Over the past decade and a half, the top players in the storage market have remained the same. Will the trend continue?
So many things change, so many things stay the same. Some vendors come, others go.
New exciting technologies are continually emerging. Yet Lazarus Vekiarides, CTO for ClearSky Data, feels that little has changed in storage over the past decade or two.
“The biggest surprise has been the extent to which growth and innovation in the primary storage market has stagnated,” he said. “There are a lot of reasons for this: declining capacity costs, the cloud, over-investment and a generally soft economy.”
Think about it from his perspective: When EqualLogic started in 2001, the leading vendors were NetApp and EMC. A decade and a half later, the survivors are largely the same, with what Vekiarides labels derivatives of the very same products. This says a lot about what it takes to disrupt the enterprise technology market, he said.
“The only truly new players are the public clouds, and one could argue that they are just beginning to penetrate the market,” said Vekiarides.
So let’s take a look at who is ahead right now and who is going to dominant when we hit the roaring twenties.
The most recent Worldwide Quarterly Enterprise Storage Systems Tracker from IDC saw $11.1 billion in revenue for the quarter and capacity shipments up 18.3 percent year over year to 52.4 exabytes. The storage market for hyperscale datacenters was the hottest, with external storage systems remaining the largest market segment.
But market dynamics are undergoing disruption. IDC reports that the all-flash array (AFA) market generated almost $1.7 billion in revenue during the quarter. That’s up 61.2 percent. The hybrid flash array (HFA) segment continues to stay ahead with $2.5 billion, but the gap is closing fast. Hybrid is destined to be consigned to the role of a bit player within a few years.
"2016 represented a year of considerable change for the enterprise storage systems market," said IDC analyst Liz Conner. "Traditional enterprise storage vendors have aligned their portfolios to meet the shifting demands."
As such, Dell Technologies is the big kahuna. It accounts for a whopping 32.9 percent of worldwide revenues. Second place is shared among HPE, IBM and NetApp who all finished around 10 percent. IDC said HPE's share has been bolstered by its H3C joint venture in China that began a year ago. Hitachi is fifth with a 7 percent share of revenue.
Vekiarides' point, then, that Dell EMC and NetApp persist at the top of the pile is supported by these numbers. But this ignores the fact that these companies have absorbed a lot of hot storage startups as an important part of their growth strategy.
Looking ten years down the line, will the same old names continue to prevail?
Vekiarides said storage is going through a massive transformation period. But he said the management model for data must also transform in the enterprise. That means storage once and for all stepping out of the established model of being delivered in the form of metal boxes. He said that model has maintained the status quo among the leading vendors.
“How else could we have gone through more than a decade of growth, new vendors and IPOs, and still be left with the same players we started with?” said Vekiarides.
He is a believer in the “as a service” business model. This is disruptive to the status quo, he said, because the industry is not built to survive on monthly revenue payments. Getting companies like Dell or HP to suddenly transform into a service provider like Amazon is simply too hard, said Vekiarides.
“If we are to see a big shift in dominance, it has to be driven by a shift in the delivery model,” he said. “The beneficiaries will be the likes of AWS, Google and a set of companies we haven’t heard of yet.”
Ranga Rangachari, Vice President of Storage at Red Hat, was reluctant to predict the companies who will lead the pack in ten years. But he did say that two types of storage vendor will likely exist:
Meanwhile, object storage will grow in use for long-term, archival and long-tail data storage. Machine learning and artificial intelligence (AI) workloads will operate on such large-scale data sets to extract value. Rangachari said the existing big firms, like Google and AWS, will continue to dominate this use case for data in public cloud with one or two niche clouds servicing specific markets.
Greg Schulz, an analyst at StorageIO Group, went as far as to name names. Here are the companies he thinks will rule the data storage roost in a decade:
Amazon Web Services (AWS) – AWS includes cloud and object storage in the form of S3. However, there is more to storage than object and S3 with AWS also having Elastic File Services (EFS), Elastic Block Storage (EBS), database, message queue and on-instance storage, among others. for traditional, emerging and storage for the Internet of Things (IoT).
Microsoft – With Windows, Hyper-V and Azure (including Azure Stack), if there is any company in the industry outside of AWS or VMware that has quietly expanded its reach and positioning into storage, it is Microsoft, said Schulz.
"Someday soon, people are going to wake up like they did with VMware and AWS," said Schulz. "That’s when they will be asking 'When did Microsoft get into storage like this in such a big way.'"
NetApp – Schulz thinks NetApp has the staying power to remain among the leading lights of data storage. Assuming it remains as a freestanding company and does not get acquired, he said, NetApp has the potential of expanding its portfolio with some new acquisitions.
“NetApp can continue their transformation from a company with a strong focus on selling one or two products to learning how to sell the complete portfolio with diversity,” said Schulz.
Dell EMC – Dell EMC is another stalwart Schulz thinks will manage to stay on top.
“Given their size and focus, Dell EMC should continue to grow, assuming execution goes well,” he said.
Huawei – Huawei is one of the emerging giants from China that are steadily gobbling up market share. It is now a top provider in many categories of storage, and its rapid ascendancy is unlikely to stop anytime soon.
“Keep an eye on Huawei, particularly outside of the U.S. where they are starting to hit their stride,” said Schulz.
VMware – A decade ago, Storage Networking World (SNW) was by far the biggest event in data storage. Everyone who was anyone attended this twice yearly event. And then suddenly, it lost its luster. A new forum known as VMworld had emerged and took precedence. That was just one of the indicators of the disruption caused by VMware. And Schulz expects the company to continue to be a major force in storage.
“VMware will remain a dominant player, expanding its role with software-defined storage,” said Schulz.
Of course, those named above won’t be the only names in town. Schulz said they will be ably supported by infrastructure and component players such as Cisco, Broadcom, Intel, Mellanox, Micron, Samsung, Seagate and others.
“The major cloud vendors — Amazon, Google, Baidu and Alibaba — will dominate the storage industry from an infrastructure view based on their ability to hyperscale,” said Yoshida. “While there will still be a need for onsite storage, that storage will be provided as an onsite service — perhaps as an extension of the cloud service.”
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