the overall infrastructure
Trefis Community Forecast
Trefis members predict the total storage market (
) will increase from 16 billion GB in 2010 to 178 billion GB by the
end of our forecast period, compared to the baseline Trefis
estimate of an increase from 165 billion GB during the same period.
The member estimates imply an upside of 5% to the
Trefis price estimate for NetApp's stock.
complete analysis for NetApp's stock is here