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External storage sales down as market shifts to hyperscale and server-based storage

External storage sales are shrinking.

The total worldwide enterprise storage systems factory revenue grew to an $8.8 billion during the second quarter of 2015, according to IDC. However, sales are tilting more toward hyperscale data centers and sever-based storage. External storage capacity — SAN and NAS — still represents the largest portion of the market, but sales dropped 3.9 percent compared to the second quarter of 2014.

Total disk revenue grew 2.1 percent, and capacity shipments were up 37 percent year over year to 30.3 exabytes during the quarter.

EMC was still the largest storage systems supplier with 29.9 percent of external storage worldwide revenues, while IBM, NetApp and HP came in second in a statistical tie for second with revenue shares of 11.1 percent, 10.9 percent and 10.5 percent, respectively. Dell and Hitachi also were in a statistical tie for fifth with Dell earning 6.6 percent and Hitachi earning 6.5 percent of the worldwide external storage revenues market during Q2.

Most of the top vendors declined in year-over-year revenue, with NetApp, IBM and Dell suffering largest revenue declines.  NetApp dropped 19.6 percent, finishing at$615 million in Q2 this year compared to $765 million in Q2 2014. IBM revenue fell 11 percent, coming in at$631 million in Q2 this year compared to $712 million in Q2 2014. Dell slipped 9.9 percent, falling to  $313 million compared to $414 in Q2 of 2014.

EMC’s revenues declined 4 percent to $1.7 billion compared to $1.764 million a year ago and Hitachi slipped 1.9 percent to $366 million. HP was the only of the top six vendors to increase year-over-year, and it barely went up. HP increased 0.2 percent to $597 million. The rest of the industry increased 9.3 percent year-over-year and grabbed 24.6 percent market share. IDC put the overall external storage revenue at $5.7 billion during the quarter.

Although all of its revenue comes from external storage, EMC also led the total worldwide enterprise storage systems market accounting for 19.2 percent of all revenues in 2Q15. HP held the number two position with 16.2 percent of spending during the quarter, and had the highest growth of eight percent. Dell accounted for 10.1 percent of global spending. Storage systems sales by original design manufacturers (ODMs) selling directly to hyperscale datacenter customers accounted for 11.5 percent of global spending during the quarter and server-based storage grew 10 percent to  $2.1 billion.

“Revenue growth was strongest within the group of original design manufacturers that sell directly to hyperscale data centers,” IDC storage reseach director Eric Sheppard said in the press release. “This portion of the market was up 25.8 percent year over year to $1 billion.”

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