From the revenue growth point of view, storage arrays are pretty straightforward. The real growth magic comes from startups – Chris Mellor
At their annual user conference last month, EMC stated that they were not happy with only 30% share of the storage market, and that they are eyeing the remaining 70%. Since this was a user conference, the bravado was hardly surprising. The statement, however, did coincide with the appearances of a number of articles and analyst research reports which question the outlook for not only EMC but also other legacy storage vendors. By one account, according to IDC’s External Disk Storage Systems Quarterly Tracker, sequential revenue for the top six storage vendors – HP, EMC, Dell, Hitachi, NetApp and IBM – declined at a steady rate throughout 2012. While sales for the top six storage vendors dropped sequentially from $4.9bn to $3.8bn between Q2 and Q4 of 2012, the combined sales for the “others” category steadily grew. By the final quarter of 2012, revenue for the latter category reached $2.1bn, surpassing the sales of EMC for the first time.
In an article entitled "Grim outlook for big storage as revenues dip across board", Chris Mellor from The Register made the observation that "Mainstream storage vendors seem to be in trouble as Dell, HP and IBM's storage revenues have tanked over the past two years".
Mellor mentioned that Stifel Nicolaus analyst Aaron Rakers created a spreadsheet comparing his records of how these vendors' storage revenues changed quarter by quarter.
The reddish area marks out negative growth rates. Although EMC and Netapp fared better than the other three, they both had declining growth rates with EMC teetering around no growth.
Mellor concluded that “from the revenue growth point of view, storage arrays are pretty straightforward. The real growth magic comes from startups.”
The need for IT infrastructure is only growing. It’s the means that are changing – Robin Harris
Looking at the same trends from a different perspective, storage guru Robin Harris compares the current market landscape in storage to the mainframe market in the 70s in a two part blog series entitled “EMC and the 7 dwarfs". Robin concludes by saying "Since the advent of RAID systems in the early 90s we haven’t seen much turnover in the major players. That’s about to change. The need for IT infrastructure is only growing. It’s the means that are changing." He mentions Tintri among several other storage vendors as the "aggressive, new architecture storage companies" that are ushering in these changes.
The key observation Robin made here which is also supported by market forecast from various sources is that demand for storage is growing. Why then are the legacy storage companies struggling? The answer lies in the aforementioned “others” category which includes a group of rapidly growing start ups such as Tintri. Whether it’s faster storage based on flash or smarter VM-aware storage that understands virtualization, customers are responding.
For the mainstream storage providers, their portfolios of products are fundamentally based on legacy architectures, some of which are almost 20 years old. To put into context just how much things have changed in that period - 20 years ago, virtualization on industry standard servers didn’t exist, neither did 10 GB Ethernet; and of course Al Gore had yet to invent the Internet. With these kinds of sweeping changes all around the island of legacy storage, it’s hardly surprising customers are looking for modern alternatives – in another word, storage in the “Others” category.
Legacy companies are trying to come up with quick fixes or short cuts. It won’t be easy. For more on this topic, read my three-part blog series on virtualization, storage, and the software-defined data center.
So setting aside the chest thumping and wishful thinking, it may be wise for EMC to first worry about how to hold on to the 30% before going after the 70%.
As for the other incumbents, things are likely to get even tougher for them but all these innovations in storage are great for customers.
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