A steadily consolidating storage market veered into the fast lane last week with EMC's $1.3 billion purchase of Legato Systems. And experts see nothing but open road ahead for more mergers and acquisitions.

The storage industry has witnessed about 125 deals since 2001, with 26 having been consummated this year. EMC has been on a spree over that span, having acquired 10 software companies - including Astrum, FilePool, Prisa and Terascape - as part of a strategy to boost software revenue from 23% to 30% of the company's total take. Meanwhile, more than 50 storage companies have declared bankruptcy or folded since 2001.

The bottom line for customers is that there are advantages and disadvantages in consolidation.

"Consolidation lets users buy integrated products from a single vendor rather than point products from a variety of vendors," says Anders Lofgren, senior analyst for Forrester Research.

The downside is that customers might lose bargaining power.

"Even though customers will get better service and integration as consolidation happens, because there are fewer players, there is less price stability," says Brian Babineau, an analyst with Enterprise Storage Group. "Customers lose their leverage in consolidated markets. Vendors can control pricing a little better."

Analysts say a variety of storage technologies remain targets for acquisition by EMC, HP, IBM and Veritas.

"The whole area of storage virtualization or abstraction, and along with that any number of storage management software vendors, are ripe for acquisition by the major systems vendors," says Ron Johnson, senior partner for the Evaluator Group.

As the products become more acceptable to end users, you are going to see the systems vendors like IBM and HP move into acquisition mode to make themselves more competitive," he adds. "[Virtualization start-ups] DataCore and Falconstor, in particular, are ready for acquisition."

Ray Paquet, research director for Gartner, points to another area that has gained attention recently thanks to heightened enforcement of government regulations.

"I would say the next set of acquisitions in storage would be in the archiving and life-cycle management products," Paquet says. "KVS, Educom TS, Outerbay, Princeton-Softech would be the likely companies [to be acquired]."

Legato was a player in this segment with its acquisition of OTG Software last year.

Backup is another area that might spur further consolidation, Babineau says.

"The next round of acquisitions comes around the back-up area because that's where there's still the most pain for customers," he says. "Companies like Revivio and Timespring, which are building niche technologies that solve real business problems. Bocada and Avamar have great back-up strategies. They need to find channel relationships with large storage vendors before an acquisition will be considered."