IDC Warns SSPs of Pitfalls on the Path to Profits

Despite strong potential for growth, the storage service provider (SSP) market will face hurdles in the coming year, says a recent study by analyst firm IDC.
According to IDC, worldwide storage utility spending will increase from $153 million in 2000 to $10.7 billion in 2005. Yet to reap these potential gains, IDC warns, providers must avoid pitfalls along the way.

“The storage service provider market has entered a critical phase in its development,” said Doug Chandler, manager for IDC’s Storage and Data Management Services program. “With the start-up stage over, SSPs must demonstrate their viability to potential and current investors and concentrate on market validation. Over the next 6 to 12 months, it will be critical to this market that the SSP model becomes more widely accepted by paying customers, regardless of which SSPs become market leaders.”

Like the rest of the IT industry, the SSP market is in a state of flux. The IDC report points to shifts in customer wants and needs, investor tendencies, technology supplier strategies, new and untested technologies, and the continuing primacy of the Internet in driving industry development as contributing factors keeping the SSP market on shaky ground.

“The success of the SSP market will be closely tied to the success of the Internet datacenter, Web hosting, and other firms that, as partners, will drive much of the storage-on-demand business in the next 12 to 24 months,” Chandler said.