Data storage, which has typically offered refuge for tech firms battling tough economies, is finally feeling the effects of the spending crunch.

This is the sobering message from technology research firm IDC, which says that quarterly storage revenue has slipped for the first time in more than five years.

Recent years have seen an explosion in data, earning storage a reputation as one of the more recession-resistant parts of the tech sector, particularly compared to PCs and servers.

This spelled good news for tech firms such as





(NTAP) - Get Report



(IBM) - Get Report

, and


(HPQ) - Get Report

, which could all count on solid storage growth. That's no longer the case, according to IDC, which saw total fourth-quarter revenue from disk storage systems plunge 5.9% year over year to $7.3 billion.

"Because of the global economic crisis, the last quarter of 2008 was tough for the disk storage systems market," said Natalya Yezhkova, an IDC research manager, in a statement.

IDC blamed weakness in server sales for the slump and noted that revenue from external disk systems declined 0.5% year over year, its first slip in more than five years.

Clearly, there are few places for tech firms to hide in the current climate.

"Previously, storage systems have been a safe haven, especially when you think about the growth that we expect in data volumes -- it's something like a factor of 10 every five years," says Jerry Luftman, distinguished professor at Stevens Institute of Technology in Hoboken, N.J. "This is the result of the recession and the fact that information systems organizations are being asked to hold back on purchases."

The storage slowdown is not exactly a bolt from the blue, as evidenced by tech firms' quarterly results.

IBM, for example, saw


storage revenue decline 20% year over year , with sales of disk systems down 16% and tape products plummeting 31%. It was a

similar story

at Hewlett-Packard, where revenue from the firm's Enterprise Storage and Servers division was down 18% year over year, with storage sales falling 7%.

Storage-specific companies have also been feeling the burn. NetApp swung to a

$75 million

loss last month prior to announcing a major




storage giant


took a profit hit

after the firm announced a plan to shed about 7% of its workforce. The firm has, however, forecast a second-half pickup in IT spending.

Despite all this doom and gloom, IDC acknowledges that not all parts of the storage sector are suffering.

"High-end storage was impacted negatively by a freeze in end-user spending and longer purchasing cycles, but some low-end and midrange storage segments actually increased," wrote Yezhkova.

Other analysts have also noted a change in storage buying, with users opting to 'tier' their data by moving it onto lower-cost hardware.

"A number of storage vendors highlighted the move away from higher-end systems, with customers purchasing more lower-end arrays and tiering more aggressively to accommodate the growth of data volumes and lower budgets," wrote

Goldman Sachs

analyst David Bailey, in a recent note.

Like other tech stocks, shares of storage firms have retreated with the broader economy. EMC, which hosts its analyst forum in Boston, Mass., next week, is down 34% compared to this time last year and NetApp's shares have slipped 42% over the same period.

Despite the spending slowdown, Goldman Sachs' Bailey remains relatively bullish on storage, particularly compared to other technologies.

"Our meetings and our recent checks suggest that while overall spending on hardware remains soft - including delays in upgrades of PCs, servers, and printers, storage should stand out as the relative bright spot in the hardware sector," he wrote. "

This is driven by growing digital content and the necessity to back up and archive data for security, compliance, and disaster recovery purposes."

IT also has a very different role now compared to previous recessions, which should bode well for storage technology, according to Stevens Institute's Luftman.

"In previous downturns, IT was the first place to cut, but that's not the case this time," he says. "Most organizations are working with their IT organizations to improve expenses, so there's a bit of lemonade in these lemons."

EMC currently dominates the storage market with market share of 23.3%, according to IDC. IBM and H-P are in second and third place with 15.7% and 13%, respectively.