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

Demand for extra storage capacity and performance has risen sharply, as microprocessors have become faster, software applications have become more resource intensive, and network computing has become more of a standard. Attempts to harness processing power and give users additional features have made the normal new software application require vastly more storage space than former versions. On personal computers, storage needs have further grew and multiplied because of rising multimedia features and content, for example DVD movies and downloadable music on the Internet. Meanwhile, corporate systems needed to cope with escalating storage and processing wishes from internal users, as well as from the Internet.

Cargo values for computer storage devices and equipment like tape libraries, which equaled $9.0 billion in 2000, decreased to $8.2 billion in 2001. At that time, approximately 66 companies competed in the domestic market. Despite the myriad forces inspiring demand for storage devices, the industry, like other computer hardware sectors, has been hurt by aggressive price competition. Such pressures have encouraged significant consolidation throughout the industry and have brought cost cutting at several storage device vendors. In addition to increased price competition, the market for storage devices was at the mercy of a weak economic climate in the early 2000s. This presented challenges across practically every product group in the computer industry, as manufacturers faced decreased spending and confidence 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 beginning of 2000s. These web-based services sell storage space and management applications that clients can simply connect to and use, allowing companies to avoid purchasing and maintaining storage hardware and software themselves. Starting in early 2000s, the nascent SSP field was modifying how storage devices are used and marketed. It also presented an opportunity for storage equipment companies to branch into services. By 2001 telecommunication giants like World Com and AT&T were involved in this sector. Internationally, IDC, a leader 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 growth reflected a compound annual growth rate of nearly 134 percent.

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