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Data Storage Sector Favorable, S&P Says

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"Computer industry analysts estimate that some 60 percent of all corporate data exists only on desktop and laptop computers, " said Walter Scott, CEO of Acronis. "Incorporating Acronis True Image with New Mexico Software backup server is the ideal solution to capture that corporate data and ensure that it is not lost. While traditional server backups are effective for protecting server data, every company should have a combination of server and workstation backup plans."

Thinkpad (AXcess News) New York - Standard & Poor's believes that renewed confidence by managers and consumers alike will fuel new electronic purchases and create opportunities for the data storage sector. S&P continues to hold a positive view on the storage industry's fundamental outlook.

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Microsoft For full-year 2005, Standard & Poor's forecasts an approximate 7 percent increase in total storage-related revenues (including disk systems, components, tape, services, and software) to more than $65 billion, with worldwide factory revenues from disk storage systems expected to post gains in the mid- to high-single digits. These numbers look particularly impressive in the face of lower projected overall spending for IT-related goods and services, and a strengthening U.S. currency that is dampening revenues collected overseas.

Back in the proverbial "stone age" it was a truism that he who controlled the corporate data center controlled the corporate data. Since then we've seen the explosive growth of desktop computers, laptops, personal data assistants, cell phones that can run corporate applications, and removable USB drives that hold from 16 MB to 120 GB. Today, some 60 percent of all corporate data lives outside the data center on users' computers and devices. Today, nothing defines the modern road warrior more than his or her laptop and gadgets.

Laptop Computers On the consumer front, the proliferation of cellular phones, digital cameras, laptop personal computers, portable digital music players, and set-top boxes has opened up significant new growth opportunities for the storage industry. Hard disk drive suppliers in particular have benefited from this emerging category; they have seen tremendous improvements in average selling prices, a reduction in excess inventory levels and, consequently, increased profitability.

It seems as though any discussion of storage management would not be complete without the inclusion of storage and server virtualization. Over the next few years, the size of the storage management problem will continue to compound. Data centers will continue to be more heterogeneous with the introduction of new server and storage hardware technologies. Therefore, it is critical for VARs to sell storage management solutions that embrace both physical and virtual server environments.

Laptop Computer Following a prolonged spell of lackluster growth and less-than-stellar prospects, the data storage sector has once again emerged as a focal point of the information technology (IT) marketplace, with the consumer portion of the sector ascending to heights that even the most optimistic forecasters could not have imagined just a few years ago, said Standard & Poor's in its semi-annual survey on the data storage industry, published today.

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Desktop Computer Despite a sell-off thus far in 2005 that Standard & Poor's believes is due largely to investor profit taking on the heels of the industry's substantial relative outperformance in the previous two years, S&P continues to hold a positive view on the storage industry's fundamental outlook. Growing amounts of newly created information and a beneficial regulatory climate have generated increasing demand. In addition, robust balance sheets, a limited amount of debt, and consistent free cash flow generation have become hallmarks of many of the industry's key players. Standard & Poor's believes this high level of financial flexibility is advantageous, as it allows firms to more readily capitalize on emerging market trends.

Notebooks "A healthier US economy has instilled confidence in company managers and consumers alike, which we think will encourage additional purchases of storage equipment," said Richard Stice, analyst with Standard & Poor's Equity Research Services. "Over the next six to 12 months, we believe end markets will continue to enjoy a pickup in demand as corporations authorize additional spending on various storage initiatives. Given the accelerating generation of new data, more organizations are realizing the critical need to broaden and enhance their overall storage capacity."

Despite its positive outlook for the industry, Standard & Poor's notes there are potential pitfalls that could limit near-term growth, including a scenario of severe pricing declines on existing products and a less favorable business mix as storage companies emphasize more low-end and midrange models. Moreover, if demand does not materialize as expected, companies will be forced to reduce prices in order to stimulate customer interest. A further complication is the ongoing geopolitical climate, which could diminish business and consumer confidence and thereby hurt spending on storage products.

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