History (1994): IDC 1993 Storage Market Outlook on European Storage Industry: Suppliers Grow Revenue by 10% Over 1992

Although the European economy and systems suppliers were hard hit by the recession, storage suppliers managed to grow revenues by 10% or more over 1992.

The HDD supply and demand curves were out of balance for most of the year.

Tape and optical suppliers found welcome growth in selected areas, notably DC2000, 4mm, and CD-ROM.

Our 1994 forecast calls for revenue growth of 10%, 10% and 17% for HDDs, tape, and optical markets, respectively.

In our view CD-ROM sales will continue to fuel more attractive growth for optical.

Computer systems found Europe a tough place to do business in 1993. The recession finally cauqht up with Germany, the French economy is in the doldrums, Italy remains in political disarray, and the recovery in the UK is anemic. The result was no growth in PC spending, as well as further decline in multi-user business.

For storaqe suppliers, the year fared somewhat better; specifically, European storage consumption grew to more than $6 billion, up 6% Y/Y. The total available market (TAM) grew to $4 million, up 11%.

The major events in 1993 were:
– Peripherals Europe dissolved; Conner controls distributor relationships.
– Digital Equipment closes Kaufbeuren, Germany, manufacturing plant.
– Western Digital contracts for manufacturing capacity in IBM’s Havant plant.
– Conner closes Ayr, Scotland plant.
– The European Community drops preferential treatment of Singapore imports.
– Iomega vaults into the DC2000 market with significant success in Germany.
– Mitsumi takes the lead with very low-cost, low-performance CD-ROM.

Economic indicators point to an improving European situation. In our view, storage will sustain a 10% rate of growth in TAM revenues.

We are beginning to see some stability in the European HDD market: channel and supplier inventories are under control, managements are aware of the need to secure better profitability; and large suppliers are beginning to strategize to compete in a low-growth market.

The onset of new product cycles will drive a competitive environment in 1994; specifically, we expect pricing pressures for single-, two- and four-disk 250MB, 500+ MB and 1GB products.

In tape markets, we expect rapid penetration by DC2000 and 4mm drives to continue, though our DC6000 forecast will likely be revised downward.

IDC anticipates the Yen value will decline from 1993 levels, with the result felt most in the optical storage area. Low-end CD-ROM and 3.5-inch M-O will likely gain in popularity at reasonable margins

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 76, published on May 1994.