IDC Asia/Pacific Expects Commoditization of External Disk Storage Capacity To Continue Driving Unit Pricing Downwards

31 August, 2006

Singapore and Hong Kong, August 31, 2006 – According to IDC ’s Asia/Pacific 's (Excluding Japan) Quarterly Disk Storage Systems Tracker, the external disk storage market in the Asia/Pacific (excluding Japan) region registered strong growth in the second quarter of 2006. IDC notes a robust 1 0.8 % growth in revenues th is quarter from the same period last year, reaching US$ 521.3 million.

Consistent with the trends in the previous quarters, t otal shipments of new external storage capacity in the region for 2 Q06 continued to climb at an exponential rate . There is an increase of 81.8% from the same period last year and a total of 62,289TB of external storage capacity shipped in this quarter. The continuing trend of exceptionally high storage capacity growth coupled with strong revenue growth propelled GB unit pricing downwards to a n ew low of US$ 8 .37 /GB.

"The same drivers of the downward trend in GB unit pricing over the past few quarters continue to ," push the prices down. These include the widespread use of cheaper Serial ATA (SATA) and Serial Attached Storage (SAS) drives and vendors' emphasis on the growth of the midrange disk systems market. Many midrange disk storage systems now feature the capabilities of their higher-end cousins and can be deployed for all but the most critical of applications and uses," says Jack Yu, Market Analyst for IDC's Asia/Pacific Storage Research.

Commoditization of disk storage systems , which has been mostly affecting the volum entry e and midrange segments of the market, is beginning to affect impact the enterprise segment as well. This has driven many some customers to now buy new storage capacity based on pric e ing rather than on overall value to the organization . This is further ex erc acer a bated by the use of product-centric , electronically-enabled auctioning platforms for project tendering in some countries, which mask the true value of complete solutions.IDC expects this development to further accelerate the fall in GB unit pricing going forward.

Referring to the overall disk storage market, Mr Mr. Yu continues, " IDC expects sustained high growth in this region as companies continue to acquire storage capacity to cope with exploding data growth. The majority of them are also expected to show a preference for networked storage systems as they allow for scalability and flexibilityV endors are building up their customer base and expanding reach into new areas . This includes partnering w ith vendors who have traditionally been strong in their respective areas (what does this mean?) , as well as acquiring those with specialized skills and established brand names i n the Asia/Pacific (excluding Japan) region . V endors are seen aggressively seeking to gro increase w ing their share s in the small-and medium-sized business market. This developement is witnessed in recent observations IDC has observed that include the recent introduction of new midrange disk storage arrays as well as the rede p lo ployment of resources to reposition and better align companies with market opportunities ."

China Remains the Largest Market in the APEJ Region

China continues to be the major contributor dominates the to the region in terms of storage demand. External disk storage revenue in the PRC in 2 Q 2005 06 was US$ 148.2 171.0 million, accounting for 3 2.8 0.6% of the total APEJ market. Along with the PRC, Australia (18.0%) and Korea ( 14.5%) 16.0%) and Australia (15.5%) remained the top 3 countries trailed the PRC as the next largest markets in the region.

Top Vendors Continue to Lead the Market

Both HP and EMC IBM continued to le ad the APEJ external disk storage markets in 2 Q1 Q06, with 2 0.3 1.6% and 20.5 19.4% of the market respectively. However, both vendors' revenues contracted marginally from the same period last year, while their competitor IBM grew 6.8% in revenue to achieve 17.3% in market share. Compared with the same period last year, HP's revenue contracted 9.0% while IBM's grew by 9.5%. EMC emerged in third place with 19.3% market share, having shrunk by 7.4% from the same period last year.

Top 3 Vendors, APEJ End-User Revenue, 2Q 106

External Storage Systems(USD million)

Source: IDC Asia/Pacific Quarterly Disk Storage Systems Tracker, 1 2Q06

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