IDC Q2 2010 Storage Tracker -- Shifts Abound

Last night, IDC released their storage market share analysis for what happened in Q2.  Some things remained the same, other parts seem to be changing.

And if you watch this market as closely as I do, it's worth reviewing some of the more interesting bits.

What You Need To Know

For many years, IDC has published the most authoritative numbers on storage hardware and software sales.  While no methodology is perfect, I've come to view IDC's numbers as absolutely essential to anyone in the storage business.

EMC doesn't give IDC access to any privileged information, they have to figure things out from published reports.  Generally speaking, IDC's estimates of EMC's business are usually within a few points (plus or minus) of our own.

IDC tracks sold-by numbers (so rebadged OEM sales go to the seller, not the OEM), and they also strip out storage software numbers (e.g. replication, management) which show up in a different report.  Services and maintenance are similarly excluded.

As a result, you're looking at bare hardware numbers.

Major IDC Categories

Since it's likely that claims and numbers are likely to be flying around here shortly, it's worth a moment to briefly review the IDC categories.  The best way to understand them is from large to small.

First up, there's "Worldwide Storage".  This (generally speaking) is all server-related storage that moves to the market -- internal storage, external storage, the works.  It includes disk (and now flash).  It does not include tape, nor desktops.

Next up, there's the "Worldwide External Storage".  This category is a subset of the one above, and excludes all the storage that gets shipped internally with servers. 

Next up, we've got "Worldwide External RAID" (a subset of the category above) that's external storage that has some sort of external controller.  Getting a bit more precise, we've got "Worldwide Neworked Storage" (another subset of the category above) which is the more familiar NAS, FC, iSCSI stuff.

IDC does additional breakouts by specific attach, price band, geography and operating system supported.  While the aggregate data is fairly accurate, you can usually find more variability as the categories get progessivel smaller -- still very useful stuff, though.

The press gets a subset of the data for free.  Everyone else has to pay for the details, which can be quite interesting to pore through.

Sadly, they don't offer their views on VMware or other hypervisor attaches.

The Headlines

Since only server vendors can sell storage inside servers, the aggregate storage numbers aren't as interesting as the various external categories -- although it's fun to track the relative proportions of internal and external storage over time.

Simply put, there are three things that stood out from the Q3 numbers:

1 - The market for storage grew
2 - EMC not only continued to lead, but gained more points of market share than any other vendor
3 - Some familiar names in the storage business are having a rough time of it

The Market Grew

Year-over-year compares are dramatic, since Q2 2009 was dismal for just about everyone.  IDC estimates $5.016 B of external storage hardware was sold in Q2 2010 -- about 20% more than last year, but a more modest 1.1% increase over Q1 2010.

About $2.2 B of that was sold in the US, which showed an encouraging 8.7% growth rate over Q1 2010.  We can only hope that growth trend continues to other regions of the world :-)

Market Share Points Gained -- And Lost

You'll often see certain vendors try to claim "fastest growing" or something similar.  What matters more to industry watchers are market share points gained or lost.

Many articles focus on the "Worldwide External Storage" category.  If I were in a bragging mood, I'd congratulate EMC with adding $372m revenue (year over year) and posting around 40% growth.  I'd also congratulate NetApp for adding $203m of revenue during the same period, and posting 55% growth off their smaller base.

But those are year-over-year numbers.  I tend to be more interested in the sequential quarterly numbers.

To keep matters simple, let's focus on the "Worldwide External RAID" category -- that's anything with an external controller -- as an example.  It's easy to see that each point of market share gained or lost is worth about $50m in revenue.

Using EMC as an example, IDC gives us credit for quarterly revenue growth of 5.3%, but -- against the market, we grew a more modest 1.1% in terms of overall market share -- from 25.9% of the market to 27% of the market. 

IBM and HP turned in respectable performances as well.  IBM went from 12.2% to 14.1% in this category, notching up an additional 1.9% of the market.  HP went from 9.2% to 10.1% of the market, gaining 0.9%. 

By comparison, vendors like NetApp were comparatively flat: from 11.6% in Q1 to 12.0% in Q2, adding only 0.3% to their market share numbers.

My take?  As servers refresh, storage from the same vendor generally gets sold with them in many portions of the market.  It's a part of the market that's notoriously difficult for independent vendors to crack.

If these were the market share winners, who were the losers?  Hitachi, Fujitsu and NEC -- who gave up 1.0%, 1.8% and 0.8% collectively.  Similar patterns show up in the more granualar sub-categories.

Drilling Into The Various Segments

One subset of the storage market of perennial interest has been iSCSI -- so where are we now?

The good news -- iSCSI continues to grow -- from $558m to $641m from Q1 2010 to Q2 2010 -- that's about 15% growth on a quarterly basis, which is nothing to sneeze at.  But, as portion of the overall networked storage market, it's still just a bit north of 15% of the overall market.  Dell comes in at about 35% of the iSCSI market, HP is gaining share here with about 14%, EMC and NetApp come in just behind at around 13.5%.  Once again, EMC doesn't get credit for the iSCSI arrays we OEM through Dell and others :-)

The dynamics of the NAS markets are good, as well.

Quarterly, the market grew about 8% to around $1.2 B.  EMC's share grew to 45.3%, NetApp's share declined to around 26%, losing around 2 points of market share -- consistent with trends over the last several quarters.

Interestingly enough, "big storage" is back -- one of the articles noted strong growth (~30%) in the larger arrays with higher selling prices (>$100k).  VMAX, anyone? :-)

So, What Does All Of This Mean?

Depends what you're looking for, really. 

Compared with past quarters, IBM and HP slowed their historical market share bleeding, and turned things around slightly.  Although NetApp has been growing nicely off a modest base, they still have a lot of ground to catch up before they catch up to the other big players.  And continuing market share loss in one of their traditional segments (e.g. NAS) isn't particularly positive news.

Aggregate storage capacities continue to boom -- the aggregate numbers are almost incomprehensible.  Yes, we're spending more money on storage, but we're getting far more bang for the buck these days.

But -- as far as the numbers themselves -- it can be rather frustating, since we don't have IDC numbers for the really interesting questions that are on everyone's mind. 

For example, how much of this is going to service providers, rather than traditional IT settings?  How much of this is supporting Intel virtualized environments vs. traditional computing models?  How much of this is flash vs. spinning disks?

And that's the problem with data -- you end up with more questions than answers :-)

Comments

[nate]

Is it true that EMC started out as a furniture company?

I ran into a couple HDS guys at a bar last night and got to talking with them(not that I have much experience with HDS) one of them was a former EMC rep(I guess who isn't these days?!) and was joking around saying that EMC got their start in the early days as a furniture company.

Just sounded odd!

[Chuck Hollis]

Hi Nate

Yep, that's sort of true.

When the founders wanted to make memory boards for the minicomputers of the era, they needed something to pay the bills. As I've heard it, the answer was office and data center furniture.

It turned out pretty good :-)

- Chuck

[Dominic Cody]

Chuck,

Looking at the storage market as it stands today, I can only see EMC going from strength to strength based on it's portfolio of products and how it has aligned itself firmly with Cloud.

You mention NetApp, I actually think NetApp will see it's market share increase over the next 12-24mths mainly because of the move towards Cloud Services.
You also mentioned HP, I actually feel that HP will continue to lose traction however depending how they handle the whole 3Par aquisition this could change that and they could gain some ground to cover lost faith in EVA and XP platforms. The fact that Hitachi are saying the new technology for the XP and HDS Arrays could be delayed until end Q1 2011 is not going to do HP any favours.

[Andy Sparkes]

THe 3PAR acquisition makes HP a very serious contender in the cloud/utility storage market. when we cross this with the Matrix product line you see an extremely powerful vertically integrated solution all from one vendor rather than a series of alliances with their own set of internal competing priorities. 3PAR, 3COM move HP into a position of real strength.