This IDC study presents a current market sizing and forecast for storage spending in the telecom market. The most important trends affecting disk storage system demand and strategies in the service provider market include:

• More aggressive adoption of tiered storage: Service providers have been slow to leverage lower-cost/higher-capacity storage solutions compared with other industries. This resistance will fade in the coming years with growing datacenter and application consolidation as well as improvements in secondary storage system reliability and maturing of supporting software solutions in areas such as storage virtualization (both file and block), data protection, and active archiving.
• Growing demand for file-based storage: A combination of factors is driving rapid expansion in the deployment of file-based storage solutions within service providers. Service providers (especially wireless and cable service providers) are storing, and then protecting, growing volumes of file-based rich content (both user generated and commercially distributed). Hosting service providers are also expanding their offerings in SMB disaster recovery and evaulting services that focus primarily on protecting file-based information. This shift toward file-based applications and storage requirements will boost demand for NAS solutions but will not be driven solely by NAS. This trend will also drive demand for clustered and grid-based file solutions built on internal server and SAN architectures as well as file virtualization solutions that allow service providers to more effectively manage large NAS pools.
• Greater replication of data on disk systems for business analytics and long-term archiving: Like many other industries, including financial services and retail, service providers (wireless and wireline in particular) are boosting their use of data mining and business analytics tools to combat fraud, reduce churn, and more effectively target new services offerings. In response to evolving regulatory requirements, they are also faced with new challenges (e.g., ediscovery requests) in the areas of long-term archiving for call detail records (CDRs) and consumer-created content. Both of these trends are spurring demand for more sophisticated information classification/management capabilities and the greater use of archival disk solutions in place of existing tape-based archival solutions.
• Hybridization of storage and server form factors and product lines: Today, technology development in the storage and server industries is in considerable flux. A short list of technologies reshaping server and storage design and packaging includes multicore, 64-bit processors, bladed architectures (including ATCA), high-speed interconnects (e.g., IB, PCI Express, 10Gbps Ethernet), and new storage interconnects (SAS and 2.5in. drive form factors). One of the key new markets where server designers are seeking to innovate is the storage market. IDC expects the cross-fertilization between server and storage domains to accelerate even faster in the coming years, with service providers emerging as major consumers of these new hybrid solutions. Storage business unit managers will have to become more adept at leveraging rapid technology transitions in server/storage architectures as opposed to simply updating existing storage platforms. They will focus more of their own investments on acquiring and/or developing more advanced and intelligent storage and data management software and solutions.
• Impact of IPTV and VOD: IPTV is often discussed as a driver of storage consumption in wireline service providers; however, IPTV will not significantly boost consumption of traditional storage hardware and software solutions during the next five years. In fact, wireline service providers will not be able capitalize on the overall explosion in rich content, which will spur much higher levels of demand for file-based storage solutions in wireless and cable environments. IPTV is really two markets: live streaming of video and video on demand (VOD). For wireline service providers, live streaming is the higher priority, and this type of IPTV is a more modest consumer of storage. In fact, much of the needed storage for such solutions will be dispersed across many network access points as part of content delivery networks (primarily an internal and low-cost DAS storage opportunity).
• Disaster recovery for the middle market: In regions such as the United States and Western Europe, the recent spate of natural and man-made disasters as well as new regulatory requirements (e.g., Sarbanes-Oxley, Basel II, and HIPAA) are forcing many large and midsize companies to develop more rapid and reliable disaster recovery programs. Many of these companies are developing lower-cost disaster recovery plans based on the server virtualization and physical colocation of server and storage systems at hosting datacenters. This will spur demand for low-cost modular storage, including iSCSI, to support the disaster recovery applications. It will also drive spending on more sophisticated data replication and backup software, including as part of data protection services for remote and branch office support (evaulting services).
• Web 2.0 and content depots: The current explosion in social networking and software-as-a-service (SaaS) companies continues to drive a rapid expansion in demand for storage systems and data protection services in hosting datacenters. Many of these companies use hosting datacenters as the base of operation for initial deployment and expansion into new geographies. A growing number are looking to hosting service providers for disaster recovery and archiving services. These "content depots" are emerging as major consumers of storage capacity as well as disruptors of existing storage systems business models. Their storage systems requirements are similar in many ways to a portion of the needs of both wireless and cable service providers, so they will influence the kinds of storage solutions deployed by a number of significant service providers in the coming years.

"The telecommunications sector represents one the fastest-growing and most dynamic parts of the storage industry," said Rick Villars, VP Storage Research at IDC.