My Friday Rant -- Q1 IDC Results

It's Friday, it's been a good week, but I still have one more blog post left in me.

The reason I've chosen to spend some time exploring the latest IDC results is simple: in a very competitive part of the IT game, IDC is the de-facto scorekeeper.  I used to offer up blog commentary every quarter, but stopped doing it since nothing interesting was happening.

Not the case this time around. Things appear to be changing in the storage biz ...

For Starters

I've been working with storage market share numbers for most of my time here at EMC, and IDC consistently has the most accurate and useful take on who sold what.  If you're in the business, you need to subscribe to IDC's service at a minimum.

EMC doesn't give IDC (or anyone else) non-public information -- they have to model their results from the same information available to everyone else.  That being said, their estimates are usually close enough to what we see in our own business that it's good enough for the intended purpose.

Occasionally, vendors will quibble about how various products are categorized, but it all gets counted one way or another.  Just to be clear, the name on the label is the one that gets counted, so any business through badged OEMs goes to the OEM, not the manufacturer.

In EMC's case, that's worth considering, since a non-trivial amount of our products get sold by our partner Dell, among others.  They get credit for the product that bears their name.

Finally, as IDC tracks all storage (including storage internal to servers), most of my comments here will focus on various aspects of external RAID storage (vs. dumb enclosures), since that's what is interesting to most of us. 

I tend to focus on year-over-year compares, since everyone has different year ends, etc.  And, finally, if you have to focus on one number, focus on market share -- because, at the end of the day, that's what really matters most.

So, what did we see in Q1 2010?

Storage Is Back

We've all sort of known that, but the numbers are now there to back it up. 

IDC says we collectively spent about 17% more on external storage than last year, and a robust 21% more on external RAID storage.  Thank you, one and all!

I think it's largely about pent up demand.

It's been a long, cold economic season during late 2008 and most of 2009.  No less information was being generated, nor was there any less demand to store and use it -- so it's no surprise that -- yes -- people are spending money on storage as the economy improves.

I'm sure the question in everyone's mind is how much of this is pent-up demand, and how much of this represents the new demand curve for information storage.  I, for one, don't know the answer, and won't have an informed opinion until later this year :-)

Jockeying For Position

EMC usually gets #1 position in most IDC storage categories, with the exception of mainframe (#2 behind IBM, naturally) and iSCSI (#2 behind Dell, but please note counting rules above!)

Year over year, we were fortunate enough to be able to grab more new market share than anyone -- with a healthy year-over-year gain of 3.1% in the external RAID category.  And that was off the #1 installed base in the industry.

Again, thanks to all of you who put your trust in EMC products.

Enough self-congratulation, let's look deeper.

NetApp seems to be doing a healthy job of taking share from a lot of weaker players out there, posting a not-too-shabby 2.1% year-over-year share gain, again in the external RAID category.

If EMC and NetApp are the #1 and #2 share gainers respectively, who is losing share? 

Well, according to the IDC numbers, it seems to be Hitachi (off 1.7% market share), Sun (off 1% market share, no surprise there), and that inestimable category "other" (smaller players) which lost a big 2.5% points of market share.  It wasn't too long ago that this "other" category was growing, not shrinking.

Everyone else managed to hang on to their market share y/y in this category, including (in no particular order) 3PAR, Compellent, Dell, Fujitsu, HP, IBM, Isilon and NEC.  Small swings, nothing major.

I was intrigued by the emergence of Huawei as a "named player", escaping the obscurity of the "other" category in IDC's eyes.  Interesting ...

Other Notes

I was very pleased to see the continued growth of iSCSI, to approximately $550m worth of the total $4.7 billion spent on storage in Q1, well north of the magic 10% mark.

NAS continues to grow proportionally as well, with IDC stating that is was responsible for more than $1.1 billion of Q1 storage spend, or getting pretty close to 25% of the external RAID storage market.

IDC says that -- once again -- EMC comes in #1 for NAS with a tad more than 45% of the market, and says that we've picked up 5.7% more of the market since last year at this time. 

Again, thanks to all of you who have helped us achieve this growth.

Funny story time -- you're probably aware of the "20% more usable capacity guarantee" that EMC posted a while back.  Turns out that some enterprising customers are going back and forth between us and the other guys, and coming out w-a-yyyy ahead in the process ....

Now 20% may not sound like much, but some of these are multi-hundred terabyte and petabyte-sized deals.  20% (or more) can be a lot of extra usable capacity at those sizes, no?

Bottom line: it now makes simple economic sense to bring in EMC.  Based on what I've heard so far, you'll probably end up getting far more for your money -- and that's regardless of who you end up going with!

Finally, as I go through the traditional IDC breakouts of UNIX storage, Windows storage and Linux storage, I've got to wonder -- where do we get to count the VMware and other hypervisor stuff?

I don't know about you, but I would find that sort of market share data very interesting indeed.

Conclusions

EMC and NetApp appear to be doing quite well.   Congratulations to both companies!  Despite our continual rancor, we both must be doing something right ...

Everyone else seems to be holding their ground, or losing share in a few cases.  Continued healthy growth in the IP-based storage -- iSCSI and NAS. 

No real independent data on who's wining and losing in the next OS battle for the hypervisor -- we think EMC is doing really well, but some independent IDC numbers would be helpful.

Once again, the real question is -- how much of this is pent up demand, and how much of this is the new demand curve for storage?

We'll see ...

Comments

[David Jones]

Congratulations Chuck, from an entirely selfish perspective, this is good news for a contracting storage admin such as myself.

There seems to be some discrepancy between your figures, and those posted by Chris Mellor in the Register: http://www.channelregister.co.uk/2010/06/04/idc_q12010_external_disk/

Who are we to believe?

[Martin H]

I don't see any discrepancy, they're different figures. Did you mean the revenue growth number on the Reg? NetApp had highest % revenue growth, but it's total revenue was still less than half of EMCs.

[Chuck Hollis]

Hi David

I think that Chris gets the press release summary, I get the detailed supporting data, since EMC subscribes to the service.

It's important that you are very precise when you quote IDC data, since there is a lot of different cuts and takes. Hence why I am very precise when I use these numbers, e.g. Q/Q, Y/Y, which categories I"m speaking of, etc.

As far as "who to believe", I'd say believe us both, as we're both usually right.

-- Chuck

[Chuck Hollis]

Hi Martin H

You're right -- any vendor looking to make a splash will usually quote revenue % growth in a category or segment that favors them. And, as we all know, smaller bases make for bigger revenue % growth numbers. It's an old gimmick, but people still fall for it.

For me, the only stat that really matters is market share -- because it applies equally to all vendors. A point of market share is a point of market share, no matter how big the company might be.

For example, give the statement that $4.7 billion of external RAID was sold, a point of market share is approximately worth $47 million in revenue. That helps you put the 3.1% EMC share gain number, as well as the 2.1% share gain number, in a bit of context.

Put differently, EMC got $150m more of the available storage pie in Q1 than they proportionally did last time this year. NetApp, about $100m.

I also tend to look at year-over-year numbers, since they can be most consistently compared. A lot of revenue swings can happen at a company's financial year-end, so that tends to distort things.

-- Chuck

[Chuck Hollis]

Hey everyone, I went back and looked at the "fast growing vendor category" of all named vendors that IDC tracks.

For external RAID, year-over-year, the prize goes to (drum roll please), NEC with an astounding 118% percent growth.

Congratulations, NEC!

So I don't know where the "fastest growing" claim could have come from. Frankly, I don't even want to know ...

-- Chuck