Sales of disk storage systems -- which contain much of the world's digital information -- fell 18 percent in the first three months of this year, hit by deep cuts in technology spending, according to industry research firm IDC.

Market leaders Hewlett-Packard Co, EMC Corp, International Business Machines Corp and Dell Inc all saw double-digit declines in total sales of disk storage systems, as companies downsize and cut back on technology costs.

The drop follows an even more severe 24 percent first-quarter decrease in sales of servers, the computers which control networks, reported by IDC last month.

Hewlett-Packard was the hardest hit, with a 25.8 percent drop in total first-quarter worldwide disk storage sales to $975 million from $1.3 billion a year ago. EMC's comparable sales fell 16 percent, IBM's fell 21.7 percent and Dell's fell 17.2 percent.

Hewlett-Packard ceded some market share to rivals but held its spot at the top with 17.4 percent of the market. It was followed by EMC with 15.5 percent, IBM with 14.4 percent and Dell with 11.7 percent.

The disk storage system vendors are really seeing the impact of the global economic downturn in the first quarter revenues, said Steve Scully, a research manager at IDC.

We'll probably not see any significant return for the second quarter of 2009 and then any return that comes back will certainly be slow through 2009, he added.

IDC noted that although storage revenues were down, the overall disk storage capacity shipped in the first quarter was 2,146 petabytes, up 14.8 percent from a year ago, suggesting that demand for data storage is still growing.

One petabyte is 1,000 terabytes. To put that in context, popular social site Facebook says the 60 billion images it has stored from users takes up 1.5 petabytes of storage.

People have a lot of opportunities on the server side with virtualization and other things but they're still cranking out a lot of data, said Scully, explaining why storage system sales suffered a lighter decline than servers. The number of banks might be less but not the number of bank accounts.

(Reporting by Bill Rigby; editing by Carol Bishopric)

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