Storage Scorecard

If you're a sports fan, you know how important the score is -- it's the first question anyone asks.

The storage industry is incredibly competitive.  That's good for everyone -- competition brings out the best in vendors, and customers win every time.

I wanted to take a moment and recap Gartner's recent storage industry scorecard analysis.  There's a new pecking order showing up, and -- if you're close to the storage industry -- you can see positions shifting around.

And that raises some interesting questions ...

The Gartner Excerpt:

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Gartner Says Worldwide External Controller-Based Disk Storage Market Grew 3 Percent in Second Quarter of 2007

STAMFORD,Conn., September 5, 2007 — Worldwide external controller-based (ECB) disk storage revenue totaled $3.7 billion in the second quarter of 2007, a 3.3 percent increase over the same period in 2006, according to Gartner, Inc.

EMC maintained the No. 1 spot overall, finishing the quarter at 25.2 percent market share (see Table 1). IBM was in second place with 14.8 percent of the market followed by Hewlett-Packard with 13.8 percent. Dell improved its market share to secure the No. 4 spot with 9.2 percent share, overtaking both Hitachi/HDS and NetApp.  Dell showed the strongest growth year-over-year among the top-tier vendors, with 25.1 percent revenue growth for the quarter. Hitachi/HDS slipped one spot, ending the quarter in the No. 5 position with 8.2 percent of the market. NetApp slipped to No. 6 with a market share of 7.8 percent. Sun Microsystems rounded out the top vendors, remaining in the No. 7 spot with 4.8 percent market share. The “Others” vendors increased their share of the market by 8.2 percent year-over-year, accounting for 16.2 percent of worldwide revenue in the second quarter.

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You can see the entire press release here.

So, what's interesting here?

First, no surprise, EMC remains #1 in this market, and by a considerable margin.  Some of the data indicates that we're gaining share as well.  OK, that's to be expected.

IBM and HP are neck-and-neck for #2.  But, since neither are really investing in storage as an independent market (rather than an accessory that goes with the servers), their fate in the storage market largely depends on how they're doing in servers these days.

But look at Dell.  Despite their various challenges, they are absolutely cranking out there.  25% revenue growth -- from an industry perspective, that's insane.

Thankfully, they're using a lot of EMC product to do this.

But consider this: more Dell-branded external storage is now sold than Hitachi/HDS. 

That's new. 

And Dell now sells much more external storage than NetApp. 

That's definitely new.

And, of course, everyone is taking storage market share away from Sun these days.  Nothing new here.  It's a sad picture to watch unfold, to be sure.

I found the strong 8.2% growth in the "others" category particularly interesting.  That means that there are more smaller, focused and aggressive vendors on the landscape.  And -- in aggregate -- they're getting more of the pie than in the past.

That's good for the storage market, I think.

So what does this mean?

The big takeway for me is that Dell's go-to-market model (and partnership with EMC) is apparently working very well across vast swaths of the storage market -- that much is undeniable.

To their credit, they focus on what they're good at.

So, if you're HDS, or NetApp, this means you've got two competitive forces linking arms in the marketplace.

At the high end, you've got EMC that's offering far more than just storage these days.  And for other portions of the market, you've got Dell using EMC technology to efficiently and effectively distribute.

No one spends more than EMC on storage R+D.  And EMC's non-storage R+D (security, virtualization, content mgmt, et. al.) is making the storage portfolio better.

And Dell seems to have the whole distribution thing figured out pretty darn well, I'd say.

So, if you're HDS, or NetApp -- what do you do? 

Do you fight a war on two fronts? 

Historically, not the best strategy, but that seems to be the shape of the battlefield these days ...

Comments

[storage body]

Looks like NetApp is growing faster than the overall market in storage software, unlike EMC, according to IDC. Comments Chuck?

http://www.thestreet.com/_yahoo/newsanalysis/techsoftware/10379320.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

[Chuck Hollis]

Yes, I saw that, and I'm trying to figure out exactly what's going on here.

No definite conclusions, but what IDC considers "storage software" is an interesting grab-bag of topics. I'm getting a more thorough breakdown and I'll probably report back here.

I also think it's important to note that much of EMC's growth these days is outside the storage domain, e.g. VMware, Documentum, RSA and others.

Storage software will always be an important market category for us (as defined by IDC or whoever), but -- fortunately -- it's not the ONLY software category.