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All-flash array adoption rises for NetApp, HPE

NetApp credits AFA flash array sales as key to its gaining market share, while HPE reports significant flash increase despite overall decline in storage revenue.

Despite all the talk from storage vendors about hybrid cloud, services and software, their all-flash storage array adoption is still rising.

NetApp and HPE reported quarterly earnings Tuesday, and both said their all-flash sales rose significantly. NetApp outperformed the three other major storage vendors that reported earnings over the past week, on the strength of its flash AFA systems.

NetApp said its AFA platform revenue increased 15% from last year -- an impressive number in an economy still recovering from a pandemic-caused recession. NetApp's overall revenue of $1.42 billion increased 3% since last year, while Dell storage declined 7% to $3.86 billion, Pure Storage dropped 4% to $411 million and HPE storage slipped 3% to $1.2 billion. However, HPE's drop would have been greater if not for a 29% year-over-year increase in all-flash storage.

George KurianGeorge Kurian

In October, NetApp focused on cloud and its Keystone services program during its virtual NetApp Insight 2020. All the while, it was picking up share on its rivals with flash storage. NetApp's all-flash revenue for last quarter hit $632 million. NetApp CEO George Kurian said all-flash arrays make up 26% of its systems sold. He expects that number to rise steadily as emerging technologies including QLC solid-state drives (SSDs) expand flash's advantages over hard disk drives.

"We are still in the early innings of the technology curve in the all-flash array market," Kurian said on NetAppp's earnings call. "There are more technologies coming online over the next 18 to 24 months that will move more and more of the disk-based market to the all-flash market. We don't think that all of the disk-based market moves to all-flash. But a substantial percentage of the total storage market -- let's say 70% to 80% -- will be an all-flash array portfolio."

Kurian said he remains optimistic about hybrid cloud storage and services. NetApp is working closely with AWS, Microsoft Azure and Google to enable customers to access NetApp technologies in public clouds. And it sees Keystone as a highly competitive alternative to HPE GreenLake and other major infrastructure vendors' emerging services programs.

Antonio NeriAntonio Neri

HPE CEO Antonio Neri said his company's storage portfolio is a big part of its GreenLake strategy. He added that HPE's storage business is "stabilizing" after five straight quarters of declines.

"In storage, we have been on a multiyear journey to create an intelligent data platform from edge-to-cloud and pivot to software-as-a-service data storage," Neri said on HPE's earnings call.

He cited HPE's Primera all-flash array and Nimble Storage dHCI converged system as storage growth areas.

Will QLC drive more workloads to flash?

Kurian predicted flash storage will continue to increase as the price of SSDs come down. For example, lower-cost, lower-performing QLC SSDs will enable companies to move less critical workloads to flash. SSDs have largely replaced the highest speed HDDs, and Kurian expects QLC to replace more of the capacity drives now in use. NetApp does not yet sell QLC drives in its systems, although rivals Pure Storage and startup Vast Data do.

"Today there are customers buying all-flash arrays when [SSDs] are roughly three times the cost of a hard drive," he said. "With QLC, that number gets a lot closer to one and a half to two times. We think that more workloads will come on to all-flash."

Rivals take advantage of Dell PowerStore ramp

NetApp and HPE likely benefited from soft sales of Dell EMC's new PowerStore flagship all-flash midrange storage array. PowerStore is a prime competitor to HPE Primera and NetApp AFA arrays, but Dell delayed PowerStore's launch several times before it hit the market in March. Dell COO Jeff Clarke said last week that PowerStore has not yet met expectations, but the vendor remains committed to advancing the platform. 

Kurian called PowerStore "an incomplete product," adding "it is hard to build a new midrange system. And so it's going to be some time before they can mature that and make that a real system."

COVID-19 caution colors forecasts

Like other storage vendors, NetApp and HPE issued cautious forecasts because of the COVID-19 impact. The midrange of NetApp's guidance revenue is $1.41 billion, roughly the same as last year.

"We're pleased with the news about the COVID-19 vaccines," Kurian said. "We think that the economy has mostly stabilized and it should get better from here. But we are in the midst of a nationwide lockdown. We have lockdowns in many other parts of the world. We are in for a tough few months here between November and January."

HPE did not give a revenue forecast, but CFO Tarek Robbiati said he expects a slight drop from this quarter, which would put it about the same as HPE's $6.9 billion last year.

"We continue to see gradual improvement, but we want to remain somewhat cautious due to the uncertain pace of recovery from the COVID-19 pandemic," he said.

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