As companies head into 2023, they will operate on the edge of a recession. But enterprise storage vendors may be able to weather turbulent economic waters given the growing generation of and reliance on data.
Enterprise spending will slow in 2023, according to a recent survey from Enterprise Strategy Group. Of the 742 senior IT professionals at midmarket and enterprise companies, 52% expect to increase IT spending in 2023 compared to 62% the year before. But, the report noted, "the state of the economy adds more uncertainty to IT spending plans than usual."
A global recession or economic downturn could hurt a variety of industries, according to Harry O'Halloran, managing director of Strive Consulting, a technology consultancy headquartered in Columbus, Ohio. Still, enterprise data will continue to not only grow but also accelerate in its growth despite an economic downturn, he said.
"The longer-term trend we are seeing is essentially the amount of data being generated is doubling every two years," O'Halloran said. "That's not slowing down."
Thomas Coughlin, president of Coughlin and Associates, echoed the point. "An economic slowdown will not slow data generation [nor] the need to process and store that data," he said.
Storage vendors will also draw on strategies built for other recent disruptions such as a once-in-a-century pandemic and lingering supply chain issues, according to experts.
The enterprise storage vendor market includes established businesses such as IBM, which has been around for 111 years and offered storage products since it introduced its first disk storage system in 1956. It also includes newer companies, such as Pure Storage, an all-flash storage vendor that's only 13 years old.
But age and experience are not indicators of how a company might weather an economic downturn, according to John-David Lovelock, research vice president and analyst at Gartner. If more data is generated and needs to be stored, storage sales will be predictable but won't see massive growth like infrastructure as a service.
John-David Lovelock Analyst, Gartner
"The traditional data centers aren't going away, but they aren't growing much either," Lovelock said.
In 2022, storage vendors highlighted and expanded their consumption models. Dell allows for rapid scaling up and down for storage depending on resources needed and costs with Apex Flex on Demand. HPE added flexible options to its GreenLake storage offerings. Pure Storage also expanded flexible options.
Andrew Stone, CTO of Americas at Pure Storage, said customers need new and innovative ways to store data. He pointed to the company's Evergreen Flex program introduced earlier in the year, a subscription service for storage and software that sits somewhere between capex and opex models. Customers have lower initial costs and will own the hardware at the end of the term.
Storage vendors dealt with an economic decline during COVID-19 lockdowns in 2020, which altered how companies could interact with customers and sell their products, according to Chris Evans, founder of Architecting IT, an analyst firm. It also helped accelerate technology and selling strategies, such as providing flexible consumption models.
But switching to services or becoming software-only won't protect storage vendors from the effects of a recession, Evans said. If customers can't afford to buy what a vendor is selling, it doesn't matter how the hardware or software is delivered.
In the face of an economic downturn, enterprise customers will focus their spending on necessities, Lovelock said. In general, traditional storage may not be growing as fast as infrastructure-as-a-service offerings, but sales are steady as companies create more data and sell more data services.
"People make more data, they have to store more data, [meaning] you're going to sell more storage," Lovelock said.
Randy Kerns, an analyst with Evaluator Group, believes storage vendors will continue to do well despite a slowing economy for the same reason: customers see the value in their data and will continue to retain and store it.
"Users can't dial it back and say, 'No, we're not spending money [on storage],'" Kerns said. "That's just not possible."
This isn't to say storage vendors won't have to make changes. The economic downturn will affect where vendors focus on building out their products, according to Kerns. They'll be looking into greater efficiencies around things like simplicity, data reduction, automation and tiered storage to deliver more economical offerings. There will be a focus on data protection as well, Kerns said.
Adam Armstrong is a TechTarget Editorial news writer covering file and block storage hardware and private clouds. He previously worked at StorageReview.com.