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No matter how you slice the storage market — either Gartner’s external controller-based disk or IDC’s enterprise storage — the third quarter saw another year-over-year decline in sales. But both research companies report that sales declined less than previous quarters, and actually increased from Q209. They’re also optimistic that the industry has probably bottomed out and sales should start improving.

Gartner says the worldwide external controller-based (ECB) disk storage revenue totaled more than $3.9 billion in the third quarter of 2009, a 7.3 percent decline from the same period in 2008. The previous two quarters saw double-digit declines, so it’s the first sign of a light at the end of the tunnel, says Donna Taylor, principal research analyst for Gartner’s global Storage Quarterly Statistics program.

Geographically, North America outperformed the average, showing a 5 percent decline, she says. EMEA fell 11 percent, while APAC and Japan collectively came in at down 8 percent.

One of the beneficiaries of the economy has been NAS, says Taylor. There’s been growing interest in NAS as a result of cost-cutting efforts, especially in the enterprise market. Solid-state drives — SSDs or Flash — are also generating more interest as costs continue to come down. "We will see more and more SSDs become more and more attractive to those looking to purchase storage."

Gartner has EMC maintaining its dominant position with 26.7 percent revenue share, more than double its closest competitor, IBM (13.2%). HP (10.8%) was followed by Hitachi (8.8%), Dell (8.6%) and NetApp (8.6%) in the next four spots.

Taking a slightly more inclusive look at the storage market — $4.4 billion — IDC put external disk storage systems factory shipments as down 10 percent year-over-year. It says the total disk storage systems market declined 9.6% to $6.0 billion in revenues, driven by continued weakness in server systems sales.

Like Taylor, Steve Scully, research manager, Enterprise Storage at IDC, says the slowing of the rate of decline is good news. He says the market experienced a sequential gain over the previous quarter, with many of the top storage vendors posting increases.

According to IDC, the NAS market grew 2.2% year over year, led by EMC with 46.4% revenue share and followed by NetApp with 24.5% share. The iSCSI SAN market also continues to show strong momentum, posting 24.7% revenue growth compared to the prior year’s quarter. Dell led the market with 33.6% revenue share, followed by EMC with 15.1%.