Enterprise Storage 2016 - The New Dell/EMC will be dominate
Much like the Server hardware and Server OS markets, the Enterprise Storage market has multiple views of how it is measured and therefore how you look at the rankings.
For the latest numbers released by IDC for Q2 2016 - let's look at the rankings.
First for what is called the Total Enterprise Storage Systems Market. This view includes not only traditional external SAN/NAS arrays but also direct attached storage (DAS) and Server based storage. The industry sold $5.66B in Q2 of 2016
EMC Ranks # 1 with $1.59B in revenue and a 18.1% market share. But that reflects a 5.5% decline over Q2 of 2015.
HPE is #2 with $1.55B in revenue and a 17.6% market share. HPE saw an 8.8% increase over 2015.
Dell is #3 with $1.01B in revenue and an 11.1% market share. Dell saw the largest growth at 13.8% which is reflective of the rapid growth in server based storage.
IBM is #4 with $601M in revenue and a 6.8% market share. IBM experienced a 15.6% revenue decline over 2015 - but some of that is reflected from their sale of their Server business to Lenovo.
NetApp is #5 with $595M in revenue and a 6.7% market share which is about a 3.2% decline over 2015.
Like with the server hardware market - there is the elephant in the room called ODM. These ODM Direct vendors sell to what are called the Hyper scale customers like AWS, Azure, Facebook, etc. ODM revenue was actually way down in Q2 @ $794M a 21% decline vs 2015. But that appears to be more of pause than a trend.
Finally there is the Other category - so this would include companies like Pure, Simple, along with all sorts of niche players. They sold $1.52B.
The Hybrid and All Flash is driving the business along with a growing server storage market. Dell often cites that they actually sell more individual disks than anyone - when you include all the server storage.
The Second Market view is for External Enterprise Storage Systems. So think NAS/SAN Arrays only - so excluding Server/DAS storage.
In this view the rankings change.
While EMC is still #1 and HPE #2 - the HPE revenue measurement drops significantly to $602M when you exclude their Server/DAS storage. In this market view EMC's market share jumps to 28.2%. For HPE that is over a $900M drop in revenue
NetApp and IBM move up to #3 and #4 and then there is a virtual tie between Hitachi and Dell for 5th.
Like with HPE, the Dell revenue drops significantly to $394M - when you exclude Server/DAS storage. That over $600M in revenue difference shows you how much Server/DAS storage is being consumed
Of note the ODM Direct category falls away in this ranking. The hyperscale folks do NOT buy these kinds of arrays. They buy large volumes of disk for either specific storage sleds that get placed in their racks or large DAS storage servers.
From a market trend perspective, there is a definite movement towards local storage. From Hyperconverged solutions like Nutanix, Simplivity and VMware to large storage servers - like the Dell DSS 7000 that can provide upwards of 720TB in just 4U that runs Object Store solutions like Ceph or Caringo. These are the areas seeing the highest growth.
Flash is also huge and with SSD densities rising and prices falling are becoming more and more attractive to customers as they look to improve performance.
And while customers will certainly still purchase traditional arrays, with higher density HDD/SSD disk readily available along with the falling prices for SSD, customers will need less in terms of "disk trays" to meet their storage needs.
Combine that trend with the movement towards cloud storage for Backup, DR, Archive and general object storage and there is going to be pressure on these traditional array vendors.
So this Q2 2016 view does not reflect the completion of the Dell/EMC merger that took effect in September. From both a total enterprise storage systems view or the external array view - the new Dell/EMC will become the dominate player in the space with 29.6% and 35.2% market shares respectively. By comparison - #2 HPE will be at 17.6% and 10.6% for those same measurements.
To me this means something has to happen in the storage market. While there have been rumors around for years about NetApp being sold to IBM or others, the reality is it hasn't happened. But the Dell/EMC merger may be a catalyst.
So of note - one big enterprise IT vendor's name is missing from these lists and that is Cisco. While Cisco does have a entire like of SAN Networking gear and partnerships with EMC, NetApp and Hitachi around Pod based solutions like VCE Vblock and NetApp FlexPod - without their own storage offerings - they are limited to the whim of these partnerships.
Cisco did recently announce their HyperFlex offerings in the Hyper Converged space - but to be honest that's more of a me too offering. And if the new Dell/EMC decides to go to market with an alternative to the Vblock - then Cisco may be in trouble in their server space.
Bottom line is the new Dell/EMC will be the dominate player in Enterprise Storage market and without some kind of merger, HPE, NetApp and others will continue to struggle for market relevance. But Cloud and Local Storage movement is going to continue to put pressure on the external array market.
For the latest numbers released by IDC for Q2 2016 - let's look at the rankings.
First for what is called the Total Enterprise Storage Systems Market. This view includes not only traditional external SAN/NAS arrays but also direct attached storage (DAS) and Server based storage. The industry sold $5.66B in Q2 of 2016
EMC Ranks # 1 with $1.59B in revenue and a 18.1% market share. But that reflects a 5.5% decline over Q2 of 2015.
HPE is #2 with $1.55B in revenue and a 17.6% market share. HPE saw an 8.8% increase over 2015.
Dell is #3 with $1.01B in revenue and an 11.1% market share. Dell saw the largest growth at 13.8% which is reflective of the rapid growth in server based storage.
IBM is #4 with $601M in revenue and a 6.8% market share. IBM experienced a 15.6% revenue decline over 2015 - but some of that is reflected from their sale of their Server business to Lenovo.
NetApp is #5 with $595M in revenue and a 6.7% market share which is about a 3.2% decline over 2015.
Like with the server hardware market - there is the elephant in the room called ODM. These ODM Direct vendors sell to what are called the Hyper scale customers like AWS, Azure, Facebook, etc. ODM revenue was actually way down in Q2 @ $794M a 21% decline vs 2015. But that appears to be more of pause than a trend.
Finally there is the Other category - so this would include companies like Pure, Simple, along with all sorts of niche players. They sold $1.52B.
The Hybrid and All Flash is driving the business along with a growing server storage market. Dell often cites that they actually sell more individual disks than anyone - when you include all the server storage.
The Second Market view is for External Enterprise Storage Systems. So think NAS/SAN Arrays only - so excluding Server/DAS storage.
In this view the rankings change.
While EMC is still #1 and HPE #2 - the HPE revenue measurement drops significantly to $602M when you exclude their Server/DAS storage. In this market view EMC's market share jumps to 28.2%. For HPE that is over a $900M drop in revenue
NetApp and IBM move up to #3 and #4 and then there is a virtual tie between Hitachi and Dell for 5th.
Like with HPE, the Dell revenue drops significantly to $394M - when you exclude Server/DAS storage. That over $600M in revenue difference shows you how much Server/DAS storage is being consumed
Of note the ODM Direct category falls away in this ranking. The hyperscale folks do NOT buy these kinds of arrays. They buy large volumes of disk for either specific storage sleds that get placed in their racks or large DAS storage servers.
From a market trend perspective, there is a definite movement towards local storage. From Hyperconverged solutions like Nutanix, Simplivity and VMware to large storage servers - like the Dell DSS 7000 that can provide upwards of 720TB in just 4U that runs Object Store solutions like Ceph or Caringo. These are the areas seeing the highest growth.
Flash is also huge and with SSD densities rising and prices falling are becoming more and more attractive to customers as they look to improve performance.
And while customers will certainly still purchase traditional arrays, with higher density HDD/SSD disk readily available along with the falling prices for SSD, customers will need less in terms of "disk trays" to meet their storage needs.
Combine that trend with the movement towards cloud storage for Backup, DR, Archive and general object storage and there is going to be pressure on these traditional array vendors.
So this Q2 2016 view does not reflect the completion of the Dell/EMC merger that took effect in September. From both a total enterprise storage systems view or the external array view - the new Dell/EMC will become the dominate player in the space with 29.6% and 35.2% market shares respectively. By comparison - #2 HPE will be at 17.6% and 10.6% for those same measurements.
To me this means something has to happen in the storage market. While there have been rumors around for years about NetApp being sold to IBM or others, the reality is it hasn't happened. But the Dell/EMC merger may be a catalyst.
So of note - one big enterprise IT vendor's name is missing from these lists and that is Cisco. While Cisco does have a entire like of SAN Networking gear and partnerships with EMC, NetApp and Hitachi around Pod based solutions like VCE Vblock and NetApp FlexPod - without their own storage offerings - they are limited to the whim of these partnerships.
Cisco did recently announce their HyperFlex offerings in the Hyper Converged space - but to be honest that's more of a me too offering. And if the new Dell/EMC decides to go to market with an alternative to the Vblock - then Cisco may be in trouble in their server space.
Bottom line is the new Dell/EMC will be the dominate player in Enterprise Storage market and without some kind of merger, HPE, NetApp and others will continue to struggle for market relevance. But Cloud and Local Storage movement is going to continue to put pressure on the external array market.
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