Storage giants lose out as market undergoes 'year of change'

Top five all see sales go south in Q4 as hyperscale and flash players prosper

Last year brought "considerable change" in the storage space as overall market revenues continued to shrink, but smaller players and emerging technologies prospered.

Figures from IDC reveal that global sales in the enterprise storage systems sector shrunk 6.7 per cent year on year in 2016's closing quarter to a total of $11.1bn (€10.49bn). Despite the downturn in revenue, the total capacity of all units shipped during Q4 jumped 18.4 per cent to a collective tally of 52.4 exabytes.

The market's chief revenue-generators remained external storage systems and server-based storage, but both of these areas saw annual sales declines of 7.8 per cent, to $6.4bn and $3.4bn, respectively. Meanwhile ODM sales direct from manufacturers to hyperscale computing providers fared far better, growing 3.2 per cent to $1.2bn.

Flash technology also continues to thrive, particularly the all-flash array sector, which grew 61.2 per cent annually to a worth of $1.7bn in Q4. Hybrid flash array revenues came in at $2.5bn, meaning flash technology now comprises 38.4 per cent of the overall storage space.

Perhaps unsurprisingly, the recently united Dell EMC entity is the sector's dominant vendor, with its quarterly turnover of $2.12bn equating to a market share of 32.9 per cent. This places the company 22.7 percentage points ahead of its nearest rival.

The rest of the top five are far more tightly bunched, with HPE, IBM, and NetApp more or less tied, holding 10.2, 10.1 and 10 per cent of the market, respectively, ahead of Hitachi on seven per cent.

All five of the worldwide storage market's leading quintet saw year-on-year revenue declines in Q4. The year-ago quarter's two biggest players, Dell Technologies and IBM, saw the heftiest sales drops, of 17.3 and 17.4 per cent, respectively. HPE nipped into second spot ahead of Big Blue, despite seeing revenue drop 7.1 per cent, while fourth-placed NetApp saw market share rise 70 basis points to 10 per cent, by virtue of its comparatively modest 1.4 per cent annual sales decline. Hitachi's Q4 revenue fell 15.1 per cent annually to $451.6m.

Vendors outside the top five collectively enjoyed a fine quarter, with cumulative sales growing 10.2 per cent year on year to $1.92bn. Over the last 12 months the ‘others' section of the market has seen market share rise from 24.9 to 29.8 per cent.

"2016 represented a year of considerable change for the enterprise storage systems market," said Liz Conner research manager, storage systems at IDC. "While the broader enterprise storage systems market has been impacted by headwinds, companies continue to increase their investments in several key areas, such as software-defined storage, cloud-based storage, all-flash storage systems, and converged systems. As a result, traditional enterprise storage vendors have aligned their portfolios to meet the shifting demands."