Select Storage Companies: The Recession Takes its Toll

March 3rd, 2009 - The Storage sub-sector has been seen as somewhat insulated from the impact of the recession. Yet, the MGI metrics of select storage providers indicate that the sector has been hit pretty hard. Of the five vendors covered in this note, only EMC has an average MGI-X score, and only 3PAR had a positive MGI-CV.

March 3rd, 2009 - The Storage sub-sector has been seen as somewhat insulated from the impact of the recession. Yet, the MGI metrics of select storage providers indicate that the sector has been hit pretty hard.  Of the five vendors covered in this note, only EMC has an average MGI-X score, and only 3PAR had a positive MGI-CV. These generally mediocre MGI-X scores and negative MGI-CVs indicate that the sector is experiencing significant duress as IT buyers pull back on their IT spending.  EMC's negative MGI-CV is meaningful not only for its size, but also since it is a clear reversal from the preceding two quarters where its MGI-CV was positive.  NTAP's sharply negative MGI-CV is disturbing. In spite of being perceived as the leader in the virtualization market, VMware's MGI-CV drop into negative territory highlights the challenges to the sector overall.  CML's negative MGI-CV score represents a big change from the past two quarters.  3PAR's positive MGI-CV needs confirmation, in light of the company's small size.  We are concerned by 3PAR's very low MGI-X score and need to see two consecutive quarters of improvement before gaining real conviction.