IDC Q4 2008 Storage Scorecard

Four times a year, IDC releases their market share analysis for the storage market. 

Even though most vendors don't talk much about it, just about every vendor subscribes to their service.  Much time is spent in conference rooms debating and discussing the numbers and their implications: by segment, by protocol, by geography, etc. etc.

I usually try to find a bit of time to reflect on a few trends that others might find interesting, but that's no substitute. 

And there were definitely a few thought nuggets with this round of analysis.

Before We Begin

Simply put, IDC's data is generally accepted as the most consistent, accurate and useful in the industry.  To get the real useful stuff, you have to be a subscriber, so I can only provide highlights here.

EMC as a vendor does not provide them any special insight into our business or numbers -- most of their work is external modeling using publicly available numbers.  IDC does not give any credit for OEM business, e.g. EMC through Dell, Hitachi through Sun, etc. -- what counts is the name on the box, not who actually made it.

Yes, we could have a long argument about methodology, categorization, etc. but -- generally speaking -- the numbers are surprisingly accurate, and -- since the methodology is consistent over a long period of time --trending is more useful.

This Is Not A Bragging Exercise

But facts are facts, so let's get this out of the way -- not only did EMC continue to rank #1 in every major category, but our lead increased as well -- EMC gained share in Q4 2008 and 2008 as a whole. 

You can see the obligatory press release here ...

The only other notable "winner" was Dell, who now gets credit for the EQL business they acquired.

Just about everyone else didn't do so well, relatively speaking: HP, IBM, NetApp, et. al. -- although I'm sure we're going to see some creative spin here before too long, as we usually do.

So, What Else Jumped Out?

No surprise, iSCSI is doing better!  According to IDC's Q4 numbers, iSCSI is now a healthy 12% of the overall SAN marketplace.

Dell, who sells a combination of EQL and EMC products in this space, ran away with the market share numbers at whopping 35%.  Congratulations, guys!

EMC selling under our own brand comes in at respectable 17%, and NetApp now battles HP (LeftHand?) for third place with 11%.

The NAS market is starting to look like a complete rout, according to IDC.  EMC has gradually opened up a roughly 20 point lead over NetApp in Q4 (43.8 % vs. 24.1%). 

And in the very broad "external RAID" category, although the pecking order at the top hasn't changed much, (EMC at about 25%, IBM at 16.3%, HP at 11.1%) there now is a neck-and-neck battle between Hitachi and Dell for fourth place (8.3% each).  NetApp looks to be heading for a battle with Sun for the next rung down.

And There Were Losers in Q4 2008

Not to be grim here, but a number of storage vendors had major setbacks in Q4 2008.  Since this was the first full quarter of significant economic downturn, it can perhaps be viewed as a preview of what's to come.

Both IBM and HP saw significant fall-offs in their storage business in Q4.  IBM's was particularly dramatic.  Maybe that's why we haven't heard much from TonyP lately?

Pure-play storage vendors weren't immune either.  IDC states flatly that NetApp saw a 5.4% decline in their networked storage market share (all protocols) from Q4 2007 to Q4 2008.  Compare that with EMC's 5.4% increase in the same category for the exact same time period. 

Strange symmetry, no?

And Hitachi seems to be finding new life in moving their products through HP and Sun as channel partners.  Didn't really affect the overall standings, but there were definite signs of life there.

Numbers Are What You Make Of Them

I always find IDC's market numbers very illustrative -- simply because they rise above all the noise and positioning that goes on in our vibrant little industry.  It's a great way to keep score.

Now, we all know that EMC is not perfect, and has plenty of opportunity to improve its game in any number of areas.

But, if someone were to ask me why EMC was doing so well, I'd probably point them to this.

Maybe FORTUNE doesn't think EMC is the world's best place to work, but they do think our products and services are pretty good :-)

Have a great weekend, everyone!

Comments

[Chuck Hollis]

Hi, this is Chuck

Before I get the inevitable question of "what do you think of the Gartner numbers?" the answer is that -- in my personal opinion only -- IDC puts far more effort into their work. We use the IDC numbers for our internal planning here, as an example -- not the Gartner numbers.

Thanks!

-- Chuck

[Geoff Mitchell]

Chuck,

Not sure how much you can share on a public forum, but I would be interested to hear what you have to say about EMC's performance.

The IDC numbers look great for EMC - and congratulations on this consistent level of success in the market both on market share AND for recognition of product quality. As we know, market share means you're the biggest, not necessarily the best, so the Fortune accolade is well earned.

One correction, however - HP appears to have grown faster than EMC, albeit off a base hald the size http://seekingalpha.com/article/124570-overall-storage-revenue-slips-but-emc-remains-on-top?source=yahoo

Diving a little deeper, IDC states that high-end storage sales stalled and the impact was felt more heavily than mid and lower tiers. If that's the case, why did EMC take such a large impact to its earnings per share? Aren't the mid-tiers more profitable than the high end gear, which largely drives the top line revenue?

[Chuck Hollis]

Hi Geoff -- thanks for the comment.

I should have explained the HP statement -- if you backed out their LeftHand acquisition, it would have looked flattish to down. But, you're right, they did show as growing in 2008, albeit less than the market as a result of this acquisition.

Also, you have to get the full IDC report to get the real picture. The article you referenced, for example, just looks at the category 'external disk', which is a larger category than 'external RAID', which in turn a larger category than 'networked storage', and so on.

As the categories get more narrow, the amount of value add (and potential margin) get greater. Most of us in the industry tend to focus on the value-added categories, rather than the undifferentiated ones. To each their own.

I have no idea, for example, if IDC accounted for the Iomega business that EMC now owns, which one could argue is "external disk", no?

And, as far as your speculation as to cause-and-effect, I'll leave that up to our Investor Relations group.

Personally, though, I disagree with your logic.

Thanks for writing!

-- Chuck

[KPC]

Hi Chuck,

Congrats on being rated No#1 by IDC on Marketshare.

For SAN, EMC will be definitely No #1.
For NAS/ISCSI ... ????

I think IDC has some serious discrepancies on how they count NAS/ISCSI marketshare. Gartner is no joker to ignore.

Also the EMC worry is on news like this
http://finance.yahoo.com/news/US-alleges-EMC-paid-kickbacks-apf-14529847.html

Hope its not true !

- KPC

[Dave Vellante]

Its early March and IDC has its numbers out from the previous year. That's good work.

Try reconciling factory data, the channel, customer spending by a zillion different technologies, operating systems countries, etc...and make it all add up.

It's enough to drive you from the business :-)