Data Storage Defeating Itself?

    July 5, 2006

According to some, the data storage industry is in danger of driving itself out of business (or at least out of profitability). Others feel that everything is fine and dandy, and will be for some time to come.

Data Storage Industry To Defeat Itself?
Is Digital Storage Killing Itself?

Either way, it remains an undisputed fact that people are storing more data than ever before, and that storage devices are continually increasing in capacity and/or decreasing in price.

Bob Schultz, senior vice president and manager of Hewlett-Packard’s StorageWorks group, spoke to the Associated Press. “Ten years ago, a 1-gigabyte disk drive was a really great thing,” he said. “Last Christmas, I bought a 1-gigabyte memory stick for my daughter’s camera. I suppose it cost $5,000 a decade ago for that disk drive, and I think the memory stick cost me $50.” And that, in a nutshell, is the trend.

Some think this pattern could continue until data storage vendors are squeezed up against their profit margins. Joe Tucci of the storage company EMC Corp was also quoted in the Associated Press article. “If I only have hardware and I just keep helping make you more and more efficient at less and less cost, eventually I’m going to hit a wall and it’s going to be tough for me to make money.”

But many people in the industry think that the moneymaking will carry on as usual. Entertainment-related files, including music, videos, and games, have exponentially increased the demand for data storage, and that’s just one category of data. Financial figures, medical information, and all other sorts of things are being committed to digital memory. This need is maintaining data storage profits, in spite of rising capacities and diving prices.

It seems like a fairly safe bet that the industry will remain profitable, at least for some time. Investors still might want to keep an eye out for the tipping point, though.

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Doug is a staff writer for WebProNews. Visit WebProNews for the latest eBusiness news.