Disk Array and Storage Software Sales Up Smartly in the Second Quarter
September 15, 2008 Timothy Prickett Morgan
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While certain parts of the server market in specific geographies have been hit by economic pressures, price competition, and deal deferrals in recent months, thus putting downward pressure on shipment and revenue growth in the server space, disk arrays and related storage software have thus far been growing like everything is still right with the world. The second quarter, according to the analysts at IDC, was another good one for disk array makers. IDC reckons that external disk array sales rose by 16.7 percent in Q2, hitting $5.1 billion, and that total disk sales rose by a more modest 10.9 percent to $6.9 billion. (This includes internal arrays shipped with servers as well as external arrays that attach to them through Fibre Channel, SCSI, iSCSI, and other means.) Everything is not entirely rosey, of course, because it never is in any market. Sales of internal disk arrays that are shipped inside servers fell by 3 percent to $1.8 billion, if you do the math. (IDC did not discuss this in the numbers it released to try to peddle its reports.) It is hard to say if customers are moving to SANs and cutting back on internal disks or if the decline is due to price cuts–my guess is that it is a little of both. “Despite concerns about a 2008 slowdown in IT spending, external disk storage systems spending experienced strong growth in the first half of 2008,” explained Natalya Yezhkova, research manager for storage systems at IDC in releasing the numbers. “The second quarter of the year was remarkable, not only because it is the highest growth in two years, but also because of the distribution of this growth across different market segments. The ability of vendors to meet a variety of needs among customers with a diversity of storage products and initiatives led to solid growth across all installation environments, even in those that declined over the past several quarters.” Here’s how the vendors stacked up for external array sales for Q2:
Source: IDC Worldwide Disk Storage Systems Quarterly Tracker As you can see, EMC continues to lead in a market it has largely helped to define since the early 1990s, with $1.1 billion in sales, up nearly 20 percent. Dell pumped up its numbers with its acquisition of Equalogic, almost meeting the market average, and IBM came pretty close, too. But among the top six vendors, only Network Appliances outgrew the overall market in Q2, while Hewlett-Packard and Hitachi did not come close to the market growth rates. Interestingly, the collection of vendors jammed into the Others category had a collective growth rate of 22.2 percent in the quarter, far outgrowing the market and any individual player and also collectively garnered 27.5 percent of sales for the quarter–demonstrating rather handily that there is room–and money–for innovation in the disk array arena. Now, when you take into account the internal disk arrays tucked into servers and add external arrays to the mix, the vendor rankings are different, as they are every quarter. Take a gander:
Source: IDC Worldwide Disk Storage Systems Quarterly Tracker HP, despite a 1.2 percent revenue decline to $1.25 billion, was able to just barely edge out IBM as the top storage seller worldwide in Q2 across all kinds of disk arrays. IBM grew its total disk sales by 2.6 percent to reach $1.23 billion in the quarter, helped in large part by the internal disks sold with its System x and Power Systems servers. Dell had about another third of its sales driven by internal arrays, giving it the fourth position in the market, followed by Sun Microsystems, which despite all of its noise about disk array innovation is still an also-ran in this space. However, Sun is getting traction in disk storage, with sales up 29.2 percent in the quarter to hit $494 million in sales. The company has a long way to go before it makes it into the numbers for external arrays, which is where a lot of the profit is. The real profits in the storage market, however, come with add-in software, and Sun is giving much of its code–Solaris and the Zettabyte File System, among other code–away for free. Storage software revenues, which are tracked separately by IDC and which are not included in the array numbers cited above, increased by 14.2 percent in the second quarter to $3.1 billion. As you can see, software accounts for about 38 percent of the total hardware-software stack for storage in Q2–and that software, while not free to manufacture, is inherently more profitable than hardware. “The storage software market continued to enjoy strong growth as perceptive users have put more applications and more data under storage software control,” says James Baker, research manager of storage software at IDC. “Vendors are responding to business-level needs with improved resource utilization, stronger data protection and recovery profiles, finer granularity of storage management, and by meeting more stringent auditing and regulatory realities. The time to value of storage software projects has never been quicker nor needed more.” The second quarter was the first time that storage software sales worldwide broke through $3 billion, by the way. File system, archiving, data protection, and disaster recovery software are the top sellers in the storage software space. RELATED STORIES The World Can’t Get Enough Disk Array Capacity Disk Array Capacity and Sales Still Growing at Historical Rates Asia/Pacific Region Bolsters Disk Array Sales in Q3 Gartner Charts External Disk Array Sales for Q2 Disk Array Sales Still Humming Along, Says IDC IBM Tops HP in Latest Gartner Disk Array Ranking, Both Trail EMC
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