The computer storage sector manufactures magnetic, optical, and tape storage and retrieval products for computer equipment. These products range from the basic desktop computer floppy and hard disk drives to independent storage management systems such as complex tape library and autoloader systems implemented in large enterprise networks.

The call for extra storage capacity and functionality has risen sharply, as microprocessors have become faster, software applications have become more resource intensive, and network computing has become more prevalent. Attempts to harness processing power and give users more capabilities have made the normal new software application demand vastly more storage space than former versions. On personal computers, storage needs have further evolved and multiplied because of rising multimedia features and content, such as DVD movies and downloadable music on the Internet. At the same time, corporate systems needed to deal with escalating storage and processing wishes from internal users, as well as from the Internet.

Shipment values for computer storage devices and equipment like tape libraries, which equaled $9.0 billion in 2000, fell to $8.2 billion in 2001. At that time period, approximately 66 companies competed in the domestic market. In spite of the myriad forces inspiring demand for storage devices, the industry, like other computer hardware segments, has been hurt by aggressive price competition. Such pressures have prompted substantial consolidation throughout the industry and have introduced cost cutting at several storage device vendors. In addition to increased price competition, the market for storage devices was prone to a weak economic climate in the early 2000s. This presented challenges across practically every product segment in the computer industry, as manufacturers dealt with decreased spending and assurance levels in both the consumer and corporate sectors.

The computer storage industry continued to deal with both pressures and opportunities associated with storage outsourcing services, or storage service providers, or SSPs, at the start of 2000s. These web-based services sell storage space and management tools that subscribers can simply connect to and use, allowing companies to avoid buying and maintaining storage hardware and software themselves. Starting in early 2000s, the nascent SSP field was altering how storage devices are used and marketed. It also presented an opportunity for storage equipment companies to branch into services. By 2001 telecommunication industry leaders like World Com and AT&T were competing in this sector. Internationally, IDC, a leading consultant in technology intelligence and industry analysis, forecast spending on SSPs to grow from $150 million in 2000 to $10.5 billion in 2005, according to Computing Canada. This increase reflected a compound annual growth rate of nearly 134 percent.

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