STMicroelectronics

Sustained Momentum: Market for External Storage in India

According to Dataquest estimates, the overall market for external storage in India stood at Rs 2,500 crore, signifying a growth of 10%

The total worldwide enterprise storage systems factory revenue grew 34.4% year over year during the first quarter of 2018 (1Q18) to $13.0 billion, according to the International Data Corporation (IDC) Worldwide Quarterly Enterprise Storage Systems Tracker. Total capacity shipments were up 79.1% year over year to 98.8 exabytes during the quarter.

Revenue generated by the group of original design manufacturers (ODMs) selling directly to hyperscale datacenters increased 80.4% year over year in 1Q18 to $3.1 billion. This represented 23.9% of total enterprise storage investments during the quarter. Sales of server-based storage increased 34.2% year over year, to $3.6 billion in revenue. This represented 28.0% of total enterprise storage investments. The external storage systems market was worth $6.3 billion during the quarter, up 19.3% from 1Q17.

“This was a quarter of exceptional growth that can be attributed to multiple factors,” said Eric Sheppard, research vice president, Server and Storage Infrastructure. “Demand for public cloud resources and a global enterprise infrastructure refresh were two important drivers of new enterprise storage investments around the world. Solutions most commonly sought after in today’s enterprise storage systems are those that help drive new levels of data center efficiency, operational simplicity, and comprehensive support for next-generation workloads.”

MARKET DYNAMICS – INDIA

If one takes an audit from the financial year 2018 perspective, according to Dataquest estimates the overall market for External Storage in India stood at Rs 2,500 crore, signifying a growth of 10%.

Market researches like IDC defines an Enterprise Storage System as a set of storage elements, including controllers, cables, and (in some instances) host bus adapters, associated with three or more disks. A system may be located outside of or within a server cabinet and the average cost of the disk storage systems does not include infrastructure storage hardware (i.e. switches) and non-bundled storage software.

As per IDC’s latest Asia/Pacific Quarterly Enterprise Storage Systems Tracker Q1 2018 release, India’s external storage market witnessed a growth of 12.7% YoY (by vendor revenue) and stood at USD 84.1 million in Q1 2018.

External storage market growth in 1Q 2018 was majorly driven by increased spending from banking organizations. Major Industry verticals such as Banking, professional services, manufacturing, Telecommunications, and government together contributed to more than 80% of the overall external storage market in Q1 2018.

“Organizations are witnessing significant data growth and there are challenges for getting IT budgets for traditional hardware. Organizations are considering technologies to help data optimization and consolidation as ways to overcome this difficulty,” says Dileep Nadimpalli, Research Manager, Enterprise Infrastructure, IDC India.

All flash arrays segment saw a significant growth of 87.4% YoY in Q1 2018 contributing to 30.9% of the overall external storage market. Adoption of All flash arrays (AFA) offers better technical advance and performance at an affordable price which is benefiting customer due to competitive vendor environment. Organizations are actively considering flash options and are willing to pay the additional price premium to avail the best in class performance.

Mid-range storage segment witnessed a significant growth YoY due to large banking and professional services deployments while entry-level storage segment saw a decline in Q1 2018. Midrange external storage segment continued to lead the market with more than 58% market share in Q1 2018.

“Budgetary pressures and dynamic business priorities are pushing organizations to consider new deployment models to procure infrastructure. To address these changing customer requirements, OEMs should focus on innovative pricing models to drive new and incremental business. With unabated data growth, highly available data and instant information delivery is what matter to business”, says Ranganath Sadasiva, Director, Enterprise Solution, IDC India.

VENDOR PLAY

In Q1 18, (JFM 18) as per IDC, Dell Inc continued to be the market leader with a 29.7% market share by vendor revenue, however, witnessed a YoY decline in Q1 2018. Hewlett Packard Enterprise saw a significant growth predominantly driven by deals from banking and telecommunications industry. In the OND 2017 quarter, Hewlett Packard Enterprise and NetApp saw a significant growth predominantly driven by deals from banking and telecommunications industry.

Dell Inc emerged as the market leader with a 26.1 percent market share by vendor revenue, however, witnessed a YoY decline in Q3 2017 (JAS 17). Hewlett Packard Enterprise gave tough competition to Dell Inc, narrowing the gap in terms of vendor revenue and stood at the second position. IBM and HDS witnessed double-digit YoY decline while Huawei and NetApp saw a significant YoY growth in Q3 2017. HPE displaced Dell Inc and emerged as the market leader with a 32.4 percent market share in Q2 2017 (AMJ 2017). Large deals from Banking and telecommunications drove the growth for HPE. IBM and Dell Inc witnessed a double-digit YoY decline while HPE and NetApp saw a high double-digit YoY growth in Q2 2017.

OUTLOOK

Market analysts say that the external enterprise storage systems market is expected to grow at a single-digit compounded annual growth rate (CAGR) for 2017 – 2022 time-period. This growth will be driven across industries and will be led by spend in 3rd platform technologies and digital transformation initiatives. Moreover, new buyer segments such as third-party data centers and cloud service providers for storage vendors will be created owing to demand for cloud transformation but would it would cannibalize some portion of traditional storage market coming from the enterprise customers.

 

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