I swear I'm not obsessed with IBM (NYSE:IBM). Just because I gushed about the company's supercomputing prowess on Monday and sang the praises of its new environmental initiative on Tuesday, it's not like I wrote anything about the company yesterday.
Truth be told, though, I could have. That's because Gartner, a leading industry research firm, released its annual report on the external controller-based (ECB) disk storage market and noted that IBM cruised past Hewlett-Packard (NYSE:HPQ) into second place in market share. (It still trails industry leader EMC (NYSE:EMC) by 9%.) To understand the significance of this, it helps to know that just five years ago, HP held a 15-point lead over IBM in this field.
In terms of revenue, IBM's share of the global ECB disk storage market grew to 15.8% from 14.8% in 2005 (about $2.4 billion), while HP's portion dropped to 13.1% from 14.7%. HP CEO Mark Hurd acknowledged his company's poor performance at a technology conference yesterday but seemed to imply that the disappointing results were the result of a lack of sales personnel.
To be honest, I'm not close enough to the industry to know how much truth there is to Hurd's statement. What I do know is that in the past year, IBM has introduced a number of new products across its portfolio, including its new DS8000 series, as well as the industry's first tape drive with native encryption, so Hurd's explanation rings at least a little hollow.
If it's just a matter of execution, HP should be able to reclaim its position next year, right? Will this happen? I don't know, but I wouldn't hold my breath. IBM is well positioned to help its clients -- especially the growing number of small and medium businesses -- not only manage their growing storage needs but, through its global consulting business, also help them better manage what's in all that data. The prospect of offering customers both solid products and value-added services is a powerful combination.
Of course, longer term, the entire industry could experience a sea change as companies as diverse as Seagate (NYSE:STX) and Amazon (NASDAQ:AMZN) look to expand into the market by offering new data storage services to small- and medium-sized business, such as I wrote about in "Seagate Evolves" and "Amazon Looks to Make a Buck Off Muck." And that could represent a threat not only to EMC, IBM, and HP, but also to the smaller players in the ECB disk storage business, including Hitachi, Dell (NASDAQ:DELL), Network Appliances, and Sun Microsystems (NASDAQ:SUNW).
In the meantime, the news offers investor yet another reason to look favorably on Big Blue. And, oh, by the way, I promise I won't write an article about IBM tomorrow.
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Dell is both a Stock Advisor and Inside Value pick. Amazon is a Stock Advisor selection.
Fool contributor Jack Uldrich owns stock in IBM. The Fool has a strict disclosure policy.
