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IDC's storage market stats contained a surprise in the first quarter: Revenues from worldwide external disk storage systems grew 5.9 percent in the first quarter of 2007 compared to growth of more than 10 percent for internal storage. What's this? After years of external storage beating the pants off internal disks, are we seeing a return to the halcyon direct-attached storage (DAS) days? And if so, what's behind it?
Perhaps we had it wrong all these years. The idea of building a storage network was a product of misguided youth. Why have all your storage assets in one huge complex pool when you can have it all right at your fingertips, under your desk or at least attached to your friendly local server?
However, when the numbers are analyzed more closely, the truth is that external disk storage systems continue to flourish at least most of the time. The first quarter, in the grander scheme of things, was nothing more than an aberration.
"External direct-attached storage continues to decline, being cannibalized primarily by network storage systems," said Natalya Yezhkova, a storage analyst at IDC. "The other threat to external DAS is coming from internal storage that grew at 10.5 percent in the first quarter of 2007. Developments in the server market, including server virtualization and the adoption of multi-core processors, have lead to deployments of servers with larger storage capacity, thus adding to the decline in external DAS."
Of course, it's all in the definitions, so bear with us a moment. IDC defines external storage as being any and all disk systems that reside outside the server enclosure. Internal storage is placed within the server. DAS is an array of disks dedicated to a particular server, and external DAS means that the array is situated outside the server such as an HP MSA 20 or 30.
With that in mind, Yezhkova's numbers show that regardless of that first-quarter anomaly, external storage has been far above internal both in terms of factory revenues, capacity increase and annual growth for many years as far back as IDC tracks, in fact. Internal storage managed a measly 2 percent growth last year, compared to 8 percent for external.
Going forward, IDC projects a widening gap through 2011, with external capacity growth at more than 60 percent a year, about 15 percentage points higher than its internal cousin. In terms of raw capacity, we are looking at 710 PB a year of external compared to 369 PB of internal disk.
"Internal storage revenue is always lower than external," said Yezhkova. "We expect the market to return to normal this quarter, with external storage growing in single digits while internal storage will begin to decline slightly year-over-year."
Server virtualization and multi-core chips play a part in all this. Instead of the stripped-down blade concept, the corporate world now sees more need for servers packed with a lot more storage inside.
While this may be having a small effect on disk shipments, IDC analyst Richard Villars notes an even deeper influence being exerted on server shipments. On a quarterly basis, IDC research shows the growth percentage of x86 server shipments peaking in late 2003 at almost 25 percent. Since then, numbers have been in steep decline and bottomed out at less than 2 percent growth in late 2006.
"Over the same period, spending has increased while unit growth slows," said Villars. "This shift in server demand could be called the virtualization effect."
This clearly shows a move toward packing more into one box in order to have more virtual machines running within it.
How does that translate over to the storage world? Yezhkova feels that virtualization causes increases in both internal and external storage, not internal over external.
"The impact is just more visible on the internal storage side, as typically you'd expect that this segment would decline, while in the past three years it was growing, at a low percentage though," she said. "We believe that this is primarily because of server virtualization and adoption of multi-core processors."
Her prediction for 2007 is that internal storage will experience a low single-digit rate of growth for the year as a whole. She also anticipates a continuation of the trend toward richer server configurations in terms of CPU, memory and disk storage. However, this will be balanced by a slowdown in server unit growth and declining prices per gigabyte.
But all is not bleak for internal storage. Despite annual revenue growth numbers falling into the minus column each year, shipped capacity for internal storage is expected to grow at a 47 percent annual rate from 2006 to 2011.
The disk market is very healthy overall, of course. Worldwide external disk storage systems factory revenues in the first quarter of 2007 amounted to $4.3 billion, and the total disk storage market reached $6.1 billion in sales, according to IDC, and is now shipping more than 1,000 petabytes a quarter.
In 2007 so far, external storage systems under $50,000 are driving the growth. That is a change compared to 2006, when midrange and high-end systems priced above $50,000 were the strongest segments. This shift, too, might be related to virtualization and the adoption of beefier servers.
So who's on first byte? HP and IBM remain the big kahunas in terms of worldwide disk storage sales, with 20.1 percent and 18.3 percent of the total, respectively. They are followed by EMC (14.8 percent), Dell (9.3 percent), Hitachi (6.1 percent), Sun (5.4 percent) and NetApp (5.2 percent). Those seven account for about 80 percent of the total market.
In the external market, though, it's a different story. EMC emphatically rules the roost with 21.2 percent revenue share, followed by HP and IBM with 13.4 percent and 12.7 percent respectively, then Dell (8.9 percent) and Hitachi (8.5 percent). EMC's lead is pretty good for a vendor that no longer considers itself a hardware specialist. In fact, EMC even leads the NAS market with 33.3 percent revenue share, followed by Network Appliance with 29.6 percent. NetApp, at least, has the claim to fame of being king in the iSCSI SAN market with a 24.3 percent share, compared to 14.6 percent for second-place EMC.