The investment house interviewed 72 enterprise customers and eight customers in the public sector (a mix of education and government) and found that 85 percent of them have budgets that are the same or higher than last year, with 40 percent growing their IT budgets at least 3 percent over 2004.
"End users in our sample are planning to spend relatively more IT budget on HP, Dell, and IBM solutions in 2005," said Daniel Renouard, a principal with Baird and one of the authors of the report on the survey results. He also noted good news for Sun Microsystems, which moved from last place in last year's survey to fourth highest this year. No vendor received a smaller net spending score this year, which Renouard said lends credence to a "healthy" IT spending environment.
More than three-quarters—77 percent--of respondents expect to spend the same or more on storage in 2005, and nearly half expect annual capacity growth between 20 to 39 percent in the next two years, which Renouard said is in line with historical growth rates.
Server and storage technologies may fare a little more unevenly. Baird foresees continued health in the Fibre Channel storage area network (SAN) market, with respondents expecting SAN-to-server attach rates to increase from the current 29 percent to 46 percent in 2007. In addition, servers networked to storage via Fibre Channel, iSCSI or netork attached storage (NAS) are forecast to increase from 40 percent now to 68 percent in 2007.
In addition, 76 percent are using or expect to use server virtualization, but there is far less interest in storage virtualization and only "limited adoption," according to the survey.
Adoption of IP storage remains somewhat limited, with only 14 percent using iSCSI. While vendor support and customer interest in iSCSi may be high (71 percent), "we believe server virtualization and blade technology (both drive FC SAN attachment to servers) have delayed and possibly reduced the overall demand for IP storage," Renouard wrote.
Some 40 percent expect to spend more on tape this year, while 48 percent plan to spend less, a shift from last year's results, in which only 26 percent said they planned to spend less on tape. "This suggests headwinds for the tape market in 2005," Renouard said, and he attributed the change to alternate technologies. "We believe the emergence of ATA for disk-to-disk-to-tape backup has begun to cannibalize tape sales, and will continue to limit growth," he said, especially for tape automation vendors like StorageTek, Advanced Digital, Overland and Quantum. One thirs of surveyed users are tapping ATA for primary storage, and Baird predicts it will become a bigger competitor to Fibre Channel as customers get more experience and realize better performance with the low-cost disk technology.
The 80 companies surveyed represent $208 billion in total revenue and 12 petabytes of total storage capacity. Collectively, the sample owns 58,000 servers, 636,000 PCs and have a median number of three data centers. The mean IT budget for each respondent was $70 million.