Enterprises are reaching deeper into their pockets to add data storage capacity to their computer networks, according to an industry report released today.

Worldwide revenue for external disk storage systems rose to $4.3 billion (£2.3bn) in the third quarter of 2006, a 9.9% increase compared to the same period last year, according to the research firm IDC.

This is the 14th consecutive quarter of storage revenue growth, a trend IDC attributes to more companies buying storage because of the demand to save more data, and to existing customers buying larger capacity systems.

"There is definitely a bump in the quarter on the systems side," said Brad Nisbet, manager of IDC's Storage Systems Program.

Sales growth has been particularly strong for midrange-priced systems while flat for high-end systems, Nisbet said. While the cost per megabyte of storage has continued to decline, the average selling price of systems has continued to rise because enterprises are buying larger and larger capacity storage.

The market share rankings of the top storage vendors were unchanged in the latest report.

EMC kept the number one spot with a 21.4% share on an 18% increase in revenue over the year-ago quarter to $927 million (£471m). HP ranked second with a 17.6% share on only a modest 1.8% revenue increase to $760m (£386m).

Third place went to IBM with a 13.7% share. Dell, which sells co-branded Dell/EMC storage, ranked fourth with an 8% share, and Hitachi Data Systems was in fifth place with a 7.9% share. And the entire disk storage systems market grew 7.9% to $6.2bn (£3.2bn).

Also of note, the market for storage area network (SAN) technology grew 17.3%. The SAN market excludes sales of network-attached storage (NAS), in which servers are liked to just one storage appliance. SAN refers to a larger network of multiple storage devices that are grouped together as a single resource.

In particular, storage networks linked together with iSCSI (for Internet Small Computer System Interface) connections showed dramatic growth of 108.4% over the third quarter of 2005. IDC attributes that growth to the ease of use and low total cost of ownership of iSCSI-based networks compared Fibre Channel-connected storage.

The IDC report excludes sales of tape storage technology.