Disk Array Price Erosion Slows In Q1, Software Stalls

June 18, 2012 Timothy Prickett Morgan

With the hard disk drive shortage due to the flooding in Thailand more or less over, the reactive price rise for SATA and SAS disk drives over the past several months due to shortages has helped in part to prop up the worldwide disk storage market. The insatiable demand for hoarding data, which has only been aggravated by the hyper around big data, did its part to help push disk array sales, too.

In the first quarter, IDC reckons that disk array revenues were up 6.8 percent, to just under $8 billion, and total disk capacity shipped across internal arrays tucked inside servers and external arrays lashed to them rose by 20.8 percent, to 6,037 aggregate petabytes. It looks like price increases for SATA and so-called near-line SAS (meaning slow spinning) disks helped prop up entry disk array sales (those that cost $25,000 or less), and that helped boost revenues and curb the erosion in pricing on disk arrays. The emerging markets in Asia and South America also had big appetites for disk capacity and that helped, too.

EMC, which does not sell its own servers and which does not (yet) sell internal disk arrays for servers, widened the gap between itself and Hewlett-Packard despite the fact that HP has a captive server base and EMC only links to other people’s iron. EMC posted total disk array sales of $1.73 billion, up 14.4 percent and accounting for a lot of the overall growth in the market. HP’s disk array sales rose only by 5.6 percent, to $1.45 billion, followed by number three IBM with $1.19 billion in revenues, up 7.8 percent from the year-ago period. Dell, which has bought Compellent and EqualLogic for their modern disk arrays while removing EMC arrays from its catalog, grew disk array sales by 7.9 percent to $922 million. NetApp, which is another free-standing company depending on the servers of others and not peddling internal disk arrays, had an 11.1 percent bump to $841 million in the first quarter. Other server makers–and there are still lots of innovative players out there serving niche markets like supercomputing, cloud, and SMB–comprised $1.86 billion in total sales in Q1 2012, down 1.3 percent.

If you look at only external disk array sales, then companies bought $5.97 billion in arrays, up 7.1 percent compared to Q1 2011. EMC accounted for 29 percent of revenues for external disks ($1.73 billion), and NetApp increased its lead over IBM with its growth to handily retain position two in the market with its 14.1 percent share ($841 million). IBM fell a half point to $678 million while HP grew 4.2 percent to $609 million. Hitachi, which used to count HP and Sun Microsystems/Oracle as strong reseller partners, is now largely going it alone and was able to boost its external disk array revenues by 11 percent in the quarter, to $559 million. Other vendors accounted for $1.55 billion in revenues, up only 1.2 percent. This tells you two things. First, there isn’t much money selling third party internal disk arrays–about $309 million in the first quarter, if you do the math. And two, it is tough compete with the top five in external disks, which is why growth is not so great there.

Storage software, which used to be part of the array and which is not more or less the only profitable part of the storage business, accounted for an additional $3.5 billion in revenues in the first quarter, but grew at only 3.3 percent, the slowest rate in the past two years. Archiving software sales generated $411 million in sales, up 5 percent, and data protection and recovery software brought in $1.25 billion, up 5.5 percent, according to IDC’s box and bit counters. EMC captured 24 percent of total storage-related software sales in Q1, compared to IBM’s 15.7 percent share and Symantec‘s 14.8 percent share.