Enterprises and service providers alike are investing more in external storage as they virtualize servers and build cloud-based services, said Gartner analyst Roger Cox. Migration from tape to disk for backup is also helping the market, he said. In addition, slow spending in 2009 amid the economic doldrums led to pent-up demand, he said. Meanwhile, growth in China and India is helping to power increased external storage spending.

Spending on file-based storage platforms is growing much faster than for block-based systems, though the latter remain the biggest part of the market, according to Gartner. File-based external storage system sales grew 36.2 percent from 2009 to 2010, compared with just 14.9 percent for block-based products.

Enterprises are deploying the file-based systems to deal with unstructured data such as digital media and scanned medical records, which are proliferating much faster than block-based content such as databases, Cox said. File-based storage is also better suited to virtualization, he said.

"It's easier to install and provision and manage file-based storage in a virtualized server environment," Cox said. EMC and NetApp have capitalized on this advantage by focusing on NFS (Network File System) platforms for storage in virtualized data centers, he said.

Overall, in 2010 the external controller-based storage market grew 18.1 percent from 2009, when revenue reached just $16.5 billion, and beat record 2008 revenue of about $18 billion, according to Gartner. Results for the fourth quarter of 2010 were also strong, with a 16 percent increase in revenue from 2009's fourth quarter.