The State of Enterprise Storage Q1 2015
Posted on Thursday, April 9, 2015
Q1 2015 has been difficult for enterprise storage vendors according to the latest IDC industry report. Year on year sales across the industry are down 0.4% to $25.4 billion on the same period in 2014.
As the industry leader, analysts were particularly interested in how EMC had performed, noting a 0.3% loss in overall market share. This equates to a 1.5% drop in revenue – the first recorded since 2009. EMC hopes that the launch of the all-flash XtremIO array and ScaleIO converged storage infrastructure products will help reverse the decline through the rest of the year.
The report also shows that the fortunes of NetApp closely mirror those of EMC; NetApp market share also declined by 0.3%. Perhaps more worryingly for NetApp shareholders, OEM revenues were down 22% after terminating a partnership agreement with IBM.
The end of the NetApp deal also had an effect on IBM revenue, leading to a 1.2% reduction in market share. Revenue from external storage systems dropped by 10.5% over the past year.
What does it mean?
The storage industry contraction could be indicative of two trends. Firstly Cloud storage services continue to eat into the onsite data hardware market as businesses move away from capital investment in physical devices to take advantage of limitless online capacity. Concerns about data security means that enterprise adoption is actually slower than expected, making this the less likely of the two scenarios.
Secondly organizations still trying to recover from years of IT budget limitations are focusing resources on new developments and investments that support wider business strategy. As a result, many of these firms are choosing to take out post-warranty support and maintenance services with TPMs, rather than upgrade or replace existing storage systems. By extending the period between hardware refresh cycles, these organisations are able to realise significant cost-savings, particularly as their existing systems continue to perform to the required standard.
Whether this drop in sales is the first sign of a general downward trend remains to be seen. However the fact that businesses are considering alternatives to the traditional OEM-defined upgrade cyclesuggests that the storage market is in the first stages of a revolution. We await future IDC reports to prove whether the Cloud is taking market share, or extended hardware refresh cycles are affecting new sales. Either way, enterprise data storage users are successfully cutting the cost of operations apparently at the expense of hardware vendors.