In Q1 2016 storage systems, disk and nand drives and DRAM offerings declined in revenue, units and capacity. So much for Big Data marketing and the prediction that so much unstructured data from IoT devices, social media, etc. would swamp users to such an extent that they couldn’t possibly handle it. Am I capturing all of the market? Perhaps not – adding cloud storage (part of IaaS), storage maintenance and software could make things look a bit better, but the forecasts from other research houses don’t include them any more than I do (click here to see our estimate of services and analytics in 2016). Is this a temporary blip? Certainly I expect the capacities of the 2 SSD categories to start growing again soon – I hold out far less hope for storage systems and disk drives.
The Figure shows the quarterly revenues of the 4 main types of raw and system storage (as always I will warn you of the double counting due to the raw storage being used in system products). Suppliers need to work out what’s going wrong and how to do something about it. Please read on.
Consolidation amongst the vendors is rife – not just in the disk drive market, where Seagate and Western Digital ate up all the other vendors apart from Toshiba, but also among the SSD manufacturers such as Micron. The most telling consolidation is among the storage system suppliers, where EMC is being acquired by Dell (slowing the revenues of both according to their recent press release) and SolidFire has become part of NetApp. Cross-disciplinary consolidation saw Seagate buy Dot Hill and (most importantly San Disk) in order to build a storage systems business. The gap between major and minor vendors in terms of revenues is clearer now Violin Memory and Pure Systems are publicly quoted companies. Since data is now probably the most important asset for enterprises choosing a new vendor is hard to do, no matter how significant they think their technology and cost reduction seem. The Figure shows market shares for storage systems in the year to the end of March. The most significant change in the recent past has been HPE jumping over NetApp to take second position. The addition of EMC and Dell give 28.1% currently, although I expect it will shrink somewhat once the deal is completed.
Table – storage systems market shares – year to end March 2015 and 2016
|<Q1 2015||Share %||<Q1 2016||Share %||Growth %|
Source: ITCandor, 2016
All of the leading storage vendors, with the exception of Pure Storage, declined in the last year (see the Table). In fact storage systems spending has declined every quarter since the beginning of 2012: the reasons include:
- The upcoming acquisition of systems leader EMC by Dell is creating a hiatus
- Disk drive markets have already consolidated as SSDs increase in the raw device mix
- SSD sales have peaked – at least for the time being
- Alternatives to traditional storage arrays are beginning to reduce the need for buying more capacity than large users need
- The vast majority of IoT and social media data is being thrown away rather than being stored for analytics purposes
- The move towards in-memory databases and analytics is reducing the reliance on disk
The widespread vendor consolidation will continue – perhaps to the point when there are only 2 or 3 vendors left in each submarket – say Dell, HP and NetApp in storage systems, SK Hynix and Micron in SSD joining Seagate,Western Digital and Toshiba in the disk drive market.
As for analysts and their firms it’s time to stop showing charts with growth in them, since (at least from my point of view) we haven’t had much for a long time and it doesn’t look as if we’ll get any soon. Not all of them are interested in measuring revenues, but they should take note nevertheless. As an analyst I’d rather be Cassandra warning Troy of its inevitable fall than an Ostrich with its head stuck firmly in the sand.