HPE Steals Major Storage Market Share, Dell EMC Still On Top: IDC
The enterprise storage market contracted in the second quarter of 2019, but HPE leapt over NetApp to grab the number-two position in the sales of enterprise external OEM enterprise storage systems.
HPE Takes Storage Market Second Place After A Quarter NetApp Would Rather Forget
The second quarter of 2019 was a good one for Hewlett Packard Enterprise's storage sales. The company, one of only two major branded storage vendors along with Hitachi to see year-over-year growth in the quarter, enjoyed by far the largest growth rate in the industry, according to IDC's Worldwide Quarterly Enterprise Storage Systems Tracker.
For the storage industry as a whole, it was a tough quarter. Total worldwide enterprise external OEM storage systems for the industry fell 0.8 percent year-over-year to $6.3 billion, while total enterprise external OEM storage capacity shipments grew a modest 5.2 percent to 16.3 exabytes.
Part of the drop in storage revenue came from an unexpected 0.7-percent drop in all-flash storage array sales to $2.1 billion. All-flash storage has until now been one of the fastest-growing parts of the storage market.
The second calendar quarter of 2019 represents what appears to be an overall slowing down of the storage market. Will that continue? Time will tell.
In the meantime, for a look at how IDC is changing how it presents some of the numbers in its quarterly report, and a look at some of the details behind the vendors' numbers, turn the page and get strapped in for what may become a wild ride.
Change In How IDC Measures Storage
In reporting storage revenue for the second calendar quarter of 2019, IDC changed how it reports the numbers in its press release. IDC does not release the entire report to the public, but instead makes it available for a fee.
The market research firm has for years publicly provided vendor-specific details on two types of storage revenue. The first, worldwide total enterprise storage systems, measured the value of storage shipments including both external storage and storage internal to servers. The second, worldwide external enterprise storage system, measured the value of just the external storage shipped.
This dual measuring system lead to interesting results. A company like NetApp, for instance, which does not sell servers, had the same revenue figure in both measures. However, companies like Dell EMC and Hewlett Packard Enterprise, which have very strong server sales which came embedded with storage, had very different results depending how measured.
Starting with the second quarter of 2019, IDC is measuring worldwide enterprise external OEM enterprise storage systems.
How IDC Reports Storage System Revenue Going Forward
Eric Shepard, research vice president for IDC's Infrastructure Platforms and Technologies Group, told CRN via email that IDC sees three segments in the total enterprise storage market:
* External OEM includes any purpose-built storage system that is physically separated from the application server/host and sold by a traditional OEM vendor such as Dell Technologies, HPE, or Pure Storage. These systems may be RAID or JBOD ("just a bunch of disks) systems, and can connect to application severs directly or a network such as a SAN or NAS configuration.
* Internal OEM refers to general purpose servers that have storage capacity within the server and are sold by traditional OEM vendors such as Cisco, Dell Technologies, HPE, or Lenovo.
* ODM Direct includes all systems sold by ODM vendors such as Quanta, Inventec, Wistron, and Wiwynn directly to such cloud builders as Google, Amazon, or Microsoft.
"Combined, these three make up the total market that we normally publish," Sheppard wrote. "We are going through a change to our taxonomy at the moment and only included one of these three segments in our press release to avoid confusion."
This quarter, IDC only included external OEM, which is not undergoing any taxonomy changes, in the release, he said.
Dell EMC: Still The Champion, Almost Holding Steady
Dell Technologies’ second calendar quarter 2019 worldwide enterprise external OEM storage systems revenue was $1.89 billion. That figure kept Dell EMC as the top branded storage vendor for the quarter with a 29.9-percent market share despite a drop of 1.8 percent from last year's $1.93 billion, IDC reported.
Dell Technologies, which according to IDC is the number one provider of overall storage, storage software, and all-flash storage arrays, on Aug. 29 reported that total storage sales growth was flat year-over-year in its first fiscal quarter 2020, which ended Aug. 2. The company did not report specific storage revenue numbers.
Jeff Clarke, vice chairman of products and operations for the Round Rock, Texas-based company, told investors that Dell is seeing significant traction from its new Unity XT midrange storage offering even as it ramps up to introduce its next-generation midrange storage offering to market. The company is also seeing strong acceptance of its new PowerProtect X400 and PowerProtect software data protection technology, Clarke said.
HPE: Huge Growth Spurt
Hewlett Packard Enterprise showed the biggest growth in the second-quarter worldwide enterprise external OEM storage systems of all the major vendors, with IDC reporting the company's revenue for this segment rose 13.5 percent to $740.4 million, letting it vault past perennial number two NetApp. That 13.5-percent rise in revenue, was by far the largest rise of any branded vendor. Indeed, HPE was one of only two vendors to see growth for the quarter, IDC said. HPE had an 11.7 percent total market share in the storage market in the quarter, IDC reported.
HPE, in its fiscal third quarter 2019 quarterly financial report, did not break out specific numbers for its own storage revenue. However, the company said that its Nimble Storage revenue showed 21 percent growth over its fiscal third quarter 2018.
HPE is staking its storage future in part on its soon-to-be-released HPE Primera storage product line which combines the simplicity of its Nimble platform with the mission-critical capabilities of 3Par, and comes integrated with InfoSight predictive analytics that can identify and help mitigate potential issues.
NetApp: Big Hit In Revenue
NetApp's second-quarter worldwide enterprise external OEM storage system sales took a huge 17.8-percent dive compared to last year to $684.0 million, IDC said. That pushed NetApp -- with a total 10.8 percent market share in the quarter -- down to third place after rivals Dell EMC and HPE.
The drop was not surprising. NetApp, the storage industry's largest independent vendor, on August 14 reported total revenue of $1.24 billion, compared with $1.47 billion for its first fiscal quarter 2019 revenue. All of NetApp's revenue is considered storage revenue. The one positive note for NetApp was that its cloud data services annualized recurring revenue came in at approximately $61 million, an increase of 189 percent over last year.
Things could have been worse. Two weeks earlier, NetApp released preliminary financials, predicting a 17-percent drop in revenue and a 50-plus percent drop in GAAP income compared with its previously announced expectations.
IBM: Still Retreating
IBM has in the last few years continued to see storage revenue drop, and the second calendar year of 2019 was no exception. IDC estimated IBM's second-quarter worldwide enterprise external OEM storage system sales at $448.1 million, down about 22.7 percent over the same period as last year. IBM held on with 7.1 percent market share, IDC reported.
IBM does not break out specific storage revenue numbers during its quarterly financial reports. However, for Big Blue's second fiscal quarter 2019, which ended June 30, IBM said its storage hardware revenue fell 21 percent over that of the same period last year.
Hitachi: Breath Of Fresh Air
Hitachi Vantara, the company that includes the former Hitachi Data Systems storage business, was the only major branded storage vendor besides HPE to show growth in its worldwide enterprise external OEM storage system sales, according to IDC. IDC estimated the Hitachi sales for the quarter at $437.1 million, up 8.6 percent over the prior year period.
Hitachi Vantara, with a 6.9 percent market share, does not publish quarterly financials or otherwise publicly disclose storage revenue.