Storage in Q2 2018 – ‘system’ stagnant, ‘raw’ booms with 2 Zetabytes shipped

The storage hardware market is large and vital for the ITC industry; however while spending in the storage systems market was stagnant at $33b in the year to the end of June, raw storage grew by 14.5% to $159b (see my Figure above). A long time ago storage systems suppliers were the most important players – offering the security of directly attached devices to servers used by enterprise customers on premise; nowadays the leaders are the disk and solid state drive manufacturers, whose products are being used by self-building cloud suppliers and in all manner of mobile and mains-powered systems. The major storage systems suppliers (Dell EMC, HPE, NetApp and IBM) have transformed themselves into software and service vendors eager to provide data management accommodating the use of commodity and other vendors’ arrays and cloud services.

Market shares for storage systems, disk and solid state drives are shown in my Figure above. There are some major differences. In particular:

• The disk drive market is now the preserve of three major vendors of which Western Digital was the most important with a 38.6% share in the year.
• The solid state drive market was dominated by SK Hynix (with a 31.7% share) and Micron with 27.3%.
• Dell EMC lead the storage system market with a 20.8% share; it was followed by HPE (10.9% including revenues from its Nimble storage acquisition), a resurgent NetApp (10.8%) and IBM (6.5%). Of these vendors Dell EMC, followed by IBM and NetApp were te stronges storage software suppliers.

Of course it remains problematic to add these three markets together to come up with a total for storage spending as there is an important double count between storage systems and raw storage and because raw storage is of course used in many products other than the arrays used in businesses.

The increasing dominance of raw storage has involved a shift in spending from the Americas and EMEA towards Asia Pacific (see my Figure), where the majority of the manufacturing of ITC hardware takes place. As with the similar shift in network spending, the massive growth in purchasing of mobile devices is a major reason for this continental shift in purchasing. As in many other ITC sub-markets EMEA is being left behind as it currently almost entirely lacks suppliers who bild storage components into their systems.

There have been quarters when the capacity of raw storage shipped in the world declined (see my Figure); however there’s no doubt that the overall trend is an exponential growth driven by the increasing miniaturisation of the solid state devices. The few downward steps demonstrate the stochastic nature of the market, which sometimes involves a wait for the latest designs and fabrication plants to come online. The consolidation of the raw storage markets down to a handful of active manufacturers also leads to increased prices for much-demanded form factors – especially true of NAND products in 2018.

The introduction of the EU’s GDPR regulations has led to major data governance and security audits by major end-user organisations, which in turn should result in an increase in storage systems spending in the next few quarters; however I expect major future growth to be driven by self-build cloud service providers and the use of extra capacity in mobile devices (Samsung is currently advertising its latest mobile phone as ‘Terabyte ready’ for instance). I intend to provide a quarterly look at storage management software and cloud storage services in future coverage of this important market.