27 Sep The State Of Storage: Second Quarter Enterprise Market Trends
The horse race
At its heart, an IDC quarterly report is for the race watchers. Technology and market watchers want to know who is winning and—more interestingly—who isn’t. The storage market has long been dominated by a handful of big players, surrounded by a wide smattering of emergent technology companies—all of whom believe that they are holding the key to the next big storage disruption. The emergent players are making some noise this time around and gaining traction, but the top five list remains populated by very recognizable names.
A new market share leader did emerge during the second quarter. Hewlett Packard Enterprise has been neck and neck with Dell for the past several quarters, but inched ahead this time around, delivering just over 20% of the total enterprise storage systems market. Hewlett Packard Enterprise has found its groove and is executing with extreme precision. The company’s storage group is no exception. The acquisitions of Simplivity and Nimble Storage earlier this year are paying off in a very good way for the enterprise giant. HPE is making positive statements about its increase in AFA sales, and are openly talking about moving Nimble Storage’s Infosight predictive analytics solution into its 3Par product line. Hewlett Packard Enterprise didn’t dominate in external storage (coming in just behind Dell ), so much of this increased share can be credited to converged infrastructure, HCI, and other server-centric offerings.
Dell and Hewlett Packard Enterprise are equally dominant players in the enterprise storage market, and they will likely continue to fight over the number one spot. Their respective technologies are solid, with each having different competitive advantages. The competition will only prove to be good for the enterprise buyer.
Rounding out the top five is IBM and Hitachi , respectively, who themselves have switched positions since last quarter. These two players remain relatively flat quarter over quarter, taking in just about a billion dollars between them this time around.
It will be interesting to see where Hitachi lands during the next quarter. Just after the IDC report was published, Hitachi announced a reorganization between Hitachi Data Systems, Hitachi Insights Group, and Pentaho. This brings together Hitachi ’s storage, big data, and analytics plays into a single group, which they are naming Hitachi Vantara. This could be a strong move for Hitachi overall, but may cause some short-term distraction to the teams being integrated.
The top five vendors are solidly placed, but there are trends over the past few quarters that show a shift. The top tier players are being challenged by the ODM community in some markets, particularly in hyper-scale datacenter. They are also being challenged by the persistent group of competitors that IDC lumps together into a category that they call “others”.
The ODMs are gaining traction and making good revenue, selling the same hardware to end customers that they’re selling to the storage OEMs themselves. The second quarter showed a significant share jump from the first quarter for this group, with a total ODM share of 23.3%. More astonishing was the $2.5B in revenue that the ODMs collectively brought in, a 73.5% increase in revenue year over year. IDC notes that some of this revenue was “event driven” in the hyper-scale space, so the large numbers may not hold over time. Even so, there’s been consistent growth of the ODMs over the past several quarters. It’s worth watching both how the OEMs respond to this, as well as how much of this product moves into actual enterprise data centers.
This is the group that is leading the advancement of NVMe-based arrays and fabrics, playing with Intel ’s Optane memory, building hybrid cloud solutions, and focusing on solving tomorrow’s enterprise problems with a different mindset from the traditional storage players. Some of the more prominent companies to watch in this space are Pure Storage, Tintri, Vexat. They aren’t alone – there are a dozen other startups that we’re watching, and will write about soon.
While declining revenue numbers may make you a cautious investor in any of these companies, there’s no question that it’s a good time to be an enterprise buyer. The market is hyper-competitive. There is price pressure across the board from all of the major OEMs. The top five are all solid technology providers, but emergent players are beginning to drive new technologies into the datacenter. The new technologies are very much worth evaluating, as there are some real winners among them. Changes are coming.