IDC Second-Quarter Storage Tally: Enterprise Sales Fall, Hyperscale Data Centers' Rise

Second-quarter 2015 storage revenue rose over that of last year's same quarter, according to research firm IDC, but the news was not good for the top enterprise storage vendors.

According to the new IDC Worldwide Quarterly Disk Storage Systems Tracker, released Friday by the Framingham, Mass.-based firm, Hewlett-Packard was the only top storage vendor to see its sales rise year over year in the second quarter.

Contrast that with rivals EMC, NetApp, Dell, IBM and Hitachi, all of which saw their year-over-year sales fall.

[Related: Gartner Server Sales Report: Strong Second Quarter Hides Negative Issues]

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Even more troubling for the large vendors is the fact that the fastest-rising part of the storage industry is the ODM direct business, which IDC defined as storage sold directly to hyperscale data center customers.

The trend for storage sales to move away from enterprise vendors and toward the hyperscale data centers is already impacting the channel, said Tom Holt, vice president of sales at Bedrock Technology Partners, a San Diego-based solution provider and channel partner to many of the top storage vendors.

Sales to hyperscale data centers typically do not involve channel partners, but channel partners may resell services based on that storage, which is what's happening to Bedrock Technology Partners, Holt told CRN.

Holt said Bedrock's storage business is growing, but not in the traditional way.

"I understand the trend from the IDC report," he said. "We've gotten into six deals with Fortune-1000-type companies in the last 30 days where they include cloud storage and provisioning. It's a mix of clouds. But in all those situations, we haven't quoted any enterprise storage solutions."

In most of those six deals, Bedrock has quoted HP's Helion cloud, while in a couple of cases the quote included Amazon's S3 storage, or other ways to utilize cloud storage, Holt said. Two of those quotes included cloud acceleration solutions from Pittsburg-based Avere Systems, he said.

Other solutions providers that have not yet embraced cloud storage may or not be impacted by the drop in traditional storage solutions, Holt said.

"They are still growing the number of clients they serve, their revenue, their profit," Holt said. "But not as fast as before. And this storage trend will catch up to them, but they will adopt. Their adoption may be slower, however, because it disrupts what they are doing today."

IDC on Friday reported that total worldwide second quarter 2015 enterprise storage systems factory revenue, which includes sales of storage both internal and external to servers, grew 2.1 percent year over year, to $8.8 billion. While external storage systems revenue was the largest market segment, sales here fell 3.9 percent, while direct sales to the hyperscale data center market rose 25.8 percent year over year to reach $1 billion.

EMC, with $1.7 billion in storage revenue in the second quarter, remains the top vendor. However, that represents a drop of about 4 percent from the second quarter of last year, IDC reported.

In terms of total disk storage systems, both internal and external to the server, HP was the second-largest vendor in the second quarter, and the only major vendor to see growth, with sales up 8.7 percent over those from last year's quarter.

EMC and HP were followed by Dell, where sales fell 2.9 percent; IBM, where a 28.9 percent drop resulted from the sale of IBM's server business to Lenovo; and NetApp, who's 19.6 percent drop stemmed from a poor transition of customers to its latest Clustered Data OnTap operating system.

For external storage systems sales, IBM ranked No. 2 after EMC despite an 11.4 percent drop from last year's quarter. They were followed by NetApp, whose revenue fell 19.6 percent; HP, where revenue rose a tiny 0.2 percent; Dell, which saw a revenue drop of almost 10 percent, and Hitachi, whose revenue fell almost 2 percent.

Businesses are increasingly using new project initiatives and refreshes of their infrastructure as an opportunity to deploy new storage technologies to help reduce cost and complexity, said Eric Sheppard, IDC research director, in a statement.

"This is pushing critical investment dollars towards technologies like cloud-based storage, integrated systems, software-defined storage, and flash-optimized storage systems at the expense of traditional external arrays," Sheppard said in his statement.