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Networked storage systems revenue climbs, for most vendors anyway

Cloud and software-defined products are eating away at traditional enterprise networked storage systems, but the latter category still represents a fairly robust market. In fact, the emergence of managed services providers has given vendors a broader market to sell their storage equipment.

According to the IDC Worldwide Quarterly Enterprise Storage Systems Tracker, factory revenue from external storage systems totaled $13 billion during the first quarter of 2018, jumping 34% year over year. IDC said nearly 99 exabytes of capacity shipped last quarter, up 79% over last year.

Of the top five enterprise vendors tracked by IDC, Dell, Hewlett Packard Enterprise, Hitachi Vantana and NetApp all registered year-over-year gains. Dell, HPE and NetApp saw external storage sales grow by double digits. IBM was only one of the top vendors to decline, with sales skidding 15%.

Dell captured 21.6% of the market to maintain a large lead over No. 2 HPE, with NetApp third.

The latest tracking figures are lower than the $13.6 billion of revenue IDC reported for the fourth quarter of 2017, as the fourth quarter is historically the largest for enterprise storage sales.  IDC defines networked storage systems as those that consist of at least three disks (either in a storage array or server chassis) and associated controllers, cables and host bus adapters.

Original design manufacturers generated the biggest impact, bagging $3.1 billion from direct sales to hyper-scale data centers. That marks an increase of more than 80% from a year ago and is roughly one-quarter of total storage investments during the quarter. Revenue from server-based storage products came in at $3.6 billion, tumbling from last quarter’s $4.2 billion.

Sales of all-flash arrays increased 55% last quarter, contributing $2.1 billion. Hybrid flash arrays did even better, with $2.5 billion in sales, up 24%.

Dell shakes off HPE, claims top spot

IDC attributes the external storage rise mostly to stepped-up refresh cycles and broader converged infrastructure deployments. Market leader Dell is a good example of the trend.

On Monday, Dell closed the April quarter with $4.1 billion revenue, up 10% to post its first market-share gain since merging with EMC in 2016.  Dell executives cited increased sales of Dell EMC VxRack and VxRail hyper-converged infrastructure as a big reason for the quarterly improvement.

After finishing in a statistical tie with HPE last quarter, IDC said Dell pulled ahead on the strength of $2.8 billion in new sales. That’s 43% higher than its 2017 performance.   The figures encompass the combined networked storage systems of Dell and EMC.

HPE storage generated $2.3 billion, good for 18% of the market, but a decline of 20% from last year.  IDC reports combined figures for HPE and H3C Group, a joint venture formed in 2017 between HPE and state-owned Chinese company Unisplendour Corp. HPE retains a 49% stake in the venture.

NetApp posted one-year sales growth of 22%. It generated $890 million, or 6.8% of total market revenues. It has been a long, hard road for NetApp to get this far. Until the last two years, the file-storage pioneer lagged competitors in all-flash and hyper-converged markets. It since has turned things around, even bucking trends to grow networked-based storage despite industry-wide declines.

Meanwhile, Hitachi Vantara – formerly called Hitachi Data Systems – had flat revenue growth in storage. Its 3.6% market share is nearly a full percentage point lower than in 2017. That’s not surprising, since part of the vendor’s 2017 rebranding strategy was to deemphasize storage hardware in favor of more services and software.

IBM rounded out the top five with 3% of the market, based on $387 million in revenue. By contrast, IBM’s 2017 share was nearly 4.7% on revenue of $455 million. That’s a drop of 15 percent. On the bright side, IBM started reporting positive revenue growth earlier this year, snapping s string of 23 consecutive losing quarters.

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